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Punching In: Labor Department Eyes Trade Wages, Union Oversight

Feb. 18, 2020, 11:00 AM

Monday morning musings for workplace watchers

USMCA Pay Police | Post Office Apocalypse | The Price of Paid Leave

Ben Penn: Let’s take a spin around the Labor Department’s regulatory docket, as agencies ramp up efforts to close the book on pending rules during President Donald Trump’s first term:

Trade Enforcement: The Wage and Hour Division slipped into its budget proposal last week the first public notice that it will be implementing a small but crucial portion of the U.S.-Mexico-Canada Agreement. It concerns the “Labor Value Content” provision in the trade deal’s chapter on Rules of Origin. This new mandate, which applies specifically to the automobile industry, gives a passenger car tariff-free treatment only if 40% of its content is produced in North American plants by workers earning an average wage of at least $16 per hour.

The requirement (45% for pickups and cargo vehicles) was one of the biggest changes the Trump administration sought to return auto industry jobs to the U.S. Now, the pressure is on WHD to flesh out this mandate in an upcoming rule and develop an enforcement program.

Union Reporting: Tonight is the deadline to file comments on the “intermediate bodies” rule proposed bythe Office of Labor-Management Standards. The regulation would make mid-level chapters of public-sector unions subject to the same financial reporting requirements applied to organizations that represent private-sector workers. The agency says the proposal will provide transparency over how union members’ dues are spent.

The conservative FreedomWorks Foundation’s Regulatory Action Center launched a campaign last month to drive comments supporting the proposal. That campaign appears to have helped generate thousands of comments, many from Trump supporters praising the president for shining a light on “swampy government unions.” Large public-sector unions, such as the National Education Association, have hinted at a legal challenge once the rule is finalized.

Apprenticeships: The draft final rule to implement the president’s apprenticeship-expansion initiative has been under review at the White House Office of Information and Regulatory Affairs for almost three weeks. For major rules like this, in which unions and industry groups have much at stake, the end of the review process offers outside parties the chance to make a final case to the government to tweak the language in their favor.

The White House regulatory office’s website last week showed a meeting scheduled for Feb. 24 between OIRA and the Associated Builders and Contractors, the construction organization that’s been lobbying to include builders in the new job-training model. Any meetings with stakeholders could mean the final rule’s publication is imminent.

Employment Services: The American Federation of State, County and Municipal Employees sued the DOL on Feb. 13 over a rule that would permit states to privatize employment services at federally funded job centers, which currently must be staffed by state employees. The regulation could put AFSCME members out of work. The union’s effort to prevent that from happening could be the first in a wave of legal challenges to rules the DOL recently finalized or will soon implement.

Chris Opfer: It’s not just the private sector that’s harnessing the power of artificial intelligence.

A wide range of federal government agencies is using algorithms to do everything from processing benefits claims to nabbing securities fraudsters and assessing the potential risk of each person who enters the U.S. each day. A new report commissioned by the Administrative Conference of the United States details how the feds are using AI and highlights some of the opportunities and risks that come with machine learning.

The Labor Department is among the most active users of artificial intelligence, according to the ACUS research. The report seems to center largely on a Bureau of Labor Statistics program that scans workplace injury reports and uses an algorithm to code them. ACUS noted the Wage and Hour Division uses outside contractors to sort public comments on proposed regulations, a task that could be streamlined through machine learning.

Meanwhile, the U.S. Postal Service is poised to become a test case for using AI to supplant federal workers.

The USPS is testing autonomous vehicles for use in long haul trucking and “last mile” deliveries in rural areas. It’s also looking into using drones to deliver packages. The moves are meant to help the folks in light blue increase revenue and compete with UPS and FedEx. But those efforts are raising some of the same labor issues that have dogged those companies.

“Although the agency’s current plan is to use AI to assist human mail carriers, it is not difficult to imagine the next step of eliminating mail carriers entirely, particularly if technology becomes sophisticated enough to eliminate the need for human drivers,” the report said. “This possibility poses both political and practical difficulties for deployment.”

Jaclyn Diaz: How would you like a cup of coffee that costs, say, $547 billion over ten years?

That’s the Congressional Budget Office’s recent cost estimate for the FAMILY Act (H.R. 1185), the Democratic-backed plan to create a federal paid family and medical leave social-insurance program funded through a payroll tax. Democrats pushing the proposal have said their estimates show it shouldn’t cost “more than a cup of coffee per week.”

House Ways and Means Committee Republicans are already latching on to the CBO report, which they believe is Exhibit A of why the FAMILY Act is a non-starter in the chamber despite the Democratic majority. The nonpartisan office says enacting the bill would increase direct spending by $547 billion over the 2020-30 period—more than $521 billion for benefits and $27 billion for program administration at the Social Security Administration.

The Joint Committee on Taxation estimates that enacting the payroll tax would increase net federal revenues by $319 billion over the same period. The new payroll tax would raise $361 billion over 10 years, but that would be offset by a $42 billion reduction in income tax revenues.

“In total, we estimate that the bill would increase the deficit by $228 billion over the 2020-2030 period,” the report says.

Republicans say the score confirms the bill will “create another big spending boondoggle.” The projected operating costs to the SSA also would mean the agency budget would need to increase by $4.2 billion—nearly a third larger than the agency’s budget today, committee Republicans said.

Rep. Rosa DeLauro (D-Conn.),the bill’s lead sponsor, emphasized in response to the CBO report that the U.S. has the cash on hand.

“Our nation can absolutely afford it,” she said in a comment. “If Congress can enact a nearly $2 trillion tax cut for the rich and big corporations, we should also be able to invest a fraction of that to provide relief for working families.”

We’re punching out. Daily Labor Report subscribers can check in during the week for updates. In the meantime, feel free to reach out to us. See you back here next Monday.

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To contact the reporters on this story: Ben Penn in Washington at bpenn@bloomberglaw.com; Chris Opfer in New York at copfer@bloomberglaw.com; Jaclyn Diaz in Washington at jdiaz@bloomberglaw.com

To contact the editor responsible for this story: John Lauinger at jlauinger@bloomberglaw.com

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