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How Labor Laws Disfavor People of Color

Big companies have made statements in support of racial justice, but it’s time for them to put their money where their mouth is, writes Brennan Center Fellow Caroline Fredrickson.

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Promp­ted by the nation­wide demon­stra­tions against racism and police brutal­ity, many compan­ies have made grand state­ments of commit­ting to more inclus­ive hiring, and some have made dona­tions to civil rights organ­iz­a­tions. But as many have poin­ted out, these efforts are belied by a sorry history of not follow­ing through on good inten­tions when it comes to work­ers of color, or work­ers of any kind.

The fail­ure, however, is not just one of inac­tion, but one of long­stand­ing and aggress­ive oppos­i­tion by busi­ness interests to fixing the core defects of our labor and employ­ment laws that have excluded many work­ers of color from the economic gains of the 20th and 21st centur­ies. In Silicon Valley, for instance, much of their of color work­force is employed in minimum wage or contractor posi­tions, and the same compan­ies have fought tooth and nail against remedy­ing the omis­sions of these work­ers from core employ­ment protec­tions.

During the New Deal, even those elec­ted offi­cials who claimed to have the best interests of low-wage work­ers at heart saw fit to exclude certain people to accom­mod­ate hostile legis­lat­ors predom­in­antly from the South. In the case of the legis­la­tion protect­ing work­ers’ rights to join a union and earn minimum wages and over­time after 40 hours of work in a week, Senate Dixiec­rats condi­tioned their votes on the exclu­sion of house­hold work­ers and field hands so wealthy south­ern­ers could continue to bene­fit from these work­ers’ cheap labor.

Faced with an oppos­i­tion campaign target­ing white women trum­pet­ing, “House­wives beware! If the Wages and Hours Bill goes through, you will have to pay your Negro girl eleven dollars a week,” Pres­id­ent Roosevelt declared that “domestic help” would not be covered by the bill. He went on to sign legis­la­tion that excluded certain occu­pa­tions, such as house­hold and farm­work­ers — in the South, a predom­in­antly Black work­force — from the major laws seek­ing to fight poverty and rally the economy during the Great Depres­sion.

The Social Secur­ity Act also directly excluded farm­work­ers and domestic servants from old-age bene­fits and unem­ploy­ment insur­ance, clearly target­ing the African-Amer­ic­ans who filled these jobs. South­ern whites were thus able to use New Deal programs to build their preju­dices into the law, infus­ing a large amount of federal spend­ing into efforts to main­tain what histor­ian Jacqueline Jones describes as “the funda­mental racial and sexual inequal­it­ies in the former Confed­er­ate states.” Charles Hamilton Hous­ton, an NAACP leader at the time, described the Social Secur­ity Act when it passed in the 1930s “as a sieve with the holes just big enough for the major­ity of Negroes to fall through.”

As a result of these deals, the New Deal legis­la­tion omit­ted large categor­ies of work­ers expli­citly acknow­ledged to be made up primar­ily of work­ers of color, and partic­u­larly African-Amer­ic­ans. Indeed, 90 percent of black work­ing women received no bene­fits at all from the new laws provid­ing for a minimum wage, maximum hours, the right to join a union, and assist­ance for the unem­ployed and elderly. By leav­ing out these work­ers, New Deal legis­la­tion actu­ally ensured that, relat­ive to other work­ers, African-Amer­ican women partic­u­larly, and domestic and agri­cul­tural work­ers gener­ally, would be worse off than before. This “original sin” has become a last­ing taint on Amer­ican demo­cracy.

Perhaps most signi­fic­antly for today’s work­force, Congress also left out a category of work­ers where people of color are overrep­res­en­ted. By narrowly defin­ing “employee” as well as apply­ing the laws only to busi­nesses over a certain size, the New Deal legis­la­tion handed busi­ness a strategy to avoid cover­age by the laws.

This perverse incent­ive today allows compan­ies to avoid paying the minimum wage or unem­ploy­ment bene­fits to large numbers of work­ers by spin­ning off func­tions, outsourcing, setting up fran­chises, or desig­nat­ing a certain number of employ­ees as inde­pend­ent contract­ors to bring the company under the threshold, which is based on either the number of employ­ees or the size of the company’s profits.

Avoid­ing over­time liab­il­ity or the minimum wage, not to mention a possible union drive, has bottom-line appeal for employ­ers. But even if the company hit the threshold in terms of employ­ees, its non-employee employ­ees (tempor­ary work­ers or inde­pend­ent contract­ors) are not covered by any of these New Deal laws. This strategy has been used by the tech giants to claim their drivers, shop­pers, or janit­ors clean­ing their build­ings don’t actu­ally work for them but are contract­ors — and thus they don’t to provide unem­ploy­ment insur­ance, over­time, or health care.

Now the conflu­ence of the pandemic and the demon­stra­tions for racial justice should put a spot­light on the need to update these laws. So while JP Morgan Chase, Walmart, Nike, Uber, Lyft, and Amazon have been in the news for their grand state­ments about address­ing systemic racism, until they actu­ally stop clas­si­fy­ing their work­force as contract­ors, commit to cover­ing more work­ers under the labor and employ­ment laws, and join worker advoc­ates in a full-throated effort to raise the minimum wage, we should all write off their pronounce­ments as just a brand update and noth­ing more.

The views expressed are the author’s own and not neces­sar­ily those of the Bren­nan Center.