Carrier tariff now Carrier tax cut?

With help from Marianne LeVine

CARRIER TARIFF NOW CARRIER TAX CUT?: The air conditioner company Carrier has been in discussions with the incoming Trump administration (including Vice President-elect Mike Pence) about a plan to move about 2,000 jobs from Indiana to Mexico, The Wall Street Journal’s Ted Mann reports. Carrier is a unit of United Technologies, a leading defense contractor.


Carrier drew national headlines in February when when a cellphone video went viral of the bosses’ announcement to workers that the company would move (what was then) 1,400 jobs from Indianapolis to Mexico. Candidate Donald Trump seized on the issue, threatening that, if elected, he’d slap a steep tariff on any air conditioners imported back to the U.S. On Thursday President-elect Trump tweeted that he was “working hard, even on Thanksgiving to get Carrier A.C. Company to stay in the U.S.” These efforts were “MAKING PROGRESS,” Trump wrote, and “will know soon.” Carrier tweeted: “Carrier has had discussions with the incoming administration and we look forward to working together. Nothing to announce at this time.”

But if the Journal account is correct, Trump is no longer threatening Carrier with a steep tariff; instead, he’s considering a tax cut (even though Trump couldn’t deliver that without approval from Congress). According to “a person familiar with the discussions,” the Journal reports, the discussions have included “the company’s wishes for a tax overhaul that Mr. Trump and Republicans have promised to pursue early in his administration.” (That’s the Journal’s paraphrase, not a quote.)

The bone of contention appears to be taxation of overseas profits. “United Technologies, like other globalized U.S. companies … has large reserves of cash overseas--profits that corporations are waiting to repatriate to the U.S. until Congress cuts the level of tax they would pay,” Mann writes. “The company reported that 85 percent of its total cash, or more than $6 billion, was overseas, as of the end of 2015. One idea backed by House Republicans but not Mr. Trump would be to create a two-tiered tax rate that would help companies that have used foreign profits for factories and other assets they can’t easily repatriate.”

The Journal doesn’t flat-out say so, but its story seems to suggest that the swap under discussion is that if Trump (and, presumably, Congress) make it easier for Carrier to repatriate U.S. dollars, Carrier will keep the 2000 jobs, or some fraction of them, in Indiana. But if that’s the bargain, it’s hard to see how either side will enforce it. And it sure doesn’t have the same populist ring as “We're going to tax you when those air conditioners come — so stay where you are or build in the United States.” More from the Journal’s Mann here.

GOOD MORNING. It's Monday, Nov. 28 and this is Morning Shift, POLITICO's daily tipsheet on labor and employment policy. Send tips, exclusives, and suggestions to [email protected], [email protected], [email protected], and [email protected]. Follow us on Twitter at @marianne_levine, @CoganSchneier, @tedhesson and @TimothyNoah1.

MORE CARRIER: Sen. Bernie Sanders (I-Vt.) wants Trump to keep his promise not to let Carrier export those 2,000 jobs. But Bernie’s plan (like Trump’s original tariff threat) is more stick than carrot. Sanders would prevent companies that outsource jobs from receiving federal contracts; tax companies that outsource jobs; and tax the compensation of executives whose companies send jobs overseas, according to a statement. The Sanders bill would also “require all companies that outsource more than 50 jobs in a given year to pay back all federal tax breaks, grants and loans they have received from the federal government over the last decade.” Given the GOP’s control of Congress, the likelihood that Sanders’ plan will pass is pretty remote — even if he can sell it to Trump.

WAL-MART WON’T YANK OVERTIME RAISES: Wal-Mart won’t claw back the raises it gave entry-level managers in anticipation of the Dec. 1 implementation — now delayed — of the Labor Department’s overtime rule. That’s what a spokesperson for America’s biggest retailer told Morning Shift. Last week a federal judge in Texas granted a preliminary injunction against the rule, which doubles (to $47,476) the salary threshold under which virtually all workers are guaranteed time-and-a-half pay whenever they work more than 40 hours in a given week. The judge’s decision appeared to signal that he’ll soon toss the rule altogether with a summary judgment and permanent injunction. That would leave it up to the Trump administration whether to appeal (to a conservative Ninth Circuit that would likely oppose the rule). The betting is that Trump, who’s not too crazy about regulations in general, and already signalled he’d like to scale back this one, won’t try to save the overtime rule.

In October, Reuters reported that Wal-Mart raised salaries for entry-level managers to $48,500, up from $45,000, in anticipation of the Dec. 1 deadline. “We are reviewing the court’s ruling, but we don’t anticipate making any changes to what we’ve already shared with our associates,” Wal-Mart’s spokesperson told us.

SPEAKING OF OVERTIME: About that anticipated summary judgment and permanent injunction. The court earlier scheduled a hearing for today on whether to grant these. But that was premised on the court not issuing its preliminary injunction. Today’s hearing is therefore cancelled.

FIGHT FOR $15 PROTESTS: Fight for $15 promises its “most disruptive protests yet” on Tuesday. The actions will target McDonald’s and 20 airports across the country. Roughly 500 workers at Chicago O’Hare — baggage handlers, airplane cabin cleaners, janitors, and wheelchair attendants — plan to go on strike to demand a $15 minimum wage, a free hand to form a union, and a halt to deportations. More from POLITICO Pro’s Marianne LeVine here.

THE VANISHING MEXICAN LABOR FORCE: Trump campaigned on a promise to seal the border with Mexico and stem the flow of undocumented immigrants who undercut U.S. wages. But small business owners see the opposite problem, according to Miriam Jordan and Santiago Pérez of The Wall Street Journal. “As hiring accelerates and the labor market tightens thanks to a steady U.S. recovery, employers who need low-skilled workers are increasingly struggling to fill vacancies,” they write. “One big reason: Mexican workers, who form the labor backbone of industries like hospitality, construction and agriculture, are in short supply.” The Journal cites a roofing company in Dallas that turned down $20 million in contracts during the past two years because it didn’t have enough workers. Tacolicious, a Bay Area restaurant chain, faces similar difficulties recruiting staff, and says it must scale back future expansions as a result. Don’t tell the president-elect — we don’t like to upset him! — but the number of Mexicans who enter the U.S. illegally has dropped significantly in recent years. The “mass migration from Mexico is over,” according to Pia Orrenius, senior economist at the Federal Reserve Bank of Dallas.

“Multiple factors are behind the decline,” write Jordan and Pérez. “The Mexican families are smaller and their children are better educated; some Mexican states have launched campaigns to discourage youngsters from making the perilous journey north; and smugglers are commanding higher prices to get migrants through territory often controlled by drug gangs and across a far more secure border than ever before.”

Diminished border crossing by Mexicans means the boost in wages that Trump promises for U.S. workers is already happening for some of them. “On the ground in the U.S., many employers report the worker shortage is driving up wages, which is good news for low-skilled workers. It is also driving up costs, however, which could hamper investment and fuel inflation.” More here.

ALJ: UPS WORKER FIRED FOR UNION ACTIVITY: An NLRB administrative law judge found the dismissal of a UPS worker was “tainted” by management’s desire to halt union activity, according to a decision issued Friday. The judge found UPS violated the NLRA when it fired Robert Atkinson, a shop steward at a Pittsburgh-area facility who acted as a liaison between the Teamsters Local 538 and managers. Atkinson had campaigned against a collective bargaining agreement between UPS and the Teamsters; the judge found he was fired for refusing to support the deal. But the judge also ruled that due to Atkinson’s misconduct — he suggested on social media that a manager had erectile dysfunction, among other comments — Atkinson be awarded only partial back pay and not be reinstated. Read the decision here.

CALIF. UNION TO STRIKE DEC. 5: California’s largest state-employee union plans to strike Dec. 5, the Sacramento Bee reported last week. The 95,000-member SEIU Local 1000 represents teachers, accountants, librarians, custodians, laundry workers, and nurses, among other occupations. The local says it’s unable, after seven months, to resolve its differences with state officials over a new contract. “The union has denounced the administration’s proposed wage increase of 12 percent over four years as inadequate because it fails to address what it contends are gender pay inequities in the state workforce,” the Bee reports. “It also objects to the administration’s proposal that employees pay more for their health benefits.” The strike is set to last just one day, but the Bee’s Alexei Koseff points out that state employees don’t typically follow through on such threats. “While the possible work stoppage would be unprecedented,” he writes, “it might also be illegal: Local 1000 has a no-strike clause in its contract.” More here.

FLAGSTAFF PREPS FOR WAGE HIKES: Arizona voters approved a ballot measure earlier this month that will raise the hourly minimum wage to $12 by 2020, up from the current $8.05. The 70,000-person city of Flagstaff went a step further: it passed its own ballot initiative that will raise the city’s minimum wage to $15 an hour by 2021. In addition, the measure mandates that Flagstaff’s minimum stay $2 ahead of the state minimum. So, for example, when Arizona raises its minimum to $10 on Jan. 1, Flagstaff must go to $12 by July 1. The double whammy sent local businesses scurrying to balance their books. The Arizona Daily Sun visited Kingdom Kids Preschool and Play Center, where 20 of 30 staffers will get a raise Jan. 1, when the state’s $10 minimum wage goes into effect. “That change alone will add about $4,500 a month to the business’ payroll, a hike of about 20 percent,” the Daily Sun reports. The owners worry even more about the July 1 hike. Owner Jannette Bressler says the $12 minimum “will boost her payroll costs by another $5,000.” More from the Daily Sun here.

MINING COMPANY DENIED REVIEW: A Fourth Circuit judge last week declined to review a 2012 accident at a Virginia coal mine in which a water line valve exploded and killed a worker. The Consol Buchanan Mining Co. sought a review of a decision by the Federal Mine Safety and Health Review Commission that found the accident arose from the company’s “unwarrantable failure” to maintain safe equipment in the mine. “In light of the record evidence showing that Consol was or should have been aware of the conditions that led to the accident well before the accident, the ALJ’s conclusion that Consol demonstrated more than ordinary negligence in failing to address these conditions is supported by substantial evidence,” the Fourth Circuit wrote in the opinion. Read it here.

COFFEE BREAK

— “Cities Vow to Fight Trump on Immigration, Even if They Lose Millions,” from The New York Times

— “U.S. says cybersecurity skills shortage is a myth,” from Computerworld

— “Trump’s Energy Job Promise to Clash With Scant Supply of Labor,” from Bloomberg

— “Uber, Lyft Oppose Seattle’s Draft Union Rules,” from The Wall Street Journal

— “Immigrant Herders Can Contest H-2A Wage Rule, Judge Rules,” from Law360

— “Trump may empower local police to round up immigrants,” from USA Today

— “‘My Soul Feels Taller’: A Whistle-Blower’s $20 Million Vindication,” from The New York Times

THAT’S ALL FOR MORNING SHIFT.

Follow us on Twitter Rebecca Rainey @rebeccaarainey