Will Obama Radically Change Workforce Issues?
First piece of advice: Stay calm. Nobody is really sure what a Democratic Congress and an Obama Administration will mean for workforce issues.
Second piece of advice: Calm doesn't mean complacent. Do some contingency planning. There could be a number of important legislative and regulatory changes coming down the pike - some with the potential to radically shift workforce trends in various areas.
Unionization: For many years, the percentage of U.S. workers who are union members has been in a general decline, with only the smallest of upticks in 2007. Today, just 12.1% of wage and salary employees are in unions (Smerd, 2008a). But some employers are getting nervous about the possibility that this trend will reverse itself if the Employee Free Choice Act (EFCA), which Obama favors, becomes law.
The act would allow employees to choose union representation through a card-check process rather than via a National Labor Relations Board (NLRB) secret election. Employers would have to acknowledge union representation if more than half of workers sign cards in the union’s favor. This would allow workers to bypass the current NLRB process, which some argue favors employers. But opponents say that eliminating the secret ballot election process would invite union coercion and take away workers’ fundamental democratic right to a secret-ballot election, and they worry that the passage of the law could lead to a massive increase in unionization ("Card-check," 2007; Leonard, 2007).
"It's the big daddy of them all," quipped Lary Lorber, a Proskauer Rose employment law attorney and chairman of the U.S. Chamber of Commerce's Equal Employment Opportunity Committee, in Human Resource Executive (Flander, 2008). Because there will not be a filibuster-proof Democratic majority in the Senate in 2009, it's possible that the EFCA will not be able to pass as written, but some believe that even a compromise bill could result in federal mediation of more contracts, which could result in less flexibility for employers (Flander, 2008).
Healthcare Benefits: President-elect Obama favors a major reform that would be a "play or pay" system for employers. That is, companies would either provide healthcare benefits or contribute a part of their payroll toward the cost of a government-sponsored plan. Although small businesses would not receive the same mandate as larger businesses, they would receive a tax credit to help them provide benefits. Obama would also like to create a national health insurance exchange through which individuals could buy into public plans or private insurance options (Leonard, 2008a; SHRM, 2008).
No one is quite sure how the Obama plan would influence one of the main concerns for employers: the high and escalating costs of providing medical insurance benefits. Some are concerned that any mandate that employers provide "meaningful" coverage could put limits on the types of plans they can provide. It's not clear if high-deductible plans or plans that require considerable cost-sharing would be restricted. Some researchers say that the Obama plan would not do enough to provide incentives to patients or doctors to tamp down the spiraling costs of health care (Smerd, 2008b).
Discrimination Law: President-elect Obama has reportedly pledged to pass the Employment Non-Discrimination Act, which would make it illegal to discriminate based on sexual orientation or gender identity. An Obama administration is also likely to support the Ledbetter Fair Pay Act. That would amend Title VII so that pay discrimination claims can be brought within 180 days of the receipt of a disputed paycheck or pension payment. In essence, it would help overturn a Supreme Court decision that set limits on the time required for filing pay discrimination claims. Another issue is the Civil Rights Act of 2008, which would remove the cap on compensatory and punitive damages awarded in discrimination cases relating to Title VII and the Americans with Disabilities Act (Flander, 2008; Pasek, Johnson & Rolfes, 2008).
Family Leave: Obama supports the expansion of the Family Medical Leave Act (FMLA) to cover businesses with 25 or more employees. Specifically, he wants employers to give workers leave for eldercare needs and give parents up to 24 hours of leave for the academic activities of their children. He also wants the FMLA to cover leave taken by employees who are facing domestic violence issues (SHRM, 2008).
Wages: Obama would like to raise the federal minimum wage to $9.50 an hour by 2011 and index wage increases to the inflation rate (Leonard, 2008b; Sterrett, 2008).
Retirement: The Obama campaign stated that it had a "retirement security plan" that would "automatically enroll workers in a workplace pension plan." That is, "employers who do not currently offer a retirement plan will be required to enroll their employees in a direct-deposit IRA account that is compatible to existing direct-deposit payroll systems. Employees may opt-out if they choose" (ObamaBiden, 2008). Obama is also in favor of early withdrawals from IRAs and 401(k)s if there are hardships involved. Of course, early withdrawals from those programs have a 10% penality attached for those who are younger than 59-1/2. He proposes penalty-free hardship withdrawals of 15%, up to $10,000, in 2008 and 2009 (Brandon, 2008; ObamaBiden, 2008).
Immigration: Obama has supported the notion of a temporary worker program for immigrants and favors giving undocumented workers a path to U.S. citizenship, assuming they are otherwise in good legal standing. This path to citizenship would require that such immigrants pay a fine and learn English (SHRM, 2008).
Offshoring: The president-elect has said he wants to provide U.S. firms with tax breaks to source work onshore, though the details on how this will work remain a bit sketchy (Fersht, 2008).
Implications and Recommendations: Organizations should not only stay abreast of these and other legislative trends, they should consider how they might react if new laws were enacted over the next year or two. Many changes would require the formulation of new practices and policies, and some might require updated skill sets within the organization - such as how to deal with new unionization trends.
But companies will need to do more than just worry about compliance issues. They'll also need to focus on how to boost the productivity of their employees in the event of rising labor-cost-driven events such as increases in the minimum wage or higher benefit costs. Depending on the type of organization, this productivity push could involve any number of different initiatives, from increased automation to more efficient training programs to better health promotion practices. The common goal will be raising the performance of workers even while maintaining excellent employee relations.
Documents used in the preparation of this TrendWatcher include the following:
- Brandon, E. (2008, November 7). Obama's plans for your retirement. U.S. News & World Report.
- Card-check bill introduced in House would allow workers to bypass elections. (2007, February 12). Human Resources Report, 148-149.
- Fersht, P. (2008, November 13). Will the recession end offshore outsourcing? PCWorld.
- Flander, S. (2008, September). Brace yourselves! Human Resource Executive.
- Leonard, B. (2007, March 5). House passes union card check bill, but veto looms. SHRM Online.
- Leonard, B. (2008a, October 15). McCain, Obama offer contrasting health care platforms. HR News.
- Leonard, B. (2008b, August 24). Presidential campaigns focus on HR issues. HR News.
- ObamaBiden. (2008). Retrieved from barackobama.com.
- Pasek, J, Johnson, K, & Rolfes, A. (November 12). United States: An Obama administration’s impact on labor and employment issues. Labour and Employment.
- Society for Human Resource Management (SHRM). (2008). 2008 presidential candidate questionnaire.
- Smerd, J. (2008a, February 4). Unions reverse decline. Workforce Management, 1-3.
- Smerd, J. (2008b, October 6). Dramatic shifts, higher costs seen in plans of McCain, Obama. Workforce Management.
- Sterrett, D. (2008, November 5). Minimum wage, labor laws on new administration’s menu. Crain’s.
