AFL-CIO States Jobs Agenda

The recession and the resulting high unemployment rate have decimated state tax receipts at the very time that state social services are in higher demand than ever.  As a result, state budgets are imploding, forcing states to close a $350 billion gap in their FY 2010 and 2011 budgets.  States have responded by cutting expenditures, services and critical staff including nurses, teachers, firefighters and other first responders, actions that actually deepen the economic downturn by reducing economic activity.  Taxpaying service providers who are laid off become unemployed service recipients; the economy worsens and communities suffer from the loss of vital services.

The American Recovery and Reinvestment Act passed by Congress in February 2009 helped, but much more is needed. While working families and their unions press Congress to pass legislation like the Jobs for Main Street Act (H.R. 2847), which would invest $154 billion to create and save jobs, states should enact policies that help restore and revive their economies while holding working families harmless. 

These policy options are aimed at restoring jobs, repairing the safety net, shoring up state revenues and investing in a high-road green economy and a 21st century workforce.

For more information about the AFL-CIO 2010 State Jobs Agenda, contact Christine Silvia-DeGennaro at 202-637-5177 or csilvia@aflcio.org.

• Restore jobs in America
• Repair the safety net
• Shore up state budgets
• Choose a high-road green economy
• Invest in a 21st century workforce

Restore Jobs in America

Problem:  Despite the fiscal crisis, some states continue to hand out taxpayer dollars to companies in the form of economic development subsidies without holding the companies accountable for specific results, or even tracking how those taxpayer investments pan out.  In many instances, enormous sums of public money are spent in the name of economic development but fail to create good jobs or a stronger tax base.  In some cases, the money is used for investments in other states or countries. 

• Solution:  Attach job quality standards to subsidies and contracts so that taxpayer dollars are used to create good jobs with good wages and benefits. 
  
  
• Solution: Establish clawbacks that allow states (and localities) to get their money back from subsidized corporations that fail to create the number and quality of jobs promised. 
  
  
• Solution:  Pass the Keep Jobs in [STATE] Act, to prohibit states from contracting with or providing economic development assistance to companies that ship the work offshore. 
  
  
• Solution: Install an online disclosure system that reports the costs and benefits of all economic development deals to track subsidy amounts, number of jobs created, wage and benefit levels and whether the company is delivering on its obligations. 
  
  
• Solution:  Require comprehensive tax expenditure reports to be put online each year or two, detailing all the tax credits, deductions and exemptions allowed in the state and how much each of the tax expenditures cost.  These reports enable lawmakers to evaluate the impact of the tax breaks and decide whether they should continue.
  
  
• Solution:  Pass the Jobs Export Disclosure Act, which requires bidders for state contracts and applicants for economic development assistance to disclose whether the work will be performed outside the United States or the state.  The state must compile the data, make the information available to the public and study the impact on the state’s economy.

Problem:  The state fiscal crisis has forced most states to make serious cuts in vital government services.  Contracting out government services is sometimes touted as a cheaper way to provide services, yet frequently ends up costing more.  Many states do not even track how much money is actually spent on service contracts; without that information, they cannot determine if the services could be provided by government workers more efficiently and effectively. 

• Solution:  Establish responsible contracting procedures and improve systems for screening bidders, ensuring that contracts go to high-quality, law-abiding companies with good workplace practices. 
  
  
• Solution:  Require the state to prepare an annual Contract Expenditure Budget, which would provide information about all the service contracts in the state, including the amount and terms of every service contract, the contractor’s name and services provided. 

Problem:  There are 15.3 million Americans who are unemployed today, and there are 6.4 job seekers for every available job.  Our country needs to invest more in efforts to create and save jobs. 

• Solution:  Issue bonds to fix crumbling schools and invest in infrastructure, green technology and energy efficiency.
  
  
• Solution:  Urge Congress to pass additional federal funding for highway and mass transit projects, building and repairing schools and low-income housing, investing in green technology and energy efficiency, creating and saving jobs for teachers, police and firefighters and additional hiring and training programs.

Problem:  Additional transparency is needed to ensure that the stimulus money is being used to create good jobs. 

• Solution:  Pass state legislation requiring labor and community participation on any stimulus advisory committees that have been established to monitor how the stimulus monies are spent and evaluate the types of jobs that are created. 

Problem:  Although the federal government is required to disclose all waivers granted to the Buy American requirement under the ARRA, it is not required to disclose applications for waivers.  American companies and workers need such applications disclosed in order to have the opportunity to show that a waiver is not needed because the work can be performed within the United States.

• Solution:  Pass state legislation requiring the state to disclose Buy American requirement waiver requests on the state website. 

Problem:  Like the federal government, many states have procurement policies that leverage tax dollars to create local jobs, promote decent wages and working conditions, preserve the environment and assist minorities, veterans and people with disabilities.  However, recent international trade agreements threaten this autonomy by imposing new rules on states that prohibit preferences for domestic or in-state suppliers and limit the type of social, labor and environmental conditions states can apply to public contracts.  Governors have the ability to bind a state to these international trade agreements, taking away a state’s power to reward companies that play by the rules. 

• Solution:  Pass the Jobs, Trade and Democracy Act, which would require the consent of the state legislature to bind the state to international trade agreements, preventing governors from acting unilaterally to bind states to the terms of various trade agreements. 

Repair the Safety Net

Problem:  Many states have not taken steps to modernize their Unemployment Insurance systems.  These states are ineligible for their portion of the $7 billion in incentive funding that the federal government has offered to states to modernize their programs and provide coverage to workers who have traditionally been excluded from receiving unemployment insurance benefits.

States have until August 2011 to qualify for the additional funding.  To qualify for one-third of the incentive funding, a state must adopt the alternative base period, which expands eligibility for benefits by allowing workers to include their most recent earnings in the eligibility determination.  To qualify for the rest of the incentive funding, a state must also adopt two of four other improvements: 1) coverage for unemployed part-time workers who are searching for part-time work; 2) coverage for workers who lose their jobs for specific family reasons, including that they are victims of domestic violence, are caring for a sick family member or their spouse has relocated for employment; 3) provision of additional benefits for workers with dependent family members to assist with dependent care expenses; and 4) provision of an additional 26 weeks of benefits to laid-off workers who pursue training. 

• Solution:  Pass state legislation establishing the alternative base period.
  
  
• Solution:  Pass state legislation establishing two or more of the other benefit improvements under the ARRA.

Problem:  The federal Unemployment Insurance system only requires that employers pay unemployment insurance taxes on a worker’s first $7,000 in earnings.  This low threshold undermines financing for the state unemployment insurance systems.     

• Solution:  Pass state legislation to increase the state taxable wage base for unemployment insurance. 
  
  
• Solution:  Pass state legislation to index the state taxable wage base for unemployment insurance.  Sixteen states have taxable wage bases that are indexed, so that every year the wage threshold is adjusted based on changes to the state’s average annual wage. 

Problem:  The Federal WARN Act, which is the only federal law requiring any kind of notice for workers who are going to lose their jobs, has limited coverage and is difficult to enforce.  The law requires too few employers to give too little notice of too few plant closures and mass layoffs, and it allows too many employers to flout the law with impunity.  According to a 2009 Heldrich Center for Workforce Development survey of recently unemployed workers, 60 percent did not receive any notice that they were losing their jobs. 

• Solution:  Pass state legislation (like New York’s WARN Act, which went into effect in February 2009) that will provide stronger protections than those under the federal WARN Act.  (Under the federal WARN Act, employers with 100 or more workers are required to give their employees at least 60 days notice in the event of a mass layoff or plant closing affecting 50 or more workers.  It is enforceable only through a private right of action.)  The New York law requires employers with 50 or more workers to provide 90 days notice of layoffs affecting 25 or more workers.  The New York law is also enforceable by the state Department of Labor and it establishes additional penalties above what the federal law requires.
  
  
• Solution:  Call on Congress to reform the WARN Act to correct the defects in the law, including requiring more employers to give more notice for more mass layoffs and plant closures and provide for more effective enforcement.

Shore Up State Budgets

Problem:  States remain in the midst of a devastating budget crisis.  For Fiscal Years 2010 and 2011, the states will be forced to close a combined budget gap of $350 billion.  This is in addition to massive budget gaps addressed in FY 2009.  The state fiscal crisis has led to major cuts in services and is causing the loss of jobs in the public and private sectors as states lay off workers, cancel contracts and slash provider payments.  If states balance their budgets entirely with spending cuts, it could cost the economy 900,000 jobs.

• Solution:  Avoid a cuts-only budget solution.  Instead, use a mix of solutions to bring budgets into balance.  These solutions should include the use of reserve funds, appropriate spending cuts that do not undermine core state services and increases in state revenues.  While states face difficult options in the current crisis, most economists agree the worst thing a state can do in a severe recession is cut spending because that decreases aggregate demand and weakens the overall economy.  Instead, tax increases— particularly tax increases that affect the highest income families and profitable corporations— do much less harm.
  
  
• Solution:  Increase state income tax rates on the very rich or limit the deductions, exemptions and credits that the highest paid taxpayers are able to claim.  According to the Center on Budget and Policy Priorities, if every state with a personal income tax were to pass a 1 percentage point increase in the tax rate for households with incomes greater than $500,000 per year, as much as $8 billion could be raised.  In late January 2010, Oregon voters passed a ballot initiative raising taxes on household incomes at or above $250,000.  The funds generated from this tax increase on the very rich will be used to pay for education, health care, public safety and other services. 
   
• Solution:  Expand tax enforcement programs.  Tens of billions of dollars go uncollected each year at the state level because of state tax evasion.  Minnesota expanded its resources on tax enforcement after the state decided to study the problem and found that for every dollar spent on the new enforcement efforts, $7 was collected. 
  
  
• Solution: Attach disclosure, clawbacks and job quality standards to economic development subsidies to hold corporations accountable if they fail to create the good jobs promised. 
  
  
• Solution:  Urge Congress to pass additional fiscal relief for the states, including increased Medicaid funds and additional funds for the State Fiscal Stabilization Fund.  Current fiscal relief expires in December 2010, long before state revenues are expected to recover. 

Problem:  In 22 of the 45 states that have corporate income taxes, companies are allowed to take profits out of state and put profits (for reporting purposes) in states that have low or no corporate income taxes.  This creates massive revenue loss for states, without any economic benefit. 

• Solution:  Establish combined reporting for corporate income tax returns.  Combined reporting will require a parent corporation and its subsidiaries to combine their profits for reporting purposes, with a state taxing the percentage of the profits that were earned in that state.  The adoption of combined reporting can raise significant resources for a state.  Wisconsin adopted combined reporting in 2009; now that corporations have to accurately report their profits, revenues from corporate income taxes are expected to increase in Wisconsin by more than $75 million in FY 2010.

Problem:  As many as 30 percent of employers misclassify their workers as independent contractors, primarily to avoid paying payroll taxes.  As a result, workers are being exploited and denied basic protections under wage and hour, unemployment insurance and workers compensation laws, and state governments are losing billions in revenue because employers are evading these payroll taxes.    

• Solution:  Create a presumption of employer or employee status in a state’s labor and employment laws. 
  
  
• Solution:  Strengthen enforcement and remedies for misclassification of employees as independent contractors. 
  
  
• Solution:  Establish a private right of action for workers intentionally misclassified as independent contractors.
  
  
• Solution:  Strengthen record keeping requirements and penalties for failing to comply with those requirements.
  
  
• Solution:  Work with the governor’s office on an Executive Order to provide for agency collaboration and data sharing. 
  
  
• Solution:  Require companies that contract with independent contractors to provide the contractors with notice of their status, in writing, along with information on the impact of that status on tax liability and labor and employment protections. 
  
  
• Solution:  Call on Congress to enact legislation to strengthen enforcement by the Department of Labor and pare back tax loopholes that encourage misclassification.

Choose a High-Road Green Economy

Problem:  Not all green jobs are good jobs.  Research from Good Jobs First finds that many jobs in environment-friendly industries have very low pay rates, offer inadequate benefits and do not have the protections of a union contract.  Meanwhile, significant amounts of federal, state and local taxpayer dollars are being given to corporations to do green work.  States need to take action to create good green jobs.

• Solution:  Encourage and target state economic development funds toward green manufacturing, green retrofits for buildings, clean-up and redevelopment of environmentally distressed properties, and large-scale renewable energy projects that would decrease greenhouse gas emissions, provide large-scale energy savings and create good jobs with prevailing wage rates and other job quality standards.  Ensure that all green jobs programs create good jobs by covering the programs with disclosure requirements, job quality standards and clawbacks (which allow the government to reclaim public subsidies if recipients fail to fulfill their job creation and job quality promises).
  
  
• Solution: Work with state legislative allies to develop “green strings” in existing economic development subsidy programs so structures built or improved with taxpayer dollars are built to green building standards, driving the market for green skills and materials.
  
  
• Solution:  Pass a version of the Oregon Energy Efficiency and Sustainable Technology Act of 2009, which established a loan program for home and small business weatherization and efficiency.  This law contains labor standards for contractors that do the weatherization and efficiency work; failure to comply can result in certification revocation. 
  
  
• Solution:  Call on Congress to fully fund the Green Jobs Act of 2007’s training programs. 
  

Invest in a 21st Century Workforce

Problem:  Massive job losses, rapid technological change, global competition and stagnating wages and benefits have left today’s workers and their families with anxiety and uncertainty about their prospects for good jobs and upward mobility.  We need greater systematic public investment in education and skills-development programs linked to economic policies that support high-wage job creation, improved living standards and stronger worker bargaining power. 

• Solution:  Provide additional unemployment insurance benefits for workers in approved training programs.  Under certain conditions, a few states currently provide extensions beyond the standard period for UI benefits.  Such extensions can be critical for workers in training programs that last longer than the standard period for UI benefits. 
  
  
• Solution:  Establish a program for apprentices to receive college credits for accredited apprenticeship programs and apply those credits towards two- or four-year college degrees.   
  
  
• Solution:  Expand support for career and technical education at the high school level.  
  
  
• Solution: Call on Congress to retool and modernize the Wagner-Peyser Act to establish a stronger federal-state partnership that can make available (through online tools and counseling services) accurate up-to-date information about job vacancies, labor market trends, emerging careers, requirements for skills, education and credentialing and the availability and quality of education and training programs in communities.
  
  
• Solution: Urge Congress to pass a federal jobs training initiative to get Americans back to work quickly in high-growth sectors, while creating career paths so incumbent workers can upgrade their skills and advance into quality jobs with family-sustaining wages and benefits.
  
  
• Solution:  Call on Congress to reauthorize the Trade Adjustment Assistance (TAA) Act.  A greatly improved version of TAA was enacted in the 2009 ARRA, but it expires on Dec. 31, 2010.  Unless Congress takes action, TAA will revert to its weaker version and then terminate completely on Sept. 30, 2011.

Problem:  The share of representation from labor on workforce investment boards is too small.  The Workforce Investment Act (WIA) system provides employment and training services to unemployed, disadvantaged and underemployed adults, dislocated workers and youths through a network of One Stop Career Centers governed by state and local workforce investment boards (WIBs).  Under federal law, only two representatives from labor must be on each WIB; the majority are business representatives. 

• Solution:  Increase labor representation on workforce investment boards.  California passed a law in 2007 requiring that 15 percent of the members of WIBs be from labor.