Fits and Starts

This week, we cover the fits and starts of Bidenomics’ efforts to undo trickle-down-era damage in an unlikely pairing of industries. In the Rebalancing, we look into the USDA’s new plan to help small and medium-sized farmers deal with the consolidation in the chicken industry. In Some Like It Hot, we look at the first-ever labor neutrality agreement in the semiconductor industry, and what it could mean for the future of the CHIPS and Science Act.

The Rebalancing​

It’s what’s for dinner

This year, chicken prices hit record highs, as more Americans cut back on other, more expensive meats. Like many industries with higher-than-usual prices, the chicken industry is beset by unprecedented levels of corporate consolidation. A wave of government-sanctioned mergers in the 1990s led to the rise of four major companies that now control more than half of the market in chicken processing (Tyson, JBS, Perdue, and Sanderson).

These corporations have been enjoying record profits as a result of their market power: Tyson had a record $4.1 billion net profit for the year ending March 31, 2022—a 91 percent increase over the previous 12 months. JBS had a record net profit of $4.4 billion for the 12-month period ending March 31, 2022—a 70 percent increase over the previous 12 months. The market power of these highly consolidated companies also has left chicken farmers with fewer options, giving the big four the power to set prices for the chickens they purchase. Farmers’ pay per pound of chicken decreased 3 percent between 1990 and 2020 when adjusted for inflation.

Last month, the US Department of Agriculture announced a new plan aimed at improving the competitiveness of small and medium-sized farmers. The plan includes a new rule aimed at increasing the transparency of contracts the large processors present to small and medium-sized producers and forcing seed companies to comply with the Federal Seed Act.

The new plan at USDA is part of a broader Biden administration effort, including through the courts, to reverse the era of deregulation and consolidation in the chicken industry that has led to the excess corporate power of the present. It’s another example of the shift in approach to economic policy, with the government using the broad range of tools at its disposal to shift power within and across markets and industries.

Still, there is much more to be done. The USDA plan aims to ameliorate the challenges of consolidation, not reverse it, and notably exempts eggs, milk, beef, and pork, all of which are markets that suffer from the same challenges as the chicken market. “USDA must do more to actually protect farmers from corporate abuse, beyond merely informing producers how exploitative the system is,” said Emily Miller, an attorney at Food and Water Watch. It is a meaningful step away from the era of trickle-down economics, but perhaps not quite as large a step as some had hoped.

Some Like It Hot

Everything bagels are back on the menu

Friend of the Brief David Dayen broke news about the impact of the CHIPS and Science Act on the workforce in the microchip industry. In a post on Bluesky, he said, “Akash Systems became the first semiconductor manufacturer to announce a labor neutrality agreement with the building trades and the industrial division of CWA.” Akash is a privately held, Black-owned chip manufacturing company that’s based in San Francisco. The “historic first-in-the-industry” labor neutrality agreement, as the Communications Workers of America call it, covers semiconductor production workers at a new $432 million Akash Systems factory set for construction in West Oakland, California. According to the CWA, the facility will employ an estimated 500 workers over the next five years.

While Akash is still a long way from catching up with the large microchip manufacturers like Intel or AMD, the growing bargaining power of workers across the semiconductor industry is part of a broader story. According to a study produced for the Semiconductor Industry Association by economists at Oxford, the US semiconductor industry is set to face a shortfall of roughly 67,000 workers by 2030. These figures are in line with the CHIPS Program Office estimates that “building and operating the semiconductor fabrication facilities eligible for awards under the first funding opportunity could require more than 100,000 construction workers to build the facilities and 90,000 workers to operate them.”

If the building trades unions were to succeed at establishing a union contract at the outset of the coming boom in microchips factory and job creation, it could create a toehold in the industry, and serve as a model for workers at other factories. The news serves as a contrast to the nonunion development of a $40 billion facility in Phoenix, Arizona, by Taiwan Semiconductor Manufacturing Company, which prides itself on squashing unions. While the president claimed the factory would be built by union labor, Lee Harris at The American Prospect found that most of the workers on the job were nonunion. As Harris outlines in the piece, “American chipmakers have been arbitraging subsidies and cheap labor opportunities for decades.”

The Akash-CWA agreement shows how the semiconductor industry is supposed to work under Bidenomics. In addition to the neutrality agreement, Akash Systems agreed to work with Jobs to Move America to develop a project labor agreement “to deliver benefits to the West Oakland community, including a workforce development plan encompassing recruitment and training of under-represented groups.” Andreas Cluver, Secretary Treasurer of the Alameda County Building Trades Council said, “Akash is delivering on the promise of the CHIPS Act by rebuilding strategically important industrial capacity and deliberately creating quality jobs, especially for historically underserved communities.”

While critics continue to question the price tag of the CHIPS Act investment, the agreements between Akash-CWA and with the West Oakland community show how the resurgence of the American semiconductor industry could result in real, tangible benefits to working people.

What to Read

• In The New Republic, Timothy Noah writes about efforts to unionize Wells Fargo workers, and how they could represent new ground for the labor movement.
• Janice Fine, Paul Engler, and Mark Engler write in the Boston Review about how “co-enforcement” could serve as a new model for expanding workers’ rights by linking social movement organizations and labor unions with the state.
• In Phenomenal World, Advait Arun writes about the doom loop between climate change and the insurance industry, and how to break out of it.
• In the wake of UAW’s historic victory, read this in-depth article in the Wall Street Journal about how the campaign succeeded, and John Nichols’s The Nation piece about what comes next.

Who Said It: JRB or FDR?

As you know by now, we close every week with a quote from either President Biden or FDR. If you guessed last week’s quote was from FDR, you were right! It came from FDR’s State of the Union in 1944, when he gave his famous “economic bill of rights” speech.

Now for this week’s quote:

“We honor every American worker who has sacrificed their own life or well-being; we stand with the unions that fight for them every day; and we recommit to protecting the fundamental right to a safe and healthy workplace.”