H-4 Spousal Work Authorization Faces Challenges on Multiple Fronts

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Manufacturers are making the case in support of these workers.

According to numbers released just yesterday, there are currently 477,000 open jobs in the manufacturing sector—and manufacturers could struggle to fill millions in coming years, according to a 2018 Skills Gap Study by Deloitte and the NAM’s education and workforce partner, the Manufacturing Institute. While manufacturers are generally optimistic about the outlook for their industry, thanks in part to things like tax reform and regulatory reform, workforce concerns are a real source of uncertainty.

More than 71% of manufacturers cite their inability to attract skilled workers as a top challenge. They know that their continued ability to realize the benefits of a pro-business environment demands a workforce up to the task, which is why they are working hard to recruit more Americans into the industry and it’s why they are competing with countries around the world to attract and retain talent that can help move our American economy forward.  

Yet, despite the global competition for talent, the Department of Homeland Security is considering a change that would rapidly remove 91,000 individuals from the workforce, negatively impact the H-1B visa program and reduce companies’ ability to recruit top talent moving forward. Such changes would come in the form of rescinding work authorization for H-4 spouses of certain H-1B employees awaiting permanent residency. The same H-4 Rule is also being challenged in court. Accordingly, this week the NAM, along with the U.S. Chamber of Commerce and the Information Technology Industry Council, filed an amicus brief in support of H-4 work permits in that court case.

Currently, thanks to a 2015 rule promulgated by DHS, the H-4 spouses of certain H-1B employees can obtain work permits in order to pursue careers, support their families and contribute to their communities. This is important because these H-1B employees are already approved for permanent residency and are awaiting green cards. Even after being approved, the wait time in the green card backlog can stretch years due to outdated per-country caps in the law and having a spouse eligible to work helps keep workforce talent here in the United States. Our brief makes the case that the H-4 Rule is within DHS’ authority to provide work authorizations for categories of individuals legally present in the United States. It also provides the court with a clear picture of what’s at stake to our economy, these workers and their employers if the H-4 Rule is eliminated.

According to a recent economic analysis of the H-4 Rule, H-4 spouses are highly educated and skilled, with 99-percent of the population possessing a college degree and almost sixty percent with a master’s degree. Two-thirds of H-4 spouses work in the STEM field, which are jobs critical for modern manufacturing. The 91,000 H-4 spouses with work permits contribute approximately $5.5 billion to U.S. gross domestic product each year. H-4 spouses contribute $1.9 billion to federal coffers each year, and state and local governments would lose approximately $530 million in tax revenue per year if H-4 work permits were revoked.

Rescinding the H-4 Rule would also result in significant hardship for these families. That same analysis of the H-4 population found that nearly 90% of these families made a major life decision based on the work authorization permitted by the H-4 Rule, including decisions to have children, purchase a home or invest in additional education. Furthermore, rescinding the H-4 Rule would have ripple effects on those who employ H-4 spouses, individuals employed by H-4 spouses who have started their own businesses, as well as companies who rely on H-1B workers who may decide to relocate to a country that allows their spouse to work.

The NAM is working to protect H-4 work permits while also advocating for broad reform to our broken immigration system. Protecting work permits for H-4 spouses and eliminating per-country caps that are contributing to today’s green card backlog are two aspects of immigration reform needed to boost manufacturers’ global competitiveness. The NAM recognizes and addresses these needs and others in our comprehensive immigration proposal, “A Way Forward.” Read more about that plan here.

The NAM Supports the Equality Act Before Congress

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Manufacturers believe that equal opportunity is a key pillar of our great democracy—one that allows every individual to pursue the American Dream based on his or her own talents and qualifications. That’s why manufacturers and the business community have made great strides in providing non-discrimination protections for our LGBT employees. There is still further to go, however, and manufacturers believe now is the right time for Congress to act to help our country get there.

On Tuesday, I testified before the House Committee on Education and Labor Subcommittee on Civil Rights and Human Services on behalf of the National Association of Manufacturers. In my testimony, I expressed manufacturers’ support for the Equality Act, which would amend the Civil Rights Act of 1964 to include explicit non-discrimination protections based on sexual orientation and gender identity. We believe a federal standard will help manufacturers better attract and retain a talented workforce, which is greatly needed as we face a major skills gap. Many states and hundreds of localities already explicitly protect residents from sexual orientation- and gender identity-based discrimination in the workplace—all with slightly different requirements and definitions. A uniform federal approach will help business by providing a clear basic level of non-discrimination protection across the states.

The Equality Act puts sexual orientation and gender identity on a level playing field with other sex-based non-discrimination protections. It also includes two important pragmatic features. First, it includes a basic applicability threshold of 15 or more employees to protect smaller firms from the red tape that applies to larger employers. Second, it includes a religious exemption allowing religious employers to maintain their religious values and teachings in making hiring decisions for specific positions that require it.

Manufacturers have been at the forefront in providing their employees with fair and meaningful protections against sexual orientation- and gender identity-based discrimination. Partly, this is because talented employees demand it. Partly, this is because employers understand the importance of creating an environment in which the very best people can succeed based on merit. And namely, this is because manufacturers believe that discrimination of any kind is antithetical to the values we work to uphold every day: free enterprise, competitiveness, individual liberty and equal opportunity. The Equality Act will protect those values and create a stronger, more welcoming workforce.

An Interview with a STEP Emerging Leader

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Laura Mahany is a plant manager at Air Liquide and one of the emerging leaders recognized by the 2019 STEP Ahead Awards. Below is in interview conducted for the NAM’s morning newsletter, Input.

Input: Tell me a little about your background. What got you interested in working for a manufacturer?

Mahany: I wanted to be an engineer because of my love for math and science. When I started doing internships in college, I realized I liked the more hands-on work of manufacturing—the direct interaction with the meat of a business. I liked how every day was different, fast paced, challenging.

Input: Which parts of your education were the most valuable to your current career?

Mahany: As a child I did academic competitions in math and science, which really pushed me to improve my skills. But back then, we didn’t have all these STEM clubs and other activities the way kids do now. In college, I was a part of a program for women in engineering that made the larger engineering program feel a little bit more approachable.  

Input: You’ve mentored underprivileged kids in math and science. What sort of things did you do to inspire them?

Mahany: Each time we would learn about something different, for example, we would build rollercoasters or make ice cream using liquid nitrogen. These were experiments—we would change something, then study how it affected the outcome. I think that really drove home the scientific concepts for the kids—they had to think through how things worked for themselves.

Input: You went through a pretty dramatic experience early on in your career. What was it like to be caught in Hurricane Harvey?

Mahany: The hurricane came on very fast, and there wasn’t a lot of preparation time. We only realized it would be an actual threat to our operations two days before the storm hit. I hadn’t lived through a hurricane before, so I didn’t know what to expect.

We evacuated during the hurricane itself, but once it passed, my team and I came back to something out of a zombie apocalypse. There was no one around, the street lights didn’t work, and there was debris everywhere. The local government hadn’t given the okay for people to return, but my particular plant is critical to the safety of the community because we produce nitrogen, which other industries need to prevent the release of dangerous chemicals. So we had to restore operations very quickly.

The phone lines were down. We didn’t have internet. Plus, the hurricane traveled up to Houston, where the company has a lot of resources and personnel, so no one could come down to help us. And on top of that, many of our employees were also dealing with damage to their own homes. We had to collaborate with other industries to get what we needed, like cooling water and electricity. Luckily, I had good relationships with people at other companies—it really made such cooperation possible.     

Input: When you talk to young women on college campuses about going into manufacturing, what do they tell you about their interests or concerns?

Mahany: A lot of them are interested in sustainability. They’re interested in being part of a grand solution. I’ve noticed companies looking to be more sustainable as well; the mindset of the industry seems to be shifting toward environmental consciousness.

Input: How do you talk to college students about whether manufacturing is the right choice for them?

Mahany: I usually talk about sitting at a desk all day. In manufacturing, you almost never do that. Many people, especially women, like more collaborative environments, and manufacturing always offers you opportunities to interact with operators, technicians or other people in the facility. That makes your work much more interesting and engaging.

Input: When you’ve been mentored by women further on in their careers, what have you found most valuable from those relationships?

Mahany: My female mentors have helped me maintain confidence in myself and my career—it really motivates me to see women in high-level roles accomplishing great things. But I’ve found my male mentors valuable as well—some of my best advocates have been men, and I believe that men should make a point of mentoring women.

Input: And lastly, what more could we do to inspire young people to go into manufacturing?

Mahany: I think we should be more transparent. We should increase awareness of what those careers look like and what they mean. When you talk to a child, they always know what a doctor does or a teacher does because they interact with those people. But it’s not very often that they get to interact with engineers or visit a manufacturing plant. Manufacturing is just a big word to them—we need to make it real.

NAM Fights Paperwork Ruling that Could Cost Manufacturers Millions

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The National Association of Manufacturers joined with other trade associations in filing an amicus brief against the abrupt implementation of an onerous Obama-era labor regulation. The rule would require employers to provide data that the government isn’t even capable of processing yet—at a cost of more than a billion dollars to businesses.

For decades, the Equal Employment Opportunity Commission (EEOC) has required employers to report annual workforce data using broad “job bands” to aggregate and monitor diversity in the workforce. A 2016 Obama-era regulation (that was later delayed pending further review) extends this required employer reporting, forcing businesses to also report pay data relating to race, sex and ethnicity to the EEOC as well. Now, following a ruling by a judge last month, employers have been told that not only do they have to start reporting this new separate band of information—but the pay data is due on September 30, leaving them insufficient time to collect that information.

Manufacturers will have to pick one payroll period’s worth of data from 2018 to report before the September deadline. As the amicus brief notes, collecting this sort of data proactively, a much easier task, would still require 18 months of lead time—doing so retroactively in less than six months is simply impractical. The NAM-submitted brief also notes the complexity of implementing such a change: “The EEO-1 Report requires 180 data points. The Revised EEO-1 Report, by contrast, would require employers to submit 3,660 data points for each employer location.” Moreover, “EEOC’s Revised EEO-1 Report exceeds $400 million in pure labor costs alone, and carries a total burden of $1.3 billion per year for all businesses employing 100 or more employees.”

There is no switch to flip that would allow employers to begin complying with this new regulation by the proposed deadline. What’s more, EEOC publicly admits it is “not capable of collecting” the data. The government also filed a response explaining that any collection without proper lead time and infrastructure will result in poor quality data. So, manufacturers are facing a regulation being implemented on an impractical timeline requiring them to collect data that has “never been organized or previously produced.” The NAM continues to fight against this burdensome regulation—made worse by an unrealistic timeline—that does nothing to guarantee equal pay for equal work.

For more information, contact Callie Harman, Director of Labor & Employment Policy (charman@nam.org) or Leland Frost, Associate General Counsel (lfrost@nam.org).

Future on Display at World’s Largest Manufacturing Fair

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From robots playing pingpong to virtual reality demonstrations, from the future of mobility to the future of food, the vast world of modern manufacturing was on full display at Hannover Messe 2019 in Germany this week.

I’ve been to the world’s largest industrial exhibition before, but I still left in awe of the rapid pace of innovation in our industry and the life-changing technologies that we will all witness in the coming years.

Now in its 72nd year, Hannover Messe is unlike anything we have in the United States. The annual fair is housed in more than two dozen exhibition halls that are two, three and four times the size of a football field.

This translates to miles and miles of displays of modern manufacturing production processes, including virtual reality, robotics, artificial intelligence and machine learning, among other amazing innovations that are part of Manufacturing 4.0, also known as the internet of things. Companies from around the world participated this year, and 200,000 visitors were expected to see the 6,500 exhibits.

Everything we witnessed is completely public, with little concern about the theft of intellectual property by China or other countries that do not share our adherence to the rule of law. So just imagine what manufacturers are developing back home in labs and facilities right now. The impressive technologies we saw at Hannover would likely seem outdated compared to what’s in development.

This year in Hannover, NAM Vice President of International Economic Affairs Linda Dempsey and I joined the delegation of the NAM’s Manufacturing Leadership Council. (Read more about Hannover Messe on the MLC’s thought leadership blog.)

The delegation of more than 20 MLC members attended the opening ceremonies with us, where German Chancellor Angela Merkel and Stefan Löfven, the prime minister of Sweden, the fair’s partner country for 2019, emphasized the power of open markets to improve the lives of people around the world.

While innovative technology is what draws attendees to the exhibition floor, what is also on display is manufacturers’ need for more people to join our industry. Technologies like artificial intelligence, robotics, augmented reality and more are changing the type of jobs people do in manufacturing (in most cases making those jobs safer, easier and less repetitive). But that doesn’t change the need for the human element. Programmers, coders, technicians, operators, welders, designers, marketers—you name it, we need it in modern manufacturing.

Today, there are nearly 500,000 open jobs in manufacturing in the U.S., and manufacturers will need to fill about 4.6 million over the next decade. To keep up with the rapid pace of innovation, we need to recruit more people for the high-paying jobs of modern manufacturing.

And anyone who doubts whether there’s an exciting future in manufacturing only needs to get a small glimpse of what we saw in Hannover.

 

House Ways & Means Approves NAM-Supported IRS and Pension Reforms

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IRS reform and retirement savings legislation passed yesterday by the House Ways & Means Committee included several key policy wins for manufacturers that will enhance retirement security for manufacturing workers and ensure fair treatment for manufacturers in their interactions with the IRS.

  • The Setting Every Community up for Retirement Enhancement (SECURE) Act will allow the IRS to take steps to authorize Open Multiple Employer Plans (MEPs), which would make it easier for small businesses to offer retirement benefits to their employees. Under an Open MEP, small businesses connected by either geography or industry would be able to band together through a trade association or local business group to offer a single retirement plan for their employees – reducing the cost of offering retirement benefits and thus allowing growing companies to better attract and retain skilled workers.
  • The SECURE Act will also make it easier for longer service employees to stay in a company’s existing defined benefit pension plan even as new workers join a defined contribution 401(k) plan. This targeted reform will allow companies to provide competitive retirement benefits to all employees, regardless of their tenure.
  • The Taxpayer First Act includes important reforms that protect taxpayers’ rights when interacting with the IRS. The bill would ensure that companies retain a right to appeal IRS decisions to the agency’s Office of Appeals rather than being forced into Tax Court. It would also create safeguards around certain IRS procedures, including limiting the agency’s use of so-called “designated summonses” (which can be used to extend the statute of limitations on audit issues) and preventing the IRS from allowing external contractors to review confidential taxpayer information.

The NAM has spoken out in favor of these reforms that will protect taxpayers and retirees. In recent months, we have called on Congress to enact the IRS and pension reforms approved by Ways & Means yesterday; we also submitted a comment letter to the DOL to guide the implementation of its Open MEPs proposal. Manufacturers applaud Chairman Neal and Ranking Member Brady for taking steps to advance these important bipartisan proposals.

Senate Banking Committee Hearing Today Highlights Bipartisan Interest in Proxy Issues

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Today, continuing to build on its momentum from the end of last Congress, the Senate Banking Committee held its fourth hearing in less than a year on ways that policymakers can ensure that the proxy process is working efficiently for both public companies and their investors. The Committee’s continued focus on proxy issues is a clear indicator that Congress understands the impact that these rules can have on company policies and investor returns – and that there is growing interest in Washington to finally make bipartisan progress toward reforms that will improve proxy voting and safeguard middle-class Americans’ life savings.

A well-functioning proxy process allows companies to engage with their shareholders and work collaboratively to make decisions in the long-term best interests of the company and its investors. In recent years, however, manufacturers and their shareholders have experienced increased intrusions into the proxy process from third parties that have little-to-no stake in a company’s success. Manufacturers now must contend with single-issue activists pursing agendas disconnected from long-term value creation and proxy advisory firms seeking to institute one-size-fits-all standards through their voting recommendations, which can be tainted by conflicts of interest and riddled with errors.

Today’s hearing comes at an auspicious time, as the SEC is currently reviewing the outsized influence that these unregulated actors have on the corporate governance policies of U.S. public companies and the life savings of millions of Main Street investors. In fact, SEC Commissioner Elad Roisman – the SEC’s point person on the proxy process – gave a speech earlier this month outlining many of the issues discussed at today’s Banking Committee hearing.

These are all encouraging steps, and manufacturers are ready to work with policymakers to address these important proxy issues. Earlier this year, the National Association of Manufacturers sent a letter to the SEC with proposed solutions to guide its ongoing policymaking process; today, we submitted those comments to the Banking Committee as part of the hearing record. Manufacturers remain optimistic that Washington can come together in a bipartisan manner around commonsense solutions that provide for effective oversight of proxy firms, enhance the quality of information available to shareholders, and protect America’s Main Street investors.

Additional Health Care Mandates Only Add to the Business Challenge of Rising Health Costs

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Manufacturers consistently rank rising health care costs as a primary business challenge according to the National Association of Manufacturers Outlook Surveys conducted each quarter. The manufacturing industry has a history of leading the business community in providing health benefits to employees—98 percent of NAM members provide health insurance to employees and they do so because it is the right thing to do for their workforce and their families.

New health care mandates will continue to challenge the ability of employers to provide self-funded health care innovations that help control costs. Since manufacturers have a proud tradition of providing health care to employees, manufacturers are eager to explore ways to reduce health care costs and strengthen ERISA – the Employee Retirement Income Security Act of 1974. The economies of scale that have come to define employer-sponsored coverage, create a vehicle through ERISA to design benefits that are flexible, innovative and efficient. However, this approach only works if health care innovation is encouraged and permitted. Employers can no longer be strangled by additional regulations or the burdens of 50 different ways to comply which is why ERISA plans and their sponsors work hard to contain costs. Manufacturers want our employees to thrive, be healthy and share in our success as manufacturers.

Oklahoma is now considering a new mandate that will impact how and where pharmacy benefit coverage is provided, potentially requiring an open-ended pharmacy network and mandated reimbursement requirements outside the scope of many pharmacy benefit plans that Oklahoma employers will have to cover.

HB 2632 and S 841 represent a wrong-headed approach. The NAM agrees with the State Chamber of Oklahoma and urges legislators to fully understand the cost impacts of yet another health care mandate thrust on employers and their employees.

Strength in Sustainability: Recycled Plastics Helping Create Critical Pipes for U.S. Infrastructure

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We should all want to increase sustainability—in businesses and in our lives—but what does that look like? Sustainability is most often synonymous with products being renewable and eco-friendly, preventing adverse environmental impacts. The Plastics Pipe Institute (PPI) believes the future of high-density polyethylene (HDPE) pipe—a light weight, durable pipe used in public drainage applications that doesn’t leak or corrode—embodies these sustainability principles.

Standards for corrugated pipe made with virgin HDPE resin, or unprocessed materials, have been around for decades. But rising demand for sustainable materials led the Department of Transportation to evaluate whether pipe made with recycled HDPE resin matched the long-term performance of pipe made with virgin HDPE resin. The resulting report—and subsequent research by academics—found that the service life of HDPE pipe made with recycled materials could be predicted using a standardized test and that the recycled resin could be held to the same standard as virgin resins. As a result, by the end of 2017, two new standards—one through the American Society for Testing and Materials and another through the American Association of State Highway and Transportation Officials—were approved, allowing HDPE pipe made with recycled resins.

Prior to these standard revisions, corrugated HDPE pipe manufacturers in North America were diverting nearly a billion pounds of recycled plastic materials from landfills in production for pipe used outside of the public right-of-way and in agricultural applications. The new standards allowing the use of recycled HDPE drainage pipe within the public right-of-way will dramatically increase these quantities. This shift toward using recycled products presents an opportunity for design engineers and public utility agencies seeking to reduce their overall environmental footprint associated with storm drainage projects. An impending Life Cycle Assessment (LCA) conducted by Franklin Associates is set to conclude in 2019. The LCA will show that drainage pipe manufactured with recycled HDPE material has the lowest environmental impact of any pipe materials currently on the market for drainage applications. Corrugated HDPE pipe is demonstrating the strength in sustainability—and saving businesses money while promoting smart environmental stewardship.

The Markets Are Freaking Out about the Economy. Let’s Just Take a Breath and Relax.

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Recently, with slower economic growth globally, some financial markets across the world have waned and shown volatility, largely on the belief that this global cooldown might be a harbinger of a possible recession. Based on my analysis, while business leaders have grappled with a number of uncertainties of late, I believe the American economy—and the manufacturing sector—is still poised to continue growing into 2019 and beyond.

Yes, yields have moved lower as a result of the economy softening—especially in Europe and China—but central banks have also tried to quell drastic concerns and have stressed patience. In the United States, for instance, the Federal Reserve has done a complete turnaround since December in its stance toward monetary policy, shifting from the likelihood of two to three rate hikes in 2019 to the more dovish view of possibly no rate increases this year, with some analysts even pushing for rate cuts.

This has led to a lot of volatility in yield curves in recent days. Some of these curves, such as the spread between the 10-year bond and the federal funds rate, have inverted, raising worries about the risk of recession. Yet, it is important to keep things in perspective. The more-important yield curve—the spread between the 10-year and 2-year bond yields—has not inverted. Since World War II, the U.S. economy has entered a recession only if this yield curve goes negative, occurring within 12 to 18 months of inverting.

As far as inversion is concerned, the 10-year Treasury yield has drifted sharply lower over the past few weeks, down from 2.76 percent on March 1 to 2.39 percent yesterday, the lowest point since December 2017. But other rates have also drifted lower—and the current spread between 10-year and 2-year bonds is 0.17 percent. In addition, the Federal Reserve has said it does not intend to invert the yield curve, and it is not expected to raise short-term rates in 2019. Again, my view is that the U.S. economy and manufacturing activity are both slowing but are not expected to decline this year. Indeed, while the risk of a recession is not insignificant, it is also not imminent. I would peg the risk of a recession currently at 20 to 25 percent, rising to 40 percent by 2020.

Yesterday, the Bureau of Economic Analysis revised down real GDP growth in the fourth quarter from 2.6 percent at the annual rate to 2.2 percent. This was largely expected, especially given some of the weaker retail sales and housing data in December. However, it did not change the larger narrative: the U.S. economy grew 2.9 percent in 2018 (and an even better 3.1 percent from the fourth quarter of 2017 to the fourth quarter of 2018). Moreover, economic growth last year registered the best reading since 2005 on a year-over-year basis, largely due to strength in consumer and business spending, but with drags from residential construction and net exports.

Moving forward, I predict 2.4 percent growth for 2019, recognizing that the global economy is in fact softening and there are lingering political uncertainties surrounding trade and other policy areas. There are upside and downside risks in the economic outlook, but the most important takeaway I have is this: I, along with many other economists, expect growth to be positive this year. That point seems to be missed in recent reporting.

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