Labor likes Gov. Tim Walz for vice president — and other labor news

Gov. Tim Walz speaks to union leaders at the annual Minnesota Building and Construction Trades Council convention in Duluth on July 20, 2023. Photo by Max Nesterak/Minnesota Reformer.

Take a seat in the Break Room, our weekly round-up of labor news in Minnesota and beyond. This week: Labor likes Walz for vice president; rising unemployment signals possible recession; Ramsey County goes non-union; undocumented workers pay $222 million in state and local taxes in Minnesota; and unions post record-high pay increases in new contracts ratified this year. 

UAW president likes Walz for veep

United Auto Workers President Shawn Fain told CNN that Minnesota Gov. Tim Walz and Kentucky Gov. Andy Beshear are his two favorites for vice president given their track records of supporting unions.

Fain, a powerful voice in the labor movement since the union’s strike against the Big Three automakers last fall, made the statement after the UAW endorsed Vice President Kamala Harris for president on Wednesday, joining a slew of other large labor unions including the Service Employees International Union, the United Steelworkers and the National Education Association.

Speaking on MSNBC, UAW President Shawn Fain said, “You have one candidate in Trump who represents the billionaire class, I call him the lap dog for the billionaires. And you have a candidate in Kamala Harris, who stands for working class people.”

UAW had already endorsed President Joe Biden — who became the first president to walk a picket line during the union’s Stand Up Strike last fall — for re-election before he decided to step aside.

Walz, a former union teacher, also joined striking auto workers on the picket line at a Stellantis parts distribution facility in Plymouth last October. And he signed into law one of the most significant packages of worker-friendly policies in state history.

More than two dozen Minnesota labor leaders sent a letter to Harris earlier this week recommending Walz for vice president, saying he’s been “an ally of working families” and can “cross lines of race and place.”

Walz is a finalist to be Harris’ running mate along with Beshear and Pennsylvania Gov. Josh Shapiro, who also have the full-throated support of labor. More than 50 Pennsylvania labor leaders endorsed Shapiro for the job this week, the Philadelphia Inquirer reported.

Meanwhile, U.S. Sen. Mark Kelly of Arizona, who is also in the running, made his peace with labor after facing union opposition. He said he would support the PRO Act, which is legislation that would make it easier for workers to unionize.

Sour jobs report comes after months of strong job growth

Unemployment rose to 4.3% in July, according to federal jobs data released on Friday — nearly a percentage point higher than a year prior — signaling the U.S. could be in a recession under the so-called Sahm Rule. (A recession has begun if the three-month average national unemployment rate rises half a percent from its low in a 12-month period.)

However, the woman for whom the rule is named — former Fed economist Claudia Sahm — said the country isn’t necessarily in a recession even though her  rule has been triggered.

The economy has gone through major upheavals in the past four years, from the pandemic to inflation to massive immigration to high interest rates, and so the Sahm Rule may not be as predictive as in the past.

“Adjustments can be hard if they’re big and sudden, and we’ve had a lot of that,” Sahm told Bloomberg Television. “Yet, underneath that, is also a much more typical, pernicious, not good increase in the unemployment rate … And if workers don’t have paychecks, they can’t spend, and that’s the momentum that gets going.”

Weak job growth in the past month also has economists worried. The U.S. economy underperformed expectations last month, adding just 114,000 jobs, far below the average monthly gain of 215,000 over the past year.

Experts say the data show the Federal Reserve has surely waited too long to cut interest rates — making it cheaper for consumers and businesses to borrow money — as it sought to pull off a “soft landing” to bring down inflation without tipping the economy into a recession. Fed Chair Jerome Powell said earlier this week an interest rate cut could come after their September meeting.

Ramsey County janitors decry switch to non-union contractors

As many as 20 union janitors face losing their jobs after Ramsey County decided to contract with three new, non-union firms to clean county buildings, MPR News’ Cari Spencer reported.

Ramsey County previously used just one union firm, Triangle Services, which earlier this year agreed to pay workers $20 an hour and pay into a retirement fund as part of a four-year contract negotiated between SEIU Local 26 and a group of about 20 unionized employers.

The agreement came after thousands of janitors went on strike for three days in March.

Ramsey County spokesman Casper Hill told MPR News the county selected multiple contractors to “ensure there would be backup in case any single contractor is unable to take care of a building.”

Triangle Services will still be contracted to clean the Metro Square building — requiring about four workers. The county will also use Kimbal Services, Squeaky Cleaners and PK Property Services, which currently faces allegations of wage theft.

The workers, some of whom have cleaned the county buildings for over a decade, may apply to work at the other companies but would lose their union-negotiated wages, health insurance and retirement benefits.

“What makes me most nervous is the possibility of losing my job at this age in my life because the cost of rent is high, bills are high and I need my health insurance to pay for my medicine I take daily,” said Gladys Carasquillo, 66, in Spanish through an interpreter at a recent board meeting.

Undocumented workers pay billions in taxes

Undocumented workers contributed $97 billion in federal, state and local taxes in 2022, according to a study released Tuesday by the left-leaning Institute on Taxation and Economic Policy.

In Minnesota, undocumented immigrants contributed nearly $222 million in state and local taxes in 2022. The report’s authors estimate these workers’ tax contributions would grow to more than $294 million if given legal work authorization because their wages would likely increase and there would likely be a higher rate of tax compliance.

According to the study, more than a third of the taxes undocumented workers pay go toward public programs they’re ineligible to benefit from, like Social Security, unemployment insurance and Medicare. (Minnesota Democrats passed a law in 2023 that will make undocumented immigrants eligible for state-subsidized health insurance as soon as next year.)

Undocumented immigrants often pay higher income taxes than workers with similar incomes because they are unable to claim tax credits like the Child Tax Credit, while they are also ineligible for most public benefit programs, including cash assistance and food stamps. Undocumented immigrants are not excluded from WIC, which provides nutrition assistance to low-income pregnant women, infants and children up to 5 years old.

Union wage hikes reach record highs

First-year pay raises for union workers averaged 7.3% in contracts ratified in the first quarter of 2024, according to a Bloomberg Law analysis of 155 collective bargaining agreements across the country. Workers’ gains rise to 8% on average when adding in lump-sum payments like ratification bonuses or other one-time payments.

It’s likely the highest quarterly average wage increase in union contracts since 1988 when Bloomberg Law began tracking yearly averages of negotiated wage settlements.

The Midwestern regions saw smaller wage growth in union contracts on average than in the South and West. The region including Minnesota — also Iowa, Missouri, Kansas, Nebraska and the Dakotas — posted a 4.8% increase compared to 10.7% in the Mountain West.