The Inflation Reduction Act (IRA) does many valuable things: It reduces prescription drug prices, combats climate change and makes corporations pay a minimum tax. One of the more consequential and lasting impacts of the new law, however, could be that it highlights how Congress can move forward with pro-worker legislation. Until the Senate filibuster is reformed, the most likely path for Congress to support workers and their labor unions lies with budget reconciliation — the process used to pass the IRA with a simple majority in the Senate.
Creating good jobs — those that pay well and offer decent benefits — is central to the purpose of the IRA. As President Biden remarked earlier this month, the new law will “create thousands of good-paying jobs, apprenticeship opportunities and manufacturing jobs for clean energy construction projects, solar projects, wind projects, clean hydrogen projects, carbon capture projects and so much more.”
The bill does this through policies such as prevailing wage, buy-American and apprenticeship utilization requirements attached to various tax credits. Prevailing wage laws ensure that government spending does not drive down market standards that workers — particularly unionized workers — have been able to maintain. Buy-American preferences will support and create jobs for domestically produced clean technology and materials. Apprenticeship utilization requirements create high-skilled, educated workers who receive on-the-job training and decent pay, often because of a union contract.
With the filibuster increasingly used to block popular legislation, budget reconciliation has become a standard way for Congress to consider major policy, from the Inflation Reduction Act to former President Donald Trump’s 2017 Tax Cuts and Jobs Act (TCJA) to repeated failed attempts to repeal the Affordable Care Act.
While a number of previous budget reconciliation bills have included provisions helpful to workers, such as a 1990 wage requirement for dialysis treatments under Medicare and a paid family and medical leave tax credit in the TCJA, these pro-worker elements were relatively small and ancillary to the goals of the broader legislation. The American Rescue Plan Act (ARPA), a key COVID-19 recovery package that passed in March 2021 through the budget reconciliation process, began to change this dynamic by including a host of pro-worker policies.
The IRA goes even further to completely flip the traditional script — and makes clear that pro-worker policy can be front and center in reconciliation.
Unfortunately, some of the most important and popular pro-worker bills may not fit with the arcane rules of the budget reconciliation process. For example, an increase in the federal minimum wage was scrapped from the ARPA due to the so-called “Byrd” rule.
Still, there are many policies that can walk the reconciliation tightrope. Some, such as increased funding for the National Labor Relations Board, higher fines for labor law violations and a tax deduction for union dues were included in versions of budget reconciliation bills in 2021 and 2022.
Many more policies could likely comply. Corporate union-busting activities should no longer be tax-deductible business expenses. When the government subsidizes firms with tax credits or other incentives, job-quality standards should always be included. Companies that misclassify employees as independent contractors should stop receiving favorable tax treatment. The possibilities could go on and on.
The IRA is not just a win for workers today, but importantly, also highlights the possibilities for more pro-worker policymaking under existing congressional rules. Workers are clamoring for action — from their extremely strong support for unions to the growing number of strikes and organizing campaigns. Policymakers should seize the opportunity in future reconciliation bills to help workers out.
David Madland is the author of “Re-Union: How Bold Labor Reforms Can Repair, Revitalize, and Reunite the United States” and is a senior fellow at the Center for American Progress.
