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On Friday, U.S. Democratic lawmakers proposed a new bill that increases the current $ 7,500 electric vehicle tax credit. And while this looks like a very promising move, in reality the credit expansion is only favoring certain automakers.

The base amount remains unchanged at $ 4,000, with an additional $ 3,500 if the EV battery is at least 40 kWh – currently totaling $ 7,500 in grants.

The bill now allows consumers to charge an additional $ 4,500 for vehicles assembled at a domestic facility unionized Plant, plant. In contrast, electric vehicles made in the US but not union-built qualify for just $ 500 extra.

Union formation: who wins or loses

In short, this proposal strongly favors the so-called “Big Three” namely GM, Ford and the Stellantis group. whose unionized companies are represented from the United Auto Workers (UAW).

On the opposite side are foreign automakers operating in the US, as well as American Tesla. They don’t have unions representing their auto workers, and many of them even fought against it a unionized workplace and UAW takeovers.

For example workers at Volkswagen Assembly plant in Chattanooga, Tennessee, voted against union representation in 2019, and Nissan In Canton, Mississippi, workers also refused to form unions in 2017.

Honda’s and Toyota’s objection

Of the companies affected, Honda and Toyota were the first to express their opposition, Reuters reports.

Toyota said in a statement that the plan is discriminatory “Against American auto workers who have chosen not to unionize.”

Honda also called the bill “unfair” and noted the following:

[It] discriminates against electric cars made by hardworking American auto workers simply on whether or not they are unionized. […] Honda production workers in Alabama, Indiana and Ohio who will build our electric vehicles deserve fair and equal treatment from Congress. ”

Is the bill unfair?

The answer is quite complicated and there are two sides to the story.

1. The bill can be unfair.

While it would make perfect sense to add extra recognition to US-made EVs as an incentive for the domestic economy, unionization is a sensitive and personal matter.

After all, it is Manpower who decide whether to form a union – not the buyers, not the automakers, and certainly not the Congress.

In fact, union participation is not that popular, and the numbers have fallen sharply over the past two decades. For example, in 2020 union membership was 10.8% – a 9.3% decrease since 1983. This means that only 1 in 10 workers are unionized.

At the same time, no one (including non-unionized workers, automakers and consumers) should be penalized for choosing not to form a union.

The $ 12,000 maximum credit tax gives the electric vehicles produced by the Big Three a stronger advantage, which is likely to have an impact on sales, and therefore jobs, of the other automakers.

The bill also contains a form of inequality among consumers. Why would someone buying a Ford EV benefit from the extra $ 4,500 while someone buying a Honda shouldn’t?

2. The bill can bring long-term benefits.

Since taking office, Joe has Biden has been possibly the most overtly pro-union president in the past seventy years aiming to reverse the negative union trend.

Biden has placed the trade unions at the center of his politics and seen them as an opportunity to rebuild jobs in the middle class and also to combat climate change.

However, forcing the labor movement into the burgeoning green energy industry will inevitably lead to controversial views.

On the one hand, unions offer better choices for workers with benefits like higher and constant wages, stronger pension and health insurance plans, and the ability to raise concerns without fear of retaliation.

On the other hand, Expanding union membership among auto workers would raise wages, which in turn would mean higher production costs for automakers.

Aside from the economic blow to businesses, production costs increased will also drive up renewable energy costs and slow down efforts to replace fossil fuels, some economists warn.

However, administrative officials believe that the transition to green energy will only be politically sustainable if workers see jobs in the new economy that provide wages and benefits comparable to those in older, unionized sectors.

Politics aside, the latest Gallup poll now shows a more positive reception from unions than ever in nearly two decades, with 63% of respondents saying they support unions.

So, yes, if we look at things under that light, the bill can be good in the long run and has the potential to help the causeThe energy industry is evolving into a unionized, high-wage sector, perhaps similar to automobile manufacturing in earlier times.

The bill has yet to be voted on

On Tuesday the The House Ways and Means Committee will vote on the proposal, which is expected to meet opposition in the Senate and split 50:50 between Republicans and Democrats.

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