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As Federal Cash Flows to Unions, Democrats Hope to Reap the Rewards

BRIDGEPORT, W.Va. — In the mid-1970s, when Mark Raddish wasn’t more than 11 years old, his coal-mining grandfather picked him up from a mining camp and took him a thousand feet underground, to the cold darkness beneath West Virginia. There, he imparted a lesson.

“You don’t want to make this your livelihood,” warned his grandfather, a union miner, Mr. Raddish recalled. “These guys don’t know if they’re going to come home at night to see their mom or dad, to see their brothers and sisters or their little boy or girl.”

He did as he was told, getting an education and landing a pipe fitters’ union job for Mylan Pharmaceuticals. When that job was sent overseas, he took a leap of faith late last year and signed on as West Virginia Employee No. 2 for Sparkz, a California-based electric vehicle battery start-up. The company was enticed here, in the wooded hills outside Bridgeport, W.Va., in part by generous federal tax subsidies and in part by the United Mine Workers of America, which is recruiting out-of-work coal miners for the company’s new plant in a faded industrial park.

It is no accident that this plant, rising in place of a shuttered plate-glass factory, is bringing yet another alternative-energy company to rural West Virginia. Federal money is pouring into the growing industry, with thick strings attached to reward companies that pay union wages, employ union apprentices and buy American steel, iron and components.

President Biden and the Democrats who pushed those provisions are hoping that more union members will bring more political strength for unions after decades of decline. White working-class voters, even union members, have sided with Republicans on social issues, and still tend to see the G.O.P. as their economic ally, as well.

But Republicans in Congress — especially in the leadership and tax-writing committees — have for years resisted Democrats’ pro-union efforts, including writing legislation into the tax code and enacting broad policy measures. Republicans have argued that such measures were wasteful, inefficient and would bog down federal projects, in addition to cutting into companies’ profits and adding to inflation.

“What I worry about is how fiscally irresponsible the federal government is going to have to be,” said Rusty Brown, a former official in the Trump administration’s Labor Department.

The Democrats finally broke the Republican blockade, in part because the rising threat of China softened Republican resistance to domestic work and supply requirements, in part because Democrats wrote the most stringent requirement themselves, and passed the pro-labor incentives through Congress with rules that overcame a Republican filibuster.

“For the first time in a long time, we’re building an economy from the bottom up and the middle out,” Mr. Biden declared on Wednesday at the Wisconsin Laborers’ training center north of Madison, “with products made in America and with union labor.”

Money is just starting to flow from the last Congress’s three huge legislative victories — a $1 trillion infrastructure bill, a $280 billion measure to rekindle a domestic semiconductor industry and the Inflation Reduction Act, which included $370 billion for clean energy to combat climate change.

Mr. Raddish and Mitchell Williams, a Sparkz colleague, walking through the company’s new plant in Bridgeport, W.Va., which used to house a plate-glass company.Credit…Andrew Spear for The New York Times
Federal tax credits encourage alternative-energy companies to invest in places like West Virginia that have many retired coal mines and fossil-fuel power plants.Credit…Andrew Spear for The New York Times

Tucked into all of those laws were measures to give unions the power to effectively tell employers: You must pay union-scale wages and use union apprenticeship and training programs, so you might as well hire union workers.

“I think it’s a renaissance for the labor movement, especially for the building trades, to take this upswing and open our eyes,” said Mike Knisley, executive secretary and treasurer of the Ohio State Building and Construction Trades Council.

Labor Organizing and Union Drives

  • Apple: After a yearlong investigation, the National Labor Relations Board determined that the tech giant’s strictly enforced culture of secrecy interferes with employees’ right to organize.
  • N.Y.C. Nurses’ Strike: Nurses at Montefiore Medical Center in the Bronx and Mount Sinai in Manhattan ended a three-day strike after the hospitals agreed to add staffing and improve working conditions.
  • Amazon: A federal labor official rejected the company’s attempt to overturn a union victory at a warehouse on Staten Island, removing a key obstacle to contract negotiations between the union and the company.
  • Electric Vehicles: In a milestone for the sector, employees at an E.V. battery plant in Ohio voted to join the United Automobile Workers union, citing pay and safety issues as key reasons.

This month, the most powerful incentives went into force: tax credits for clean energy and energy efficiency projects funded by the Inflation Reduction Act. The tax credits increase in value fivefold if federal contractors pay “prevailing wages,” or wage rates generally set by unions; use “qualified” apprenticeship programs that are usually run by unions; and buy steel, iron and manufactured components that are made in the United States. Contractors that claim the credits but fail to abide by the rules face stiff fines and penalties.

The scale of those incentives was intentional: Democrats who wrote the Inflation Reduction Act made them so generous that Senate tax aides said it would be considered “fiduciary malfeasance” not to take advantage of them.

For companies like Sparkz, a 30 percent tax credit to offset the cost of investments in clean energy jumps to 40 percent if the investment lands in areas with retired coal mines or fossil-fuel power plants. Form Energy, which manufactures batteries to store power generated by alternative sources like wind and solar using iron instead of more difficult-to-find minerals, is building a plant in Weirton, W.Va, an old steel town.

If you build a clean-energy power plant on the site of a retired dirty-energy plant, you can take even more off the price of the investment.

“This is clearly saying, ‘Thou shalt create jobs,’” said Sanjiv Malhotra, the chief executive of Sparkz.

President Biden at a union training center this week in DeForest, Wis. “For the first time in a long time, we’re building an economy from the bottom up and the middle out,” he declared.Credit…Kenny Holston/The New York Times

Beyond the inflation act, Democrats, with help from a few Republicans, were able to add prevailing wage requirements to the semiconductor bill. And both the Energy and Transportation Departments are making clear that access to unions, payment of prevailing wages and commitments to local hiring will be big advantages for competitive bidders seeking infrastructure and highway electrification projects, though Republican governors like Joe Lombardo in Nevada are trying to block some of those requirements.

For union leaders, the federal legislation could prove to be a spectacular gift, if they can meet the demand for union workers and persuade those workers to reward the politicians who provided their jobs.

But that is a big “if.” Asked whether Mr. Biden or the man instrumental in many of the tax subsidies, Senator Joe Manchin III of West Virginia, were receiving credit in an overwhelmingly Republican state, Sparkz’s first two employees in the state, Mr. Raddish and Mitchell Williams, 24, shrugged.

“That’s all hush-hush,” Mr. Raddish said. “I don’t know.”

For the unions, the trajectory seems clear. Between the construction of semiconductor plants, the building of electric-vehicle charging stations and the expansion of broadband internet, leaders of the International Brotherhood of Electrical Workers foresee more work than union members for at least the next decade. That means they have to step up organizing.

“We are absolutely bringing more workers into the union,” said Bill Hamilton, business manager of the I.B.E.W. local that is staffing an enormous Intel semiconductor plant under construction outside Columbus, Ohio.

The leadership of the Plumbers and Steamfitters Local 81 in Syracuse, N.Y., is scrambling to bring in thousands of new members to satisfy the project labor agreement governing Micron’s expansive chip plant under construction north of the city. Mr. Biden highlighted such accords last week as he talked up infrastructure projects in Baltimore, New York and New Jersey. He also promoted them on Wednesday in Wisconsin, where he hailed projects in Green Bay and Columbia County.

“People don’t realize how much is in the pipeline right now,” said Mark Muro, a senior fellow at the Brookings Institution who is tracking the Biden administration’s industrial policies. “There’s a fundamental delivery challenge, but it could become a tremendous opportunity for unions.”

Mr. Brown, who is now with the anti-union Freedom Foundation, noted that private-sector unions were at a low ebb, representing only about 10 percent of the private work force.

“When you’re writing laws that pretty much require companies to use labor unions, that means you’re discriminating against 90 percent of the population,” he said.

“We’ve always been an energy state,” said Mr. Williams, a business development manager for Sparkz, the electric-vehicle company. “This is the same concept, just a different type of energy.” Credit…Andrew Spear for The New York Times

But union leaders say they are intent on strengthening labor’s power — and rewarding its allies. Mr. Hamilton said the I.B.E.W. was including education on the labor movement and an explicit section tying politics to job creation in its revamped training programs.

“We want to get 80 percent of our membership into that education program before the next presidential election,” he said.

Construction unions are targeting veterans, women and workers of color to bring into the movement.

“It goes hand in hand with what we see is going to be a big increase in our work force,” said Mark Douglas, the president of the Ohio State Building and Construction Trades Council. “We have to make sure they’re educated as to how these things work, and we’re very pleased with everything that’s happened from Washington with the Biden administration.”

That could be good news for endangered Democrats up for re-election in 2024. They include Mr. Manchin, who won tax incentives to locate plants near abandoned coal mines and closed coal-fired power plants, as well as Senator Sherrod Brown, Democrat of Ohio, who secured union-scale wage requirements in the semiconductor bill.

An ironworker apprentice training this week in Columbus, Ohio. Union labor is being used for a large Intel semiconductor plant that is under construction outside the city.Credit…Maddie McGarvey for The New York Times
An apprentice at the training center in Columbus.Credit…Maddie McGarvey for The New York Times
Another ironworker apprentice at the training center in Columbus.Credit…Maddie McGarvey for The New York Times

Not all of the new money will favor organized labor. Joseph W. Kane, another Brookings researcher, said more than three-quarters of the $864 billion for roads, bridges and other projects would go to state and local governments through old spending formulas with no special strings attached.

“There’s a lot of D.C. happy talk where you have people seeing transformational, once-in-a-generation spending,” Mr. Kane said. “The reality on the ground is very different.”

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