(Bloomberg) -- U.S. Labor Secretary Marty Walsh had high hopes for September: Receding Covid-19 risk, easing restrictions and steadily improving jobs numbers. But the delta variant’s aggressive path has shaken his expectations for a rapidly recovering labor market.
The resurgence of coronavirus cases has already pushed back a return to the office for many Americans and slowed down consumer activity. Walsh’s own department is delaying a partial return until at least October.
“I was hoping that we could have a nice recovery here in the month of September,” Walsh, 54, said in a wide-ranging Zoom interview with Bloomberg News Thursday from his home in Dorchester, Boston. “We’ve had some good job growth here in the last six months,” and “I get worried that this is going to slow some of that.”
Walsh said the Delta variant could upend his expectation that July payrolls -- with the most positions added in nearly a year -- would be a prelude to future months. He now says he’s concerned about the resurgence of cases dragging on the workforce and economic growth.
The U.S. labor market is still in the midst of clawing back from the crisis, with about 5.7 million fewer jobs than before the pandemic.
Unemployment Aid
Even some of the dozens of states that cut off emergency unemployment benefits early in hopes of helping businesses secure more workers may be forced to boost assistance if the variant keeps people home, he said.
The volatile labor market adds to the many challenges facing Walsh, the first union member leading the department in half a century, as he approaches his first Labor Day after five months on the job. Walsh holds a key role in President Biden’s pro-worker agenda, with broad oversight of American workplaces, including wage rules and safety standards, as well as an array of market-moving economic data.
He took on the role at a crucial time, amid a pandemic that devastated businesses and cost millions of workers their livelihoods. While creating new challenges in the workplace, the virus also inspired new waves of organizing by so-called “essential workers,” forced to shoulder new risks to their health. Union leaders are looking to the Biden Administration to help amplify that activism and reverse decades of labor movement decline.
Walsh said he’ll act with urgency to enforce employment laws and issue new worker-friendly regulations, while undoing several of President Trump’s policies. More imminently, he’s urging Congress to establish stronger worker protections through the Democrats-only reconciliation bill being drafted in the Senate, which he called a “once-in-a-generation” opportunity.
Worker Organizing
“I’m going to try and push as much as possible to get into reconciliation,” Walsh said, including new penalties for companies that violate workers’ organizing rights.
“If it makes it, it’s beautiful and it’s a bonus. And if it doesn’t, then we have to find other ways of doing it,” he said.
Fines for union-busting are also a key provision of the PRO Act, a sweeping labor law overhaul that passed the House with Biden’s support. But that bill faces a tough road in the Senate.
Walsh touted what he called “transformative” policies for potential inclusion in the reconciliation package, including multi-billion-dollar investments in labor enforcement, job training programs, and home-care workers; and what would be the nation’s first paid family leave system.
Gig Work
A hot-button issue for the new labor chief and U.S. workers is misclassification, when employers wrongly label staff as independent contractors rather than employees, evading responsibilities such as minimum wage and overtime pay.
Biden’s nominee to run the Department of Labor’s Wage and Hour Division, which enforces federal pay laws and investigates misclassification, is David Weil, a vocal critic of gig companies. Weil, who previously ran the division under former President Barack Obama, has written that Uber Technologies Inc. and Lyft Inc. should be considered employers of their drivers under existing law.
Asked whether he agreed with his incoming wage and hour chief about the ride-hail companies, Walsh demurred, saying they hadn’t yet discussed it: “Let me have that conversation before I say if I agree with him or not.”
“There’s lots of conversation around gig workers and what to do with gig workers,” Walsh said. “We’re having those dialogues and conversations now.”
Contractor Controversy
The labor secretary said that along with meeting with companies including Uber, Lyft, and DoorDash, he’s also met with some of their workers; some signaled liking the current system while others said they want to be employees, he said.
“This isn’t an issue that I can tackle and have an answer in five months - it’s a lot more complicated than that,” Walsh said.
Walsh was circumspect when asked about which sorts of companies his department might investigate for violating existing rules. He noted that independent contractor controversies extend far beyond the attention-grabbing ride-hail giants, flagging examples such as dishwashers and grocery delivery drivers.
“We’re going to be looking across the board when it comes to wage theft,” he said. “I will take misclassification very seriously to make sure that we are protecting the workers.”
Overtime
Walsh’s Department has the power to alter workplaces through regulation as well as enforcement, without waiting for Congress. And he’s under pressure from worker groups and unions to do that, with haste.
Without offering specifics, Walsh said developing an affirmative regulatory agenda to protect workers “is definitely a priority and there is a sense of urgency.”
Worker groups assume that bold worker-friendly rules will again be challenged in court, requiring time for the White House to defend them. One such initiative on Walsh’s agenda involves expanding federal overtime protections, which Obama attempted to extend to around 4 million more workers.
“The time goes by fast,” Walsh said. “You don’t want to wait until the end.”
The labor department’s rulemaking calendar in June unveiled a few high-profile items in the pipeline, such as updating construction-wage standards, but left unclear how aggressively Walsh aims to regulate U.S. businesses. When asked, Walsh emphasized the need for balance between empowering workers while also helping businesses succeed.
“We want industry to come back -- we want it to be strong,” Walsh said, rattling off recent meetings with groups like the U.S. Chamber of Commerce and CEOs.
Biden Friendship
Since being confirmed in March, he’s visited workers and business owners across at least 20 states and more than 33 cities to promote President Biden’s economic agenda, often leaning on his strong union ties.
Walsh joined Laborers’ Union Local 223 when he was 21 and later became president, and was nominated to lead the Greater Boston Building and Construction Trades Council. Prior to joining the labor department, he was Mayor of Boston.
Biden called Walsh a “good friend” and “tough as nails” when nominating him in January. The two men talk often.
“I don’t get into the weeds on policy with the President but, I ask him, you know, ‘am I going in the right direction,’” Walsh said. “And ask for advice from him on certain things I’m doing. And he offers his support.”
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