Senator Barack Obama, Senator John McCain, Senator Hillary Clinton
The candidates’ Websites reveal little about specific policies, so we will look at some legislative history on the issues. At her Website, Hillary Clinton says she will “empower our workers and ensure that all Americans contribute their fair share. Hillary will ensure that unions, which have played an important role in forming and sustaining the middle class, are strong. She will also ensure that trade policies work for average Americans. Trade policy must raise our standard of living, and they must have strong protections for workers and the environment.” As to innovation, she claims, “The core of my plan is to create the high wage jobs for the future — and we’ll do that by restoring our role as the world’s innovation superpower. That’s what America does best. This country was built on innovation. As president, I will lead our nation to create millions of new jobs by investing in clean energy and doubling investments in basic and applied research. I’ll implement a national strategy to bring broadband — and the information economy — to every corner of our country. I’ll improve math and science education, and open up science and engineering to more of our people.” Further, Hillary will finance her investments in innovation without increasing the deficit by devoting a portion of the revenue from ending tax breaks for companies that shift jobs overseas.
Barack Obama affirms both free trade and enforcement of free-trade agreements. “Obama will fight for a trade policy that opens up foreign markets to support good American jobs. He will use trade agreements to spread good labor and environmental standards around the world and stand firm against agreements like the Central American Free Trade Agreement that fail to live up to those important benchmarks. Obama will also pressure the World Trade Organization to enforce trade agreements and stop countries from continuing unfair government subsidies to foreign exporters and non-tariff barriers on U.S. exports.” For labor, “Obama will strengthen the ability of workers to organize unions. He will fight for passage of the Employee Free Choice Act. Obama will ensure that his labor appointees support workers’ rights and will work to ban the permanent replacement of striking workers.”
John McCain advocates participation in the world trade agreements. “The U.S. should engage in multilateral, regional and bilateral efforts to reduce barriers to trade, level the global playing field and build effective enforcement of global trading rules. John McCain understands that globalization will not automatically benefit every American. We must prepare the next generation of workers by making American education worthy of the promise we make to our children and ourselves. We must be a nation committed to competitiveness and opportunity.”
Employment Rights
Labor law is at the heart of policy disputes on outsourcing and offshoring.
Regarding workforce globalization, a 2006 federal report suggested that some U.S. policies are reported to actually encourage and reward foreign business operations. It claimed that offshoring was encouraged by the “relatively weak requirements for U.S. firms, compared with European counterparts, to pay severance or negotiate with unions over plans to move jobs overseas.” The impact of globalization upon employment translates into political policies that pit the employee against the employee. Such policies relate to the Worker Adjustment and Retraining Notification (WARN) Act, civil rights laws, and other workplace rules. No longer is it sufficient, argue the Democrats, to allow the employers to terminate employees at will. In contrast, Republicans would oppose such legislation as not providing a fair balance between employer and employee for the risks of conducting a business and employing personnel.
Even without any new legislation, several existing laws and regulations protect workers and provide a modicum of assistance when an employment is terminated due to globalization (offshore outsourcing). These include unemployment compensation, trade adjustment assistance under the Trade Adjustment Assistance Act, the Consolidated Omnibus Budget Reconciliation Act (COBRA) benefits for continuation of medical insurance for up to 18 months and early access to re-training and other services, including counseling services, available under the Workforce Investment Act of 1998.
Globalization is not the only force causing displacement of workers. Employment is also lost to automation under business-process methods that reduce error rates, increase productivity, streamline inefficiencies, permit customers to use the Internet for self-service and self-help at all stages in the customer relationship, and generally integrate enterprise resources planning software (e.g., Oracle and SAP) to avoid duplication of inputs. Industry consolidation also results in job losses.
The WARN Act of 1988, that was enacted over President Reagan’s veto due to its advance notification requirements. Since its enactment, the Democrats have sought to make it into a worker protection framework to protect against automation, outsourcing and offshoring. Democrats from states, with significant erosion of employment due to global competition, proposed an Early Warning And Health Care For Workers Affected By Globalization Act, that would erect a whole new set of protections and procedures for U.S. employers to comply with before terminating employment due to “plant closings,” or “mass layoffs.” It would enlarge the number of protected workers and increase the number of employment-related events that would trigger mandatory notifications.
More precisely, while such draft legislation does not add “offshore outsourcing” to the list of events requiring employers to notify their employees and governmental officials, it does just the same in spirit. It would extend WARN Act coverage to part-time employees. It would reduce the number of terminated employees from 50 to 25 as a trigger for notification, without regard to the size of the employer organization. (Thus, for an employer with 10,000 employees, a mass layoff of just 0.4 percent of employees would require WARN Act notifications.) Like prior attempts by Senators Clinton, Kerry and Edwards in 2004, this draft legislation would also increase the warning period from 60 to 90 days before the effective date of the termination of employment, thus exposing the employer to significant risk of sabotage, featherbedding and disruption from protected workers. As a combination of provisions, the draft legislation would create a statutory six-months’ severance package for all terminated employees for employers having 100 or more employees. The bill would automatically double the back pay and benefits of terminated employees for even inadvertent non-compliance, and employer who acted in good faith would not be able to limit its liability. Further, the bill would require the employer to pay a worker the amount of 90 calendar days of back pay and benefits (doubled), even where the worker would, in many cases, not have worked 90 days in that time period. Finally, it would prevent the employer from limiting liability under current law by capping damages at back pay for no more than one half the number of days that a worker has been employed.
Additional burdens would be imposed on employers that offer group health-insurance plans. Insurance continuation rights for terminated employees would be extended under COBRA (a general law for all employees to continue group coverage by paying post-termination group insurance premiums for individual coverage), particularly for those employees claiming rights under the Trade Adjustment Assistance Act of 1974. This change would apply to workers who have attained age 55, or has completed 10 or more years of service with the same employer.
Finally, the proposed legislation would spawn a new class of employment lawyers who represent terminated employees. Under the draft law, an employer and an employee could not settle their mutual claims unless the settlement is “negotiated by the Secretary [of Labor], an attorney general of any State, or a private attorney on behalf of affected employees.” As a result, employers could not negotiate severance payment in excess of wages during the notice period as additional consideration for a waiver of claims under the WARN Act, without the intervention of such new class of attorneys. In light of the common fact pattern spawned by a “mass layoff” or “plant closing,” the employees’ lawyers could be expected to file class action lawsuits, thus increasing settlement costs by a third (on a contingent fee basis), enriching the lawyers and reducing the employer’s assets without increasing the severance payments collected net by the employees.
