[Senate Hearing 117-259]
[From the U.S. Government Publishing Office]
S. Hrg. 117-259
SHOULD TAXPAYER DOLLARS GO TO COMPANIES THAT VIOLATE LABOR LAWS?
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HEARING
before the
COMMITTEE ON THE BUDGET
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
May 5, 2022
__________
Printed for the use of the Committee on the Budget
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
U.S. GOVERNMENT PUBLISHING OFFICE
47-606 WASHINGTON : 2022
COMMITTEE ON THE BUDGET
BERNARD SANDERS, Vermont, Chairman
PATTY MURRAY, Washington LINDSEY O. GRAHAM, South Carolina
RON WYDEN, Oregon CHARLES E. GRASSLEY, Iowa
DEBBIE STABENOW, Michigan MIKE CRAPO, Idaho
SHELDON WHITEHOUSE, Rhode Island PATRICK TOOMEY, Pennsylvania
MARK R. WARNER, Virginia RON JOHNSON, Wisconsin
JEFF MERKLEY, Oregon MIKE BRAUN, Indiana
TIM KAINE, Virginia RICK SCOTT, Florida
CHRIS VAN HOLLEN, Maryland BEN SASSE, Nebraska
BEN RAY LUJAN, New Mexico MITT ROMNEY, Utah
ALEX PADILLA, California JOHN KENNEDY, Louisiana
KEVIN CRAMER, North Dakota
Warren Gunnels, Majority Staff Director
Nick Myers, Minority Staff Director
C O N T E N T S
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WEDNESDAY, MAY 5, 2022
OPENING STATEMENTS BY COMMITTEE MEMBERS
Page
Chairman Bernard Sanders......................................... 1
Ranking Member Lindsey Graham.................................... 4
WITNESSES
Statement of Mr. Christian Smalls, President, Amazon Labor Union. 5
Prepared Statement of........................................ 26
Statement of Mr. Sean O'Brien, General President, International
Brotherhood of Teamsters....................................... 6
Prepared Statement of........................................ 28
Statement of Mr. Greg Leroy, Executive Director, Good Jobs First. 8
Prepared Statement of........................................ 39
Statement of Ms. Rachel Greszler, Senior Research Fellow,
Institute for Economic Freedom, The Heritage Foundation........ 10
Prepared Statement of........................................ 42
Questions and Answers (Post-Hearing) from:
Senator Lindsay O. Graham................................ 72
Statement of Mr. Glenn Spencer, Senior Vice President, Employment
Policy Division, U.S. Chamber of Commerce...................... 12
Prepared Statement of........................................ 49
Statement of Mr. Thomas Costa, Director, Education, Workforce,
and Income Security, Government Accountability Office (GAO).... 23
Prepared Statement of........................................ 52
Questions and Answers (Post-Hearing) from:
Senator Lindsay O. Graham................................ 74
Senator Alex Padilla..................................... 76
SHOULD TAXPAYER DOLLARS GO TO COMPANIES THAT VIOLATE LABOR LAWS?
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THURSDAY, MAY 5, 2022
U.S. Senate,
Committee on the Budget,
Washington, DC.
The Committee met, pursuant to notice, at 11:00 a.m., via
Webex and in Room SD-608, Dirksen Senate Office Building, Hon.
Bernard Sanders, Chairman of the Committee, presiding.
Present: Senators Sanders, Kaine, Van Hollen, Padilla,
Graham, Grassley, Crapo, Braun, and Scott.
Staff Present: Warren Gunnels, Majority Staff Director; and
Nick Myers, Republican Staff Director.
OPENING STATEMENT OF CHAIRMAN SANDERS
Chairman Sanders. Okay. Let us get to work.
Let me first thank all of our witnesses for being here, and
we look forward to hearing your testimony. Let me thank Ranking
Member Graham for his cooperation and that of his staff.
And today we are going to be discussing a very important
issue that gets much too little attention here in the halls of
Congress or in the corporate media, and that is that in a time,
as everybody knows, when the middle class of this country is
struggling, when people are working longer hours for lower
wages, when half of our people live paycheck to paycheck, when
people cannot afford health care, they cannot afford childcare,
they are finding it hard to fill up their gas tanks, all over
this country there is a growing movement on the part of workers
to try to organize and form unions, because they understand
that if you have a union you are going to have better wages,
better working conditions, and better benefits.
And yet, at exactly the same time that working people are
standing up and fighting back and are interested in joining
unions, we are also seeing that there are hundreds of
corporations in the United States, including some of the very
largest, that receive Federal contracts that amount to many
billions of dollars, they receive huge subsidies, they receive
special tax breaks, and they receive all kinds of corporate
welfare, despite the fact that these very same companies are
engaging in widespread illegal behavior, including massive
violations of labor law.
And the question that we are asking today is a very simple
one. Should Federal taxpayer dollars go to companies that
violate labor law and illegally prevent workers from exercising
their constitutional rights to join a union?
While corporations engaging illegal activities against
union organizing is not new, and it is widespread, this morning
we are going to focus on one company, Amazon, who, as we speak,
right at this moment, is engaged in massive well-funded anti-
union activity.
As I think all of us know, just last month Amazon workers
in Staten Island voted to form the first union at Amazon--and
Amazon is one of the largest employers in the country, almost 1
million workers--and this followed a union-organizing attempt
at an Amazon warehouse in Bessemer, Alabama, and organizing a
union in Bessemer, Alabama, ain't easy, and we thank those
workers who are here with us today for joining us from
Bessemer.
From the very beginning of the union-organizing efforts
until today, Amazon has done everything possible, legal and
illegal, to defeat union-organizing efforts. The National Labor
Relations Board, NLRB, found that Amazon's flagrant disregard
of the law infringed on workers' legal rights to a free and
fair union election in Bessemer, Alabama, ruling that Amazon's
behavior was, quote, ``dangerous and improper.'' That is the
National Labor Relations Board.
To date there are currently 59 unfair labor cases against
Amazon pending at the NLRB. Amazon is currently being sued by
the NLRB to reinstate a worker who was illegally fired for
organizing a union. Several current and former employees have
alleged that Amazon has engaged in illegal harassment and
discrimination based on race, gender, and sexual orientation.
And that is not all. Amazon has already been penalized more
than $75 million for breaking Federal discrimination and labor
laws. Amazon misclassifies delivery drivers as independent
contractors, rather than employees, to evade tax, wage, and
benefit responsibilities. Amazon's inadequate workplace safety
policies also pose grave risks to workers, and I hope we will
be able to discuss that a little bit today. If you can believe
it, and, Mr. Graham, Senator Graham, this is really rather an
astounding fact, according to a New York Times investigation,
Amazon has a 150 percent turnover rate--150 percent. Workers
come into these warehouses, they are worked as hard as humanly
possible, and then they leave, often crushed. And a whole set
of new workers then comes in to replace them. Is that really
the kind of business model that we should be rewarding with
massive Federal contracts?
Further, in some locations, Amazon's workplace injury rates
are more than 2.5 times the industry average, and that may be
understating the case because not all injuries are reported.
Last December, six Amazon workers died after they were required
to continue working during unsafe weather conditions in a
warehouse that did not have appropriate safety facilities or
policies.
It is abundantly clear that time and time again Amazon has
engaged in illegal, anti-union activity. Further, Amazon cannot
even come to grips with the reality that the workers in Staten
Island won their union election fair and square. In order to
stall the process out, their lawyers have appealed that
decision result to the NLRB. Their strategy is obvious, and I
look forward to discussing that with our panelists. They are
going to stall and stall and stall. In every way possible they
are refusing to negotiate a first, fair contract with the
Amazon Labor Union.
So today my question to Jeff Bezos, who is the second-
wealthiest person in our country, worth about $150 billion, is
a pretty simple one, and it really speaks to the kind of
corporate greed and excessive greed that we are seeing right
now in America. Mr. Bezos, you have enough money to buy a $500-
million yacht. You have got enough money to buy a $175-million
estate in Beverly Hills and a $23-million mansion right here in
D.C. Given all of your wealth, how much do you need? Why are
you doing everything in your power, including breaking the law,
to deny Amazon workers the right to join a union so that they
can negotiate for better wages, better working conditions, and
better benefits? How much do you need?
And the answer is not complicated. What Mr. Bezos
understands and what he is fighting is the reality that union
workers in America earn about 20 percent more than non-union
workers, on average. Mr. Bezos understands that 79 percent of
union workers have a defined benefit pension plan, compared to
just 17 percent of non-union workers. Mr. Bezos understands
that union workers are half as likely to be victims of health
and safety violations compared to non-union workers. And that
is why Mr. Bezos and Amazon have spent over $4 million last
year on union-busting consultants and lawyers. That is why
Amazon is forcing workers to attend captive anti-union
meetings. Take a group of workers--they do not have any
choice--put them in a room, and you brainwash them with anti-
union propaganda. And that is why Amazon has fired workers
simply because they are pro-union.
Well, my message to Mr. Bezos is this, and that is that all
over this country people are standing up and fighting back for
economic justice. They are tired of seeing billionaires get
much richer while they cannot afford health care or childcare
or, in fact, in some cases, the ability to feed their families.
So we say to Mr. Bezos, stop the intimidation. Stop the
harassment. Stop the coercion. Stop the illegal behavior. Start
treating your workers with the respect and dignity they
deserve. They are the people who made you your billions. Give
your workers a seat at the bargaining table. Give all of your
workers the freedom to join a union if that is what they choose
to do.
In the presidential campaign, then-candidate Joe Biden
promised, and I quote, ``to institute a multi-year Federal
debarment for all employers who legally oppose unions,'' end of
quote, and to, quote, ``ensure Federal contracts only go to
employers who sign neutrality agreements, committing not to run
anti-union campaigns,'' end of quote. That was what candidate
Joe Biden said.
In my view, that campaign promise was precisely right, and
today I am reviewing my request to President Biden to fulfill
that promise. That is what you said on the campaign trail.
Let's do it.
President Biden, more than any other President in my
lifetime, has talked over and over again about being pro-union,
and I appreciate the President's words and I believe him to be
sincere. He is pro-union. In my view, however, the time for
talk is over. The time for action is now. Taxpayer dollars
should not go to companies like Amazon who repeatedly break the
law. And we are talking about billions and billions of dollars
in contracts.
No government--not the Federal Government, not the state
government, and not any city government--should be handing out
corporate welfare to union-busters and labor law violators.
Senator Graham.
OPENING STATEMENT OF SENATOR GRAHAM
Senator Graham. Thank you, Mr. Chairman. I really enjoy
working with you but wow. This Committee is taking a very
dangerous turn under your leadership, to be honest with you.
You are singling out a single company because of your political
agenda to socialize this country. Every time I turn around you
are having a hearing about anybody that makes money is bad, the
government needs to grow beyond our ability to pay for it, and
we are going to have an election on your ideas here soon, and I
cannot wait.
As to the process, there is a process in this country. If
you feel like the law has been violated in your efforts to
unionize the workforce you can file a complaint, people have a
hearing, and there is a process to debar companies who engage
in illegal behavior. There is a process.
This is a political process here. This is an effort to get
an outcome you want, using the United States Senate as your
vehicle. This is very dangerous. You can have oversight
hearings all you like, but you have determined Amazon is a
piece of crap company. That is your political bias. They are
subject to the laws of the United States. They should be
subject to this.
If we get the Committee back, we are not going to do this.
We are going to talk about how to save Social Security, keep
Medicare from becoming insolvent, how to change the structural
problems of our debt. I will talk to you about climate change,
what happens if you electrify all the vehicles in the country.
What does that mean for power producers? I would like to work
with unions--I have got an uncle who was a vice president of a
union, paper mill union--to bring jobs back into America. I
would like to work with companies, unions, and the private
sector to become energy independent again.
So I am not here to demagogue the union process in this
country. I am here to say that if you are a business you can
have say too about your workforce. The idea that you can only
get a government contract if you promise to be neutral is
ridiculous.
Boeing is in South Carolina, making the 787. There have
been efforts to unionize Boeing. They lose. The people in that
plant will make that decision. The idea that Boeing cannot
argue the merits of a right-to-work environment for their
business is ridiculous, and I think patently illegal.
This is a heavy-handed approach, the most radical agenda in
my lifetime, and it should be carried out at the ballot box,
and it will be. If we take this body back, this demonization of
individual companies that are subject to the law will cease.
Thank you.
Chairman Sanders. Thank you. Now we all are going to hear
from our panelists, and I thank them very much for being here.
We have five panelists: Mr. Christian Smalls, Mr. Sean O'Brien,
Mr. Greg LeRoy, Ms. Rachel Greszler, Mr. Glenn Spencer.
Let me begin with Mr. Christian Smalls. Mr. Smalls is the
President and Founder of the Amazon Labor Union. Mr. Smalls has
been organizing labor actions at an Amazon warehouse in Staten
Island, known as JFK-8, since 2020. The JFK-8 warehouse voted
in favor of unionizing with representation of the American
Labor Union on April 1st. Mr. Smalls, thanks very much for
being with us.
STATEMENT OF CHRISTIAN SMALLS, PRESIDENT, AMAZON LABOR UNION
Mr. Smalls. Thank you for having me. Well, first of all I
want to address Mr. Graham. First off, it sounded like you were
talking about more of the companies and the businesses in your
speech, but you forgot that the people are the ones who make
these companies operate. We are not protected, and the process
for holding these companies accountable is not working for us.
That is why we are here today. That is the reason why I am
here, to represent the workers who make these companies go. And
I think that it is in your best interest to realize that it is
not a left-or-right thing. It is not a Democrat or Republican
thing. It is a workers thing. It is a workers' issue, and we
are the ones that are suffering in the corporations that you
are talking about, the businesses that you are talking about,
in the warehouses that you are talking about.
So that is the reason why I think I was invited today, to
speak on that behalf, and you should listen because we do
represent your constituents as well. So just take that into
consideration that the people are the ones that make these
corporations go. It is not the other way around.
As the current interim President of the Amazon Labor Union,
who represents 8,300 workers in Staten Island, an independent
worker-led union that won their election on April 1st, I am
going to tell you this. We organized for over a year, and
throughout the course of that year Amazon spent millions of
dollars, as you mentioned, Senator Sanders, myself, including a
few other organizers, were arrested outside for organizing,
arrested for delivering food to their co-workers. I wanted to
reiterate that as well.
You know, the type of things that Amazon does, breaking the
law, intimidation, these are real things that traumatize
workers in this country. Thousands of workers across this
country are in the process of organizing, who have decided to
organize in the United States. We want to feel that we have
protections, and we want to feel that the government is
allowing us to use our constitutional right to organize.
The notion that people united in this democracy will
outmatch tyranny is the oldest American ideal. There is a
clearly defined legal process to do this, and workers like us
have the rights, protected by the First Amendment and the
National Labor Relations Act. However, despite all of this, our
victory in Staten Island was lauded as newsworthy and
inspirational for the thousands of workers across the country,
hundreds of thousands of workers. And even though we may have
won, we did everything right pressuring Amazon to recognize our
victory and comply with our legal obligation to meet us at the
bargaining table, but Amazon is refusing to do so. As you
mentioned, they are going to stall. They filed 25 objections,
and they got the NLRB to move the hearing to a whole other
location.
To me, it just sounds like the corporations have the
control and they control whatever they want. They break the
law, they get away with it. They know that already, that
breaking the law during these election campaigns will not be
resolved during the election campaigns. So they purposely
continue to break the law.
For example, we filed over 40 Unfair Labor Practices (ULPs)
in 11 months. Most of them, quite a few of them got merit for
the action. Some of them even got injunctions. For example,
Gerald Bryson, who was fired two years ago, finally, over two
years later, there is a 10(j) in motion for his reinstatement.
Another prime example, Daequan Smith, was fired by the
company for organizing. He is still out of a job. He is living
in a shelter right now. We raised money through GoFundMe. These
are just a few examples, including myself, who has been out of
a job for the last two years.
I want to just end off by saying this. We need to pass the
Protecting the Right to Organize Act (PRO Act) so that workers
are protected and workers are encouraged to organize. And if
that does not work, you know, I am going to let you know right
now that on behalf of the Amazon Labor Union and the hundreds
of thousands of workers across this country, that we will
continue to organize. And once again I want to remind you that
this is not a left or right thing. This is a working-class
issue, and the workers at the bottom are the ones who make
these corporations go.
Thank you.
[The prepared statement of Mr. Smalls appears on page 26]
Chairman Sanders. Mr. Smalls, thank you very much.
Our next panelist is Sean O'Brien. Mr. O'Brien is a fourth-
generation Teamster and the General President of the
International Brotherhood of Teamsters, one of the largest
unions in this country, with some 1.4 million members.
Mr. O'Brien was the youngest person elected as President of
Teamsters Local Union 25, a position for which he was reelected
six times. He was sworn in as the 11th General President of the
Teamsters this March. Mr. O'Brien, thanks so much for being
with us.
STATEMENT OF SEAN O'BRIEN, GENERAL PRESIDENT, INTERNATIONAL
BROTHERHOOD OF TEAMSTERS
Mr. O'Brien. Thank you very much. Good morning Mr. Chairman
and members of the Committee. My name is Sean O'Brien. I am the
General President of the International Brotherhood of
Teamsters. Thank you for the opportunity to appear before you
today to discuss Amazon, its labor and business practices, and
its relationship with the Federal Government.
To put it plainly, it is wrong for our government to be
giving taxpayer dollars in the form of Federal contracts to
companies like Amazon. You are rewarding employers who
repeatedly, knowingly, and purposefully violate Federal labor
laws, drive down wages and standards in core Teamster
industries, and create dangerous working conditions.
To be clear, President Joe Biden is the most pro-union
President of our lifetime, and the Teamsters Union applauds his
Administration's actions on issues of great concern to working
families.
We proudly support President Biden's Executive orders on
pay equity and $15-an-hour minimum wage requirements for
Federal contractors, and the recommendation for Federal
procurement included in the White House Task Force on Working
Organizing and Empowerment will support and encourage
responsible, high-road employers. But as Chairman Sanders has
said, we have the power to completely stop companies that break
labor law from receiving Federal contracts, so why are we not
doing it?
As we already know, Amazon is a habitual lawbreaker. The
company was found guilty last year of illegally firing two
workers after they advocated on behalf of their coworkers at an
Amazon warehouse. Amazon broke labor law in Alabama when
workers tried to organize, forcing their election to be rerun
this year. In December, the NLRB cited Amazon for illegally
threatening, surveilling, and interrogating workers who were
trying to start a union at the Staten Island facility.
These kinds of actions make something very clear. When
workers try to organize, Amazon breaks the law. When workers
raise their voices, Amazon does whatever it takes to shut them
up, because Amazon is terrified of the power workers have when
they act collectively.
Sadly, while Amazon acts with impunity to break the law,
our government recently saw fit to award the company a $10
billion Federal contract for cloud computing services. While
our government was spending taxpayer dollars on Amazon Web
Services, the company reportedly spent $20,000 per week on
union-busting consultants in Staten Island alone.
What is more alarming is we know that these numbers barely
scratch the surface of what Amazon spends to prevent workers
from having any voice whatsoever on the job. Americans have the
fundamental right to join a union together and bargain
collectively over the terms of their employment.
The Federal Government, under the National Labor Relations
Act, has a mandate to encourage worker organizing and
collective bargaining and to promote equality of bargaining
power between employers and employees. As President Biden's
Executive order on Worker Organizing and Empowerment boldly
states. But our government ignores that mandate with every
dollar that it puts into the pockets of Jeff Bezos and his
organized crime syndicate known as Amazon. Why are elected
officials giving taxpayer money to a company that is willing to
use any available means--illegal or not illegal--to deny
workers their federally protected right? Why are we supporting
the growth of a company that is destroying good middle-class
jobs, creating unsafe working conditions, and assuming no
responsibility for much of its workforce?
As a Teamster, I have faced countless union-busting
companies. As a proud Bostonian from a tough neighborhood, I
have confronted my fair share of schoolyard bullies too. Let me
tell you, you do not take a beating from a bully, then fill his
pockets with money and expect fewer beatings. Amazon has been
beating up on American workers for too long, and our government
has been letting them do it, and it needs to stop.
Amazon relies on an exploitive business model that is
simply brutal for workers. The company's punishing pace of work
results in worker injury rates that are nearly twice as high as
that of all other non-Amazon warehouse facilities. Amazon
employees are seriously injured at rates nearly 80 percent
higher than the rest of the entire warehouse industry. Amazon
accounts for all warehouse worker injuries, yet the company
only employs a third of all workers nationwide. Why is our
government rewarding this behavior? Why are we not doing more
to actually protect American families?
As the General President of the Teamsters' Union, a union
that represents more than 1.2 million working people, I have
been traveling the country a lot this year, spending time with
workers face-to-face, and I will tell you this: working people
of all parties are losing faith in our government.
It feels like big business is the only thing our government
cares about. What happened to ``We the People''? Billionaires
pay little to no taxes and then they are handed billions more
by our government after they break the law. When our government
turns a blind eye to Amazon's lethal and illegal practices, it
feels like the system is rigged against everyone but the rich
and powerful.
But working people are not stupid. We see what is going on
here. It is long past time for the pendulum to swing back to
the side of hard-working families in this country. To this
Committee and to the entire Federal Government, do your duty to
protect American workers. We are watching, we are listening,
and we are voting. Tell Amazon that enough is enough, and then
show them you mean business. Do not give this company, or any
employer, another penny until the labor laws of this land are
truly upheld and workers' voices are finally heard.
Thank you very much.
[The prepared statement of Mr. O'Brien appears on page 28]
Chairman Sanders. Thank you very much, Mr. O'Brien.
Our next panelist is Mr. Greg LeRoy. He is the Executive
Director of Good Jobs First, which he founded in 1998. Good
Jobs First is a national policy resource center for grassroots
groups and public officials promoting corporate and government
accountability.
Mr. LeRoy, thanks a lot for being with us.
STATEMENT OF GREG LeROY, EXECUTIVE DIRECTOR, GOOD JOBS FIRST
Mr. LeRoy. Thank you, Mr. Chairman, and Committee members
for the opportunity to be here. My name is Greg LeRoy and I
direct Good Jobs First, a nonprofit, nonpartisan research
center on economic development incentives and corporate
accountability.
We believe that companies which receive government economic
development subsidies or procurement contracts should be held
to the highest standards of corporate ethics. Government money
should not keep going to any company that violates laws, rules,
or regulations intended to protect workers, consumers, free
markets, or the environment. Otherwise, public dollars are
subsidizing corporate behavior that is at odds with the policy
objectives of economic development and ethical procurement.
Amazon.com is perhaps the most aggressive company in
America today seeking economic development subsidies. Since
2012, when it opened its Economic Development Office, it has
been averaging almost 20 state and local subsidy awards per
year, for data centers, warehouses, office buildings, and its
various subsidiaries. They now total almost $4.2 billion. Last
year alone, Amazon pulled down 20 deals worth at least $700
million.
These understate the rate of subsidization. Some of the
subsidies are not fully disclosed. For example, sales,
property, or utility tax exemptions granted to some of their
data centers are incompletely or wholly undisclosed in some
states.
According to the Wall Street Journal in 2017, the top
management team gave the economic development team at Amazon a
goal of extracting $1 billion per year in subsidies.
It is also very aggressive seeking government procurement
contracts, especially for its profitable cloud-computing
division, Amazon Web Services (AWS). In 2013, AWS was awarded a
contract by the Central Intelligence Agency worth up to $600
million over 10 years. It was later, in 2020, along with four
other companies, awarded a new cloud computing contact for the
intelligence community reportedly worth tens of billions of
dollars over multiple years, and now recently the new NSA award
for $10 billion for the NSA Hybrid Compute Initiative.
Less well known than these high-profile Federal contracts
is Amazon's push into local and state procurement. It began
that push in 2016, and now claims to sell to 90 of the biggest
cities and counties in the United States, and 45 state
governments buy at least once a month from them. It is one of
the two fastest-growing segments in the company's sales, the
company wrote last year.
So it is clear that public economic development and
procurement dollars are deeply baked into Amazon's business
model.
Given that fact, we believe that Amazon should be held to
the highest ethical standards of conduct, and if it fails to
meet those standards it should be disqualified from both
government contracts and development subsidies.
In addition to the company's widely reported Unfair Labor
Practices that my fellow panelists have already discussed,
Amazon or its subsidiaries have been penalized scores of times
by Federal or state regulatory agencies or as a result of
private litigation on workplace issues, such as wage and hour
violations. Five wage and hour cases totaling almost $82
million include a Federal Trade Commission penalty--and I am
quoting the Commission now--saying, ``a final administrative
consent order against Amazon, which agreed to pay more than
$61.7 million to settle charges that it failed to pay Amazon
Flex drivers the full amount of tips they received from Amazon
customers over a two-and-a-half-year period.''
Amazon entities have been penalized dozens of times by the
Federal Aviation Administration for air safety violations and
more than 20 times by the Occupational Safety and Health
Administration, or OSHA, for workplace safety violations.
When a company violates workers' rights to freely organize
a union that contradicts a fundamental idea within economic
development and public procurement, that idea being that public
dollars should always serve to raise living standards and
reduce inequality, never to suppress wages or suppress benefits
and thereby exacerbate inequality. Otherwise, why would we
collectively favor a company with subsidies or contracts? Why
would we pay a company to make inequality worse?
Corporate recidivism is a longstanding problem in the
United States, and many have observed that it continues because
penalties are not stiff enough, especially personal penalties
for top executives. We at Good Jobs First submit that losing
government contracts and subsidies might get the attention of a
company like Amazon that is so wed to public dollars.
Thank you.
[The prepared statement of Mr. LeRoy appears on page 39]
Chairman Sanders. Thank you very much, Mr. LeRoy.
Our next panelist is Ms. Rachel Greszler, who is a Senior
Research Fellow with the Institute for Economic Freedom at The
Heritage Foundation. Ms. Greszler's work focuses on retirement
and labor policies such as Social Security, disability
insurance, pensions, and worker compensation.
Ms. Greszler, thanks very much for being with us.
STATEMENT OF RACHEL GRESZLER, SENIOR RESEARCH FELLOW, INSTITUTE
FOR ECONOMIC FREEDOM, THE HERITAGE FOUNDATION
Ms. Greszler. Chairman Sanders, Ranking Member Graham, and
members of the Committee, thank you for the opportunity to be
here today.
Regarding the question of taxpayer dollars going to
companies that violate U.S. labor laws, the Federal contracting
process is not an appropriate or effective way to address the
apparent concerns. It would do far more harm to taxpayers and
strip Americans of vital services, including health care and
national security, than it would to penalize the targeted
companies. Moreover, a Federal judge issued an injunction
against a similar Obama order in 2016, and Congress already
struck down individual agencies' similar blacklisting rules in
2017.
A more relevant question for the Budget Committee, given
the $30 trillion Federal debt, reckless spending, high
inflation, and an unprecedented labor shortage is how can
policymakers promote a better-functioning labor market with
more people working and with real incomes rising instead of
falling? To that end I would like to briefly consider the
current labor market conditions and evaluate two different
labor policy approaches.
Today's labor market is unlike any before in history.
Massive government spending, financed by the Fed's printing of
money, has artificially increased demand while other government
policies have discouraged work. That has contributed to a
record high 11.5 million job openings. There are almost two
jobs available for every unemployed worker.
Employers are responding to the labor shortage by providing
greater flexibility, expanded benefits, including a 64 percent
increase in workers with access to paid family leave, and also
higher pay. In March alone, 49 percent of employers reported
that they increased compensation.
But despite the fact that average earnings are up $3,300
over the past year, the average worker is $1,600 poorer after
inflation. The problem is that when employers are forced to
raise compensation without workers actually producing more they
have to raise their prices, and that adds to the inflationary
cycle.
Similarly, unions' use of muscle as opposed to merit-based
compensation increases, leads to higher prices and fewer jobs.
Policies like protecting the Right to Organize Act that
prioritized union membership over workers' desires would add to
inflation, fail to meet many workers' needs, and ultimately
lead to a smaller labor force and lower incomes. Under the PRO
Act, workers could lose a lot, including their right to a
secret ballot union election, the privacy of their personal
information, the choice of joining a union and paying union
dues, the ability to be their own boss, and the opportunity to
own a franchise business.
Most troubling to me, as a mother of six young children, is
the PRO Act's attack on independent workers. Fifty-nine million
Americans participated in independent or freelance work this
year. During the pandemic it was a lifeline to many, including
12 percent of the entire workforce that started freelancing in
2020.
Independent work is growing because people want it. They
report greater work-life balance, less stress, better health,
and the same or higher incomes. For many people, it is
independent work or no work. Half of those who freelance say
they do it because they cannot work for a traditional employer.
Closing off opportunities for people to work in the way that
they want and need may increase union dues but it will not help
workers and it will not help the economy grow.
Instead of attempting to recreate the workplace of
yesteryear, dominated by unions, manufacturing, and men,
Congress should modernize labor laws. First, policymakers
should protect flexible and autonomous work by clarifying in
law that people who control their own work can be independent
contractors.
Congress should also protect the franchising model by
codifying the longstanding precedent that franchise owners are
their workers' sole employer. The Employee Rights Act includes
these two important provisions, along with other important
worker-first policies like privacy protections, secret ballot
union elections, and the right to earn a raise.
Congress could alleviate worker and union clashes by
respecting both parties' rights to choose. That is, by ending
forced unionization and also ending exclusive representation so
that workers are not forced to join unions and unions are not
forced to represent workers that do not join them.
Finally, policymakers should help expand lower costs and
more effective education alternatives by reducing higher
education subsidies and allowing things like industry-
recognized apprenticeship programs that have proven effective
at helping workers.
The future of work requires an agile and expanding
workforce, not a one-size-fits-all model, so lawmakers' goals
should be to allow more people to gain the skills they need, to
work in the jobs they want, to choose the employment
arrangements that work best for them, and to earn rising
incomes that allow them to pay for what they want and to pursue
what they desire.
Thank you.
[The prepared statement of Ms. Greszler appears on page 42]
Chairman Sanders. Thank you.
Our last panelist we will be hearing from virtually, and
that is Mr. Glenn Spencer, who is the Senior Vice President of
the Employment Policy Division at the U.S. Chamber of Commerce.
In this role he oversees the Chamber's work on traditional
labor relations, wage hour and worker safety issues, and state
labor and employment law, among other issues.
Mr. Spencer, thanks very much for being with us.
STATEMENT OF GLENN SPENCER, SENIOR VICE PRESIDENT, EMPLOYMENT
POLICY DIVISION, U.S. CHAMBER OF COMMERCE
Mr. Spencer. Chairman Sanders, Ranking Member Graham, and
members of the Committee, I appreciate the opportunity to speak
to you today.
The U.S. Chamber of Commerce directly represents 300,000
businesses and represents approximately 3 million more through
our federation partners. These businesses take seriously their
obligations to follow all laws, including those involving labor
and employment matters. These businesses devote considerable
time, talent, and resources towards achieving compliance.
The unfortunate truth, however, is that some laws are less
than clear and can be extremely complex. The same applies to
regulations implementing those laws. In addition, these laws
and regulations sometimes overlap, and there are additional
laws and regulations at the state level. Take, for example,
independent contracting. There are multiple standards just at
the Federal level. The IRS, the Department of Labor, and the
National Labor Relations Board all use different tests. In
addition, there are state tests, and some states use separate
tests for wage and hour, workers compensation, and unemployment
insurance. The result is a confusing patchwork of laws and
regulations that can be challenging to understand.
This type of complexity, which occurs across numerous
areas, is why we see so much litigation around labor and
employment issues. Two people can look at the same factual
situation and draw two different conclusions about whether a
particular workplace policy is compliant. This is why it is
important not to jump to conclusions about whether a company
has actually violated the law. Upon further review by agency
officials or a court, allegations can be found to be without
merit.
All of this leads to the question of whether an additional
penalty structure for contractors, up to and including
debarment, is an appropriate policy. As a general matter,
Congress has concluded that it is not. Statutes like the
National Labor Relations Act, for example, articulate a
specific penalty structure that does not include restrictions
on contracting, or debarment.
Moreover, Congress has declined to pass numerous proposals
to amend the penalties in the NLRA, including labor law reform
legislation in 1978, the Employee Free Choice Act, and most
recently the Protecting the Right to Organize Act.
Where Congress has affirmatively spoken on the question of
contracting and additional penalties it has rejected that
concept. In 2017, Congress used the Congressional Review Act to
overturn the so-called Fair Pay and Safe Workplaces regulation,
which sought, in part, to require contractors to report
violations of labor and employment laws to their contracting
agencies with the ultimate threat of the loss of Federal
contracts as a penalty.
While there are undoubtedly many reasons Congress has
chosen this course of action, one factor might be that while
many businesses participate in Federal contractor--by some
estimates as many as 25 percent of employers--these businesses
specialize in different services. Preventing a company from
participating in Federal contracting would limit the ability of
the Federal Government to seek out the most efficient and
effective provider of a particular service. In some cases that
service might not be available at all. For example, some
national defense products are produced by just one lead
supplier, an issue of particular salience as we look at our
policy in Ukraine.
Administrations of both parties have often used the Federal
contracting process to impose policies that they could not get
through Congress. For example, the Biden administration
required contractors to pay a minimum wage of $15 per hour. The
Trump administration attempted to block contractors from
certain types of diversity training. The Obama administration
required contractors to provide paid leave. And the Bush
administration required contractors to post notices about union
rights.
Without commenting on the wisdom of any of these policies,
the unifying theme is that these were issues that did not
receive congressional approval. The justification claimed was
the authority of the Federal Property and Administrative
Services Act. However, courts are starting to question the
limits of that law, with cases in numerous courts of appeals.
So as the Committee contemplates the question of restrictions
on contracting or debarment as an enhanced penalty, it should
be mindful of those limits.
One additional challenge confronts the idea of imposing
such enhanced penalties via regulation, and that is the very
CRA resolution that was passed in 2017. Under the CRA, a rule
that is struck down ``may not be reissued in substantially the
same form.'' This is a significant barrier.
In conclusion, Congress has enacted numerous labor and
employment statutes. Each of those statutes contains specific
penalty provisions. If the consensus in Congress is to change
those penalty structures, Congress is free to do so. However,
attempts to do so administratively are likely to run into the
barrier of the CRA, and may also face greater scrutiny by the
courts.
Again, thank you for the opportunity to speak to the
Committee today.
[The prepared statement of Mr. Spencer appears on page 49]
Chairman Sanders. Mr. Spencer, thank you very much.
Let me begin my questioning by responding briefly to
Senator Graham. I think he suggested that a hearing like this
is radical. And you know what? I think he is right. In a
Congress dominated by corporate lobbyists and wealthy campaign
contributors, the idea that we would actually hear from the
working class of this country is, in fact, radical, but I make
no apologies for that.
Let's begin with Mr. Smalls. Mr. Smalls, if you could,
describe a little bit about the pressures that exist at Amazon
when workers have decided that they want to form a union.
Mr. Smalls. Absolutely. Well, for one, let me first just
describe what the environment is. These buildings are 14 NFL
football fields, a million square feet, some of them over a
million square feet. Staten Island, for example, JFK, these
workers are commuting from all five boroughs, and New Jersey as
well, so their commute could be anywhere between 2\1/2\ to 3
hours each way, not including their 10- to 12-hour shift if
they are full-time. Only subjected to a 30-minute lunch period
and two 15-minute breaks. If you work 12 hours you get 45
minutes and two 15-minute breaks.
So just think about that by itself, just working under
those conditions as well as enduring union-busting, which
Amazon flies in hundreds of union-busters from all over the
country, pretty much all over the world. There are some now
coming from overseas as well.
They come into the facility and they isolate workers every
single day to question them, pretty much gaslighting them,
acting like they are working to improve the conditions but
really are just polling to see who is pro-union and who is not.
They report that information back to management. They have
captive audiences every single day. For example, at JFK, they
did them every 20 minutes. They brought in classrooms the size
of 50 to 60 workers, drilled anti-union propaganda into their
heads for nearly an hour, and they did this four times a week.
Every single day workers come in, they go right to a captive
audience.
So imagine being a new hire at Amazon. Your second day, you
do not even know your job assignment, and the first thing they
do is march you into an anti-union propaganda class.
Other examples are they post and plaster the building with
anti-union propaganda. You walk in and the first thing you see
is ``vote no.'' You walk in and the first thing you see is
union dues coming out of your check, they calculate union dues
without even knowing how a union operates. They pretty much
spread rumors and lies about the union members, trying to claim
that this independent worker-led union that are all Amazon
workers are some third party. The lied and said that the union
dues, the money is going to go towards my financial gain.
Pretty much the demonized myself as the union representative,
saying that I have a vendetta because I was fired two years
ago, wrongfully.
Other things that they do, they use the police to
intimidate the workers. There was a large presence in Bessemer.
I remember when I went down there for the first campaign they
had police at every entrance. The same thing in Staten Island.
They used the police at all our demonstrations. Myself and two
other organizers were arrested, not once but twice, and we are
still sitting here, as we speak, on papers because of that.
Chairman Sanders. Senator Graham, I am going to take an
extra two minutes, and I will give you an equal amount of time.
Let me ask President O'Brien. Do non-union companies that
pay workers low wages with no benefits and repeatedly break the
law and have an unfair advantage when they compete for Federal
contracts and subsidies with companies that obey the law and
have a union contract?
Mr. O'Brien. The answer to that question, Mr. Chairman, is
absolutely. You know, we represent 1.2 million working people
in various industries. We have a similar company under contract
that has a 70-year history with the Teamsters Union, that does
and has a proven model of what it is to work for a unionized
workforce and still remain very profitable and very successful.
Those jobs are 67 percent at UPS, part-time jobs, which provide
full-time benefits--full-time health care and full-time pension
contributions.
But more importantly, it provides a means to an end. Unlike
Amazon, when you go to work and they have a 150 percent
turnover, that is criminal. When you go to work at UPS, as a
part-timer, you know that at some point in time you have a
means to an end for a full-time career, delivering packages and
parcels.
And, you know, I think the one thing that is getting lost
in this whole testimony is we are talking, and we are all
entitled to our opinions, and that is the beauty about being an
American, but we do have a proven model that worked. It worked
through the toughest economic time when there were no
vaccinations but people needed goods and services delivered.
Our Teamster members, whether it was at UPS, whether it was in
the freight division, whether it was picking up rubbish or
stocking and delivering essential groceries to people, we
proved our worth. We proved our value. And, you know, Amazon
workers should have that same ability and/or any workforce that
is being taken advantage of or retaliated for their beliefs.
Now as far as a competitive advantage, when employers use a
subcontracting or an independent contractor model they are not
paying benefits. They are not paying retirement. They may be
skirting the laws as far as wage and hour violations go. They
have a significant competitive advantage with a service that is
awful. If you go to any neighborhood right now and you talk to
an Amazon subcontractor or, as I think was referred to by one
of my panelists as an opportunity to be their own boss, that is
the furthest from the truth. They have to buy the vehicle or
lease the vehicle from Amazon. They have to wear the uniform
that Amazon says. They have to follow policies and procedure.
It sounds like not being their own boss to me.
Look, in any event we need this. We need the PRO Act. We
need America to do the right thing. If someone does something
wrong in their neighborhood they are held accountable. Amazon
needs to be held accountable, and how you hold people
accountable is taking back some of these contractors until they
are a responsible employer.
Chairman Sanders. Thank you very much. Senator Graham.
Senator Graham. Thank you. One way you should not hold
people accountable is have a hearing where you make
accusations. There is a legal system. You reach conclusions and
you want a result that I think would do a lot of damage to the
country. That is what is radical here, is we have taken a
single company, you have brought people making accusations.
There is a legal system in this country to complain about
unfair labor practices.
But what you have done here today is you have tried and
convicted Amazon. You have taken anecdotal testimony and said
Amazon is the worst offender on the planet, of the workplace.
All I can say is that Mr. Smalls, had you filed a complaint
when you thought you were wronged?
Mr. Smalls. Have I?
Senator Graham. Yes.
Mr. Smalls. The Attorney General of the State of New York
has on my behalf.
Senator Graham. Okay. But you had a process where somebody
could advocate for your interest.
Mr. Smalls. There is a process that is not working.
Senator Graham. Okay. Well, that is your opinion.
Mr. Smalls. It is a fact.
Senator Graham. Now let me ask you this. Do you believe
that if you are in a workplace you should be required to join a
union?
Mr. Smalls. I believe that we should have the right to
choose to join a union.
Senator Graham. Okay. So you would agree with me that if
you did not want to join a union you should not be made to do
so.
Mr. Smalls. Who is making them do that?
Senator Graham. The PRO Act. You have to pay union dues
whether you agree to it or not.
Mr. Smalls. I do not believe that is correct. I think the
PRO Act is giving----
Senator Graham. Ms. Greszler, is that correct?
Mr. Smalls [continuing]. Assuming you could do that.
Ms. Greszler. Yes. That is precisely what the PRO Act does
is that as a condition of being employed at a company you have
to pay union dues.
Senator Graham. So this is a good deal for the unions,
right?
Mr. O'Brien, do you support the idea that if you receive a
government contract as a company you must sign a statement of
neutrality regarding unionization?
Mr. O'Brien. I definitely believe in that, sir.
Senator Graham. Yeah, well I do not.
Mr. O'Brien. If that is your opinion, that is great.
Senator Graham. And let me tell you why I do not. Because
that means if you are Boeing in South Carolina and you want to
do business with the military you cannot give the other side of
the story why unionization may hurt productivity and is not the
best way for the worker.
So unionization efforts in this country have gone from 11.9
percent to 10.3 percent, of the private sector workforce,
including government employees, I think, maybe non-government
employees, are down to 6.1 percent. Maybe people are listening
to what you are having to say and want to go a different way.
Maybe they do not want to pay dues to a union because they work
at the site that has been unionized. Maybe people are making a
different choice. The number of people joining a union in this
country is going way down. Is it due to the abusive behavior of
all the companies or is maybe people want to make an individual
choice?
I had an uncle who was in a paper mill union. I love him
dearly. I understand the union argument, and let people listen
to it. I just want the employer to be able to give the other
side of the story.
Ms. Greszler, in your view, this idea of requiring
companies to sign a neutrality agreement to do business with
America, what would that lead to?
Ms. Greszler. Well I think that is actually unfair to
workers. Companies are required to notify workers of things
that are important to them in their workplace, and what we are
doing here is preventing workers from having that right to know
something that is significant for the future of their work.
Senator Graham. This is not about righting wrongs, because
there is a system to do that. This is about getting an outcome
you want. There was a Staten Island vote Monday where the union
effort was rejected 62 to 38. If you believe this panel, the 62
percent of the people are crazy. They do not know what they are
doing. They were intimidated, and maybe they just made a
different choice.
Chairman Sanders. Thank you. Senator Kaine.
Senator Kaine. Thanks, Mr. Chairman. Thanks to all of you.
Very, very interesting testimony.
I said at a hearing, Mr. Chair, I think about two weeks ago
here, that maybe I am not fit for this line of work because I
was born with a paintbox that has no broad brushes in it. And
so, I mean, I will start with you, Mr. President.
I do not challenge some of the facts that my Chairman laid
out, or that you have laid out, and I think some compelling
stories, but I do not think Amazon is an organized criminal
syndicate.
Mr. O'Brien. It definitely is the way they treat their
workers, sir, with all due respect.
Senator Kaine. Yeah. Yeah. So I know that is your opinion
and you are as sincere in stating that as I am in saying that I
think that is a vast overstatement.
Amazon employs a million Americans. Not everyone hates
their jobs at Amazon. Thousands of them work in Virginia, and
not everyone hates their job at Amazon. Amazon is going to open
a huge headquarters in Northern Virginia that was going to have
25,000 employees, but after New York said ``we do not want
you'' it is going to be 35,000 employees in Northern Virginia,
and Virginians are very excited about it. It is in probably the
bluest part of Virginia and the County Board of Supervisors
there is thrilled to have Amazon.
Mr. Smalls, I agree with you. I do not care one whit about
Jeff Bezos. I think the workers make Amazon go, and the
customers, the customers that use Amazon, they use it because
they think it is convenient. And during the pandemic, when they
were at home and they did not want to go to some places because
they were worried about their health, Amazon usage went up. We
cannot wave a magic wand and make customers suddenly not like
Amazon.
So I would say I just do not see it. All the facts that
have been laid on the table are facts that I am now going to
dig into with some of the others on the panel. But I think you
have to acknowledge, a million employees and customers that
find Amazon to be somebody good they want to work with, that
is, at least, also a fact that has to be put on the table.
My view is coming from the way I come from. I come from a
very pro-labor household, and I am a PRO Act supporter, and I
am going to talk about why. My dad was management. He ran an
ironworking shop that was organized by the ironworkers, and we
all grew up working with union ironworkers in my family. It was
my dad and my mother and my two brothers and me, and in a good
year, five employees and in a great year, seven employees. My
dad was on the ironworker pension fund as the management
representative, and he just taught us, growing up, unions and
management should not be fighting. It should be a team.
And I hope we would want to be a team without owners
kicking workers around and without employers being demonized. I
mean, Democrats, if we want to love jobs, we have got to also
work with those that are building companies that create jobs.
Now I want to get over on why I am a PRO Act supporter
because I think, Ms. Greszler, you said a couple of things that
I do not think are true. You said the PRO Act gets rid of the
secret ballot. No it does not. It strengthens the secret
ballot. There were earlier bills in Congress that got rid of
secret ballot, like the Employee Free Choice ACT (EFCA).
But what the PRO Act does is it requires a secret ballot if
the employer wants it. If the employer does not want to accept
cards at more than 50 percent the employer can require a secret
ballot, and there will be a secret ballot. Unless the employer
conducts such unfair labor practices during the election, then
the NLRB can order that that showing of a majority of the
workforce wants a union will go into effect. I think that
solidifies secret ballot.
The other thing the PRO Act does on secret ballot is this:
under current law, employers can decertify a union without a
ballot. If they feel like they have evidence that there is no
longer majority support, an employer can decertify a union. The
PRO Act says you cannot decertify a union without a secret
ballot.
So I have heard you and others come up here and say, oh,
the PRO Act gets rid of secret ballot. I think that is just a
flat-out misstatement. I have heard it made over and over
again. It does not. It actually strengthens secret ballot.
Mr. Smalls said he thinks people should have the choice
about a union. You should have a choice to vote for a union or
not. And if a majority votes for the union, the law has been,
for decades, that the union then has to represent the entire
bargaining unit.
The PRO Act does not require that you join the union if
there has been a successful election. It does require that you
make some payment to the union for that representation so that
you are not a free rider. If the union is obligated to bargain
for somebody whether they join the union or not, get them
benefits, get them health care, get them pensions, why should
they be able to get that for free? If we are going to respect
the democracy of a vote for a union then you are going to get
some benefit from it. What is your right to just be like a free
rider on that?
The other thing about the PRO Act that really convinced me,
Mr. Chair, and this goes to Mr. Smalls' testimony about them
waiting you out. We have a National Labor Relations Act that
says, okay, you have got to have a campaign and have an
election. So if the union wins the election, should there not
be a contract? I mean, it would see if the union wins the
election, should there not be a contract?
Well the average number of days it takes after the union
wins an election--and they do not always win--but after the
union wins an election the average number of days to get to a
contract is 409 days, and about a third of victorious unions
cannot get a contract in the first three years because the
employer just stonewalls.
So what the PRO Act does is it requires that after a
successful union election, after there has been a democratic
determination by the workers that they want a union, that you
have to produce a contract within a certain period of time and
if you do not it goes to arbitration, that seems completely
fair to me. Otherwise, you are not respecting the democratic
desire of workers for a union.
The Chairman did a nice thing. He came down to Virginia to
celebrate five Richmond Starbucks, that recently unionized. I
was out with the Starbucks employees during that time. And
another one, Mr. Chair, in Farmville, just unionized a couple
of days ago. And I strongly supported their right. If you want
a union--I am not telling you what you should want, but if you
want a union, you should have it. And once they voted to have a
union, they should be entitled to have it and get a contract
within a reasonable period of time.
I just hope, you know, we can--I do not know. Maybe I am
naive thinking that the world can work the way it did in my
dad's ironworking shop, you know, and that if workers vote for
a union that they would not be kicked around, they would not be
harassed, they would not be fired, they would not be
stonewalled. But we get to the business of creating a working
relationship that is a productive one for everyone.
The last thing I will say, and Mr. Chair has heard me say
this before. My dad used to always tell us, ``Listen, my
business acumen is going to put all my workers' kids into
career programs, union programs, or colleges, but you boys''--
my brothers and me--``you guys need to remember that the
artistry of these ironworkers is going to put all you guys
through college.''
I just hope we might have an economy that people view
themselves as on the same team.
Thank you, Mr. Chairman.
Chairman Sanders. Senator Kaine, thank you. Senator Braun.
Senator Braun. Thank you, Mr. Chairman.
Senator Kaine, I do not think you are naive. I think that I
came here today knowing that there would not be many of us
here, number one. Coming from Main Street where 37 years prior
to becoming a Senator I ran a business, and you do not have
high turnover if you have high wages. You do not have accidents
at your business that are way out of norm if you run it like
your own family is working there. If you are conscientious for
your employees it is kind of a moot point, and sooner or later
it works itself out.
I had 15 employees for 17 years. Lucky, finally, that it
scaled into a larger business. Lived with low overhead,
hardscrabble. All along the way--and I mentioned it about
eight, nine years ago when I was awarded an entrepreneur's
recognition, and mentioned at that get-together that high wages
and good benefits should be the hallmark of running a business,
growing it, and return on investment. I saw some kind of
reaction out in the crowd, which would have been mostly Chamber
of Commerce, other entrepreneurs.
But if you do it, you know, a union is probably not going
to be necessary, but when you look at concentration in
industries, you look at Amazon itself. They have actually
created a new mousetrap that will have its own reconciliation
in terms of where that can be scalable. It is not going to be
scalable ultimately if you have 150 percent turnover rates or
if you have accident rates way above the norm.
So do we resolve it here? Do we put regulations in place?
Sometimes you have got to. But I do believe the system, in the
long run, will take care of itself. And when you have got big
concentration in industries you are going to get folks like me,
from the entrepreneurial business side, that do not like it.
Most of us do not have lobbyists. Most of us do not business
partner with the Federal Government like large companies do. So
you have got to be careful that you do not stereotype I think
what has made this country great, which would be mostly Main
Street entrepreneurs, many small businesses, where they are as
blue-collar as a blue-collar job would be working for a larger
company because they make their earnings out of those
businesses.
So when you get in situations where it is egregious, sooner
or later you will be held accountable. Standard Oil did. The
telephone business did.
I have been railing, along with the Chair here, about the
health care industry. It costs too much. Everybody in this day
and age ought to be entitled to health care that you have got
access to, whether it is provided by an employer--some have to
turn to government--that does not cost you twice as much, in
some cases, as what it does in other countries. That is why you
have hearings like this.
All of this has to blend together. It does not necessarily
have to be mandated by government. But when somebody does get
out of line, when wealth gets too concentrated, when you have
got 150 percent turnover rates, high accident rates you are
going to have to have a medium to vent your grievances, and
unions, vis-a-vis large companies, probably the only way you
can do it.
I have always been a believer that you can organize, but
you can never let something get out of hand to where it gets
too far the other direction, and never lose sight of what has
made the country great. It has been based upon hard-working
individuals. The town I come from is blue-collar entrepreneurs.
We all play together, we work together, and we get along
together. And when you pay the highest starting wages,
basically, in the lowest unemployment areas your business
prospers and your employees do along with you.
I have always had a beef too, owning a business, CEO pay of
150 times the average workers. That is not going to work. You
know, I never did it in my own business. I would have been
embarrassed to do it. On the other hand, you want to make sure
you do not squash innovation, entrepreneurialism, because that
is what makes our country great. And that has got to walk
alongside workers benefitting along the way.
That is my two cents. That is why I came today. Thank you.
Chairman Sanders. Thank you, Senator Braun.
Senator Van Hollen is with us virtually.
Senator Van Hollen. Thank you, Mr. Chairman, and let me
thank all of our witnesses today.
Mr. Smalls, you mentioned in your testimony that in
addition to firing you, Amazon also fired Gerald Bryson, who
was one of the other protest leaders. Amazon claimed Mr. Bryson
was fired for statements he made in an argument with a co-
worker, but here is how an NLRB administrative judge described
Amazon's review of Mr. Bryson's conduct that led to his illegal
firing.
And I am quoting now from the judge: ``An ostrich-like,
head-in-the-ground investigation that seeks to avoid evidence
which might disclose information mitigating the employee's
misconduct,'' unquote. In other words, Amazon deliberately
ignored the facts, deliberately misrepresented the situation,
and that is why the NLRB ordered Amazon to reinstate Mr. Bryson
with back pay and found that his termination had been wrongful.
So, Mr. Smalls, you know Mr. Bryson. Why do you believe,
why did Amazon fire Mr. Bryson?
Mr. Smalls. A few things. Number one, he is Black. Number
two, he was protesting alongside with myself and others over
COVID-19, which was running rampant at the time. New York was
the epicenter. So they wanted to, once again, silence the
organizers that were advocating for that, myself include. You
know, I am still unemployed as we speak.
Senator Van Hollen. And when a company like Amazon takes
that kind of action in retaliation for a protest, does that
make it more difficult for you to organize?
Mr. Smalls. Of course it does. It is the intimidation
factor. You know, they fire the people that are speaking up.
Everybody else would not want to come forward because they
think it is going to happen to them.
Senator Van Hollen. Yeah. So, you know, and here is the
thing about our system. It took two years, or a little longer
than two years for this particular case to wind its way through
the NLRB and get a decision from an NLRB judge. By that time
the damage is already done, not just to the person wrongfully
fired but also to the organizing effort. We have just got to
dramatically improve this system, and that is why we want to
provide additional resources to the NLRB and make other
reforms.
You know, I chaired a hearing just earlier this week in the
Appropriations Committee. I chair a subcommittee called the
Financial Services and General Government Subcommittee. And I
discussed with the IRS Commissioner the fact that we already
debar, we already prevent Federal contractors who do not pay
their taxes from getting government contracts, right? It makes
sense that if you are not paying your taxes on time you should
not benefit from a contract that taxpayers are funding.
We also will hear later from the GAO witness, on the second
panel, that Federal contractors can also be debarred for
violations of the Service Contract Act, and the existing
Federal acquisition regulations provide for debarring Federal
contractors for any offense indicating a lack of business
integrity or honesty.
Mr. LeRoy, given that we already have these provisions in
place for violating tax laws, service contract laws, and other
circumstances, why would we not also say that for contractors
who are engaged in serious violations of labor law that they
would be prohibited from getting Federal contractors, at least
for some period of time?
Mr. LeRoy. I wholly agree, Senator, and I am proud to say
that I am a Maryland resident and that you represent us very
well.
Looking at the Department criteria for some of the General
Services Administration, even state governments, they all have
procedures. We are simply saying we want to elevate labor law
to the same magnitude and significance as tax law or integrity
law or antitrust law, and I think that is a very reasonable
thing to do. It is saying we care about workers and we are not
going to pay companies to degrade or places suppressed wages
make inequality worse.
Senator Van Hollen. Just in my closing seconds here, Mr.
Spencer, should we have a carve-out? In other words--and I am
trying to hear where we would agree that there has been a
significant violation of labor law, right--would you agree that
that is the kind of violation that, at least for a period of
time, should disqualify a contractor from getting a taxpayer-
funded contract?
Mr. Spencer. What I would say is I think I agree with you,
or your point that there is a procedure in place currently,
under the Federal acquisition regulations to determine whether
a contractor is suitable to receive a contract.
I used to work in the Federal Government so I knew
contracting officers when I was there. I still know some of
them now, and I trust those folks to use their best judgment
when evaluating a contract as to the suitability of an
individual contractor.
I would just point out one thing here, not to talk about
Amazon, but one of the things that they did during the
pandemic, as we recall, there was a dramatic expansion in the
unemployment insurance system to provide benefits to people who
were out of work. Amazon Web Services helped some of the states
deal with the computer upgrades that needed to happen, to make
sure that those benefits could be paid on time and to people
who had earned those benefits.
So if you are limiting the ability of companies like that
to provide those vital services that is going to inhibit the
ability of people to collect the benefits that they have
earned.
So I would say that I think contracting officers can make
those evaluations and can use their balanced judgment to
determine whether a company is suitable to receive a contract.
Senator Van Hollen. Right. We should not have a situation
where gross violations of labor rights are actually treated
differently than gross violations of other laws that bar people
from getting contracts.
I see I am over my time. Thank you all. Thank you, Mr.
Chairman.
Chairman Sanders. Thank you, Senator Van Hollen. And with
that let me thank all of our panelists for your presentations.
I found them very interesting. Thank you all very much.
And now we are going to hear from Tom Costa with the GAO.
[Pause.]
Chairman Sanders. Mr. Costa, thanks very much for being
with us. Tom Costa is the Director of the Education, Workforce,
and Income Security team at the U.S. Government Accountability
Office. Mr. Costa oversees GAO's work on worker protection,
safety, employment, and training issues. He has worked at the
GAO since 2005.
Mr. Costa, thanks for being with us.
STATEMENT OF THOMAS COSTA, DIRECTOR, EDUCATION, WORKFORCE, AND
INCOME SECURITY, GOVERNMENT ACCOUNTABILITY OFFICE
Mr. Costa. Thank you for having me, Senator. Chairman
Sanders, members of the Committee, thank you for inviting me to
testify about enforcement of the Service Contract Act, or SCA.
The SCA was enacted to provide labor protections for
Federal service contractor employees such as administrative
staff, janitors, security guards, and mail haulers. Contracting
agencies such as the Department of Defense (DoD) or the Postal
Service are responsible for administering the SCA while the
Department of Labor (DOL) enforces the law.
Under the SCA, workers do not have a private right of
action against employers. However, DOL can withhold funds from
a contractor who is found to have violated the SCA to ensure
that workers are paid what they are owed.
My written testimony summarizes the information we reported
in our 2020 report, including what available data revealed
about past SCA cases, challenges the DOL faced in enforcing the
SCA, and challenges contracting agencies faced in implementing
it. Let me start with a high-level overview of what we found.
DOL's Wage and Hour Division conducts investigations in
response to complaints or on its own initiative, carrying out
more than 5,000 investigations from fiscal year 2014 through
2019. Just over half of these cases involved DoD, the largest
Federal contractor, or the Postal Service. DOL found violations
in 68 percent of these completed cases, most of which involved
fringe benefits or wage violations.
In 94 percent of the cases with violations, employers
complied with DOL. And from fiscal year 2014 through 2019,
employers agreed to pay back approximately $224 million in back
wages. DOL also debarred 60 employers during that same time
period, which prevented those employers from being awarded new
contracts for three years.
I will focus the remainder of my statement on the updates
we received from both DOL and the Postal Service in response to
our six recommendations. First, while DOL tracks SCA
information in an enforcement database, we found inconsistent
data entry on Federal agencies hindered its efforts to use the
data for enforcement purposes. For example, the Postal Service
had over 35 different namings in the database. And I am pleased
to say that DOL has closed this recommendation by updating its
database.
Second, we found that DOL lacked a complete picture of the
effectiveness of its enforcement efforts because it did not
analyze the information on its use of enforcement tools such as
compliance agreements or debarments. Without analyzing this
information DOL may not know how best to utilize its resources
in resolving SCA cases. In response, DOL has revised its
tracking system and plans to issue a summary report at the end
of each year. However, while this is a positive first step, DOL
has not indicated how it will analyze that information to see
how effective their efforts are.
For our third and fourth recommendations we found
communication gaps between the Postal Service and DOL. The
Postal Service has the second-largest number of SCA cases of
any agency and the largest number of debarments of any agency.
We recommended that the DOL and the Postal Service develop
written protocols to improve their communication. Both agencies
agreed and have started working on a memorandum of
understanding. However, after some back and forth, we heard
from both agencies that they are waiting for the other to
proceed forward, indicating that the communication gap still
exists.
Fifth, we found that contracting agencies such as DoD and
the Postal Service may have incomplete information about SCA
violations from DOL which could affect their ability to make
fully informed decisions when awarding new contracts. For
example, the contracting agencies might not know that a
contractor had been debarred, and this could increase the
chance that a debarred contractor would get a contract it
should not.
We recommended that DOL take steps to ensure that the
unique contractor identifier be included in debarment records.
According to DOL, it has developed a tool to link these numbers
to both contracting and performance records. However, the
government transitioned this past month to using a new, unique
identifier, and we are not sure yet if DOL has adjusted its
processes to accommodate the new system.
Finally, we found that DOL did not always communicate
enforcement findings in a way that was readily accessible to
contracting agencies. Information on past violations may assist
contracting agencies to determine whether a prospective
contractor has a satisfactory performance record. We
recommended that DOL develop written procedures for relaying
SCA findings to the contracting agencies, and DOL indicated it
is in the process of doing so.
I am pleased that DOL and the Postal Service have taken our
recommendations seriously and begun taking action.
Nevertheless, more needs to be done, and we will continue to
monitor both agencies' efforts.
This completes my prepared statement. I would be happy to
answer any questions.
[The prepared statement of Mr. Costa appears on page 52]
Chairman Sanders. Thank you very much, Mr. Costa.
Let me begin by asking you, are companies with past labor
law violations still getting government contracts? Why is the
Department of Labor not using its debarment authority to
prevent this?
Mr. Costa. Yes. Contractors who get debarred are still
getting contracts. We identified 622 contractors that had SCA
violations that received subsequent Federal contracts worth $35
billion. It is important to note that the SCA, unlike some
other labor laws, does not grade on the scale of severity, so
an honest mistake is treated the same as a willful violation.
That said, DOL did identify 379 cases where there were
previous SCA violations or other violations and the contractor
still got additional contracts. In 19 of those cases, those
contractors were subsequently debarred.
Chairman Sanders. Give us some examples of serious
violations of the law by companies that still have government
contracts.
Mr. Costa. We looked at aggregate data, sir. We did not
look at specific contractors, so I do not know exactly. Under
the SCA it would be wage violations so it would be
misclassifying someone as a much lower-paying position or it
could be denying people their fringe benefits, like paid leave,
vacation time, health benefits, things like that.
Chairman Sanders. How widespread is that?
Mr. Costa. As I noted, there was not too much above there.
Well, I should take that back. In over 5,000 cases DOL found
violations in 68 percent of those cases.
Chairman Sanders. That seems to be pretty widespread.
Mr. Costa. Yes. I am sorry. It was pretty widespread. What
we do not know is the severity of those cases. We know that
only 60 were debarred.
Chairman Sanders. What portion of SCA violations included
violations of other acts such as the Fair Labor Standards Act?
Mr. Costa. Yes. At least 379 cases included either prior
violations of the SCA or violations of other acts like the Fair
Labor Standards Act or the Occupational Safety and Health Act.
Chairman Sanders. Well, let me just thank you for being
here and thank you for the work you are doing. I think the
taxpayers in this country want to know that when their tax
dollars are going to contracts with companies that those
companies obey the law. I do not think that is asking terribly
much. Do you agree?
Mr. Costa. Companies should obey the law. That is correct,
sir.
Chairman Sanders. All right. So I think we are making
progress but we still have a very long way to go. And with
that, Mr. Costa, thanks so much for being with us.
Mr. Costa. Thank you, sir.
Chairman Sanders. As information for all Senators,
questions for the record are due by 12 noon tomorrow with
signed hand copies delivered to the Committee clerk in Dirksen
624. Email copies will also be accepted. Under our rules, the
witnesses will have seven days from receipt of our questions to
respond with answers.
With no further business before the Committee, this hearing
is adjourned.
[Whereupon, at 12:29 p.m., the hearing was adjourned.]
ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD
[Prepared statements, responses to written questions, and
additional material submitted for the record follow:]
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