Over the next decades, sales of electric vehicles (EVs) will likely surpass those of gas-powered cars and trucks, transforming America’s automotive industry and automotive jobs. Without effective policies in place, however, the transition to electric vehicles could reduce the quality of jobs in the auto sector.
Largely because of efforts by unionized autoworkers, many existing auto-sector jobs pay decent wages and provide a route to the middle class, especially for Americans without college degrees. In contrast, many domestic electric vehicle producers offer lower wages, fewer benefits and less opportunity for pay advancement — with worse working conditions for their employees.
As the auto industry evolves it can continue to provide middle-class sustaining jobs — if Congress takes sufficient actions. What Congress does now will determine whether these are good jobs for the next generation of American autoworkers.
One key step Congress needs to take is to create a new prevailing wage policy for electric vehicles to help high labor standards of the existing automotive industry to continue in the transition to new EV jobs. For example, any budget reconciliation bill should ensure that firms receiving tax incentives to support EV manufacturing are required to pay the prevailing wage.
Prevailing wage laws require that government-subsidized firms pay at least the basic hourly rate of wages and benefits paid to similarly employed workers. These laws ensure that government spending supports a well-qualified workforce and does not drive down standards. They are common on government construction projects and for contracted government services, although they have not been frequently used in manufacturing.
As Ray Curry, president of the United Automobile, Aerospace and Agricultural Implement Workers of America, explains, “while a prevailing wage does not replace having a union, what it will do is stop new electric vehicle ventures from driving down the wages built up by union workers.”
The prevailing wage concept holds great promise for maintaining high standards in the auto industry as it electrifies, but the policy must be properly adapted to the new jobs. A new report by the Center for American Progress explains how to effectively develop a prevailing wage policy for electric vehicle jobs. The report highlights the need to ensure that existing internal combustion automobile jobs provide reference points for new the prevailing wage for EV jobs and the importance of clear standards and good data for making sure prevailing wage calculations accurately reflect market conditions.
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As important as it is, a prevailing wage is not the only policy necessary to ensure high standards in the EV transition. Other needed policies include those that prevent discrimination, promote domestic production, ensure compliance with existing workplace laws, as well as respect workers’ right to join a union and bargain collectively. Indeed, unionized workers enjoy many advantages compared with nonunion workers — such as safer workplaces, grievances procedures, protections from retaliation and a strong voice — that are not addressed by a prevailing wage policy. Still, a properly designed prevailing wage would be a particularly important policy for ensuring high standards in EV jobs.
This isn’t the first time Congress has faced a choice on whether modernization of key transportation industries would continue to support good jobs. During a few major transitions in important industries such as railroads and transit, policymakers passed legislation to protect the high standards that workers have achieved through collective bargaining. By establishing high standards now, while US electric vehicle production is still in its infancy, policymakers will support good jobs for autoworkers for years to come.
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.