On May 4, ABC sent a letter to the U.S. Senate Finance Committee Chair Ron Wyden (D-Ore.) raising concerns about provisions in the Clean Energy for America Act that would expand new government-registered apprenticeship program requirements and Davis-Bacon prevailing wage regulations onto the construction of projects receiving clean energy tax incentives. ABC is troubled by provisions in the legislation that will needlessly increase construction costs and reduce competition from qualified companies and their skilled employees who participate in the construction of the clean energy marketplace.
As currently drafted, this legislation will create a shortage of skilled labor and contractors able to deliver a rapid, market-driven and cost-effective transition away from fossil fuel energy to clean energy. In addition, these changes will create added costs that will be passed on to ratepayers, manufacturers and consumers, and decrease America’s energy cost advantage attractive to manufacturers and businesses in the global marketplace.
Introduced by Senate Democrats, the legislation overhauls “the system of tax breaks dealing with clean energy, providing new or sweetened incentives for using solar, wind and other non-carbon sources to generate and transmit electricity, as well as expanding incentives to promote energy efficiency, in areas such as commercial buildings,” according to Engineering News-Record.
The increased costs resulting from the legislation’s proposed government-registered apprenticeship program requirements and prevailing wage regulations for the construction of projects receiving clean energy tax incentives may make program tax credits unusable—depending on the type of clean energy construction project and geographic market—and hinder the ability of clean energy producers to be competitive against fossil fuel producers, which ultimately undermines critical policies addressing climate change.
Government-registered Apprenticeship Requirements
Section 601 in Title VI of the Clean Energy for America Act requires all contractors and subcontractors contracted to build clean energy projects that are receiving applicable tax credits and have four or more construction workers on a jobsite to “ensure that not less than 15% of the total labor hours of such work” is performed by participants in government-registered apprenticeship programs.
ABC and its 69 chapters support government-registered apprenticeship programs—offering more than 300 U.S. Department of Labor and state government-registered apprenticeship programs in 20 different construction occupations across America—as part of its all-of-the-above workforce development strategy to tackle the industry’s skilled workforce shortage, estimated at 430,000 workers in 2021 alone.
However, participants and graduates of federal and state registered apprenticeship programs in the construction industry constitute only a small fraction of the industry’s workforce and data demonstrates the government-registered apprenticeship system is not meeting the industry’s demand for skilled labor. According to data from the U.S. DOL, in fiscal year 2020, the construction industry’s federal government-registered apprenticeship system produced 20,749 graduates of its four-to-five-year apprenticeship programs. In addition, construction industry apprenticeship programs registered with state governments produced an estimated 15,000 to 20,000 graduates in FY 2020. At current rates of completion, it would take more than 10 years for all government-registered construction industry apprenticeship program completers to fill the estimated 430,000 vacant construction jobs in 2021 alone.
According to the letter:
“Needlessly excluding all contractors who do not participate in government-registered apprenticeship programs from building clean energy projects subject to clean energy tax incentives is problematic. It will create a shortage of contractors and skilled labor to complete these projects, undermine established and preferred industry workforce development pipelines not affiliated with government-registered apprenticeship programs, displace contracts and jobs for businesses and workers already building the clean energy economy, give an unfair competitive advantage to unionized contractors and labor, increase clean energy construction costs and ultimately threaten America’s rapid and cost-effective transition to clean energy.”
Prevailing Wage Requirements
The Clean Energy for America Act expands ABC-opposed Davis-Bacon prevailing wage requirements to “eight clean energy tax credit programs, which will reduce competition from contractors already building the clean energy economy, increase construction costs and render some of these tax credit programs unusable,” according to the letter.
“Until the Davis-Bacon Act can be modernized and regulators address the red tape burdens and increased costs resulting from this anti-competitive and costly regulatory scheme, it would be wise to keep prevailing wage regulations in their current form off of clean energy tax credits projects. Doing so would create the conditions for all qualified contractors and their skilled workforce to compete to build the clean energy economy and give taxpayers additional value for investments in clean energy and public works projects as Congress works to enact critical clean energy infrastructure modernization and America faces a $2.6 trillion infrastructure gap by 2029.”
Outlook on Wyden Bill and Infrastructure Proposals
Sen. Wyden’s Clean Energy for America Act was introduced on April 21 and received a full committee hearing on April 27. The U.S. House Ways and Means Committee is working on similar legislation overhauling the tax code for clean energy marketplace.
Sen. Wyden’s bill comes on the heels of the Biden administration’s March 31 release of the American Jobs Plan, an outline of $2.25 trillion worth of government spending that includes investments in infrastructure and clean energy.
According to a White House fact sheet, “President Biden is proposing a ten-year extension and phase down of an expanded direct-pay investment tax credit and production tax credit for clean energy generation and storage. These credits will be paired with strong labor standards to ensure the jobs created are good-quality jobs with a free and fair choice to join a union and bargain collectively.”
ABC has raised concerns about the AJP’s tax hikes on small businesses and language calling on Congress to pass the ABC-opposed Protecting the Right to Organize Act and tie controversial government-mandated project labor agreements onto federal investments in infrastructure via forthcoming legislation.
In an April 28 op-ed published in The Hill, titled America can build back better through fair and open competition, ABC pushed back on controversial provisions in the AJP that would harm the merit shop contracting community:
“At a time when our economy is showing signs of recovery, the Biden administration and Congress should support policies that help bring our economic engine roaring back to life. Fair and open competition on taxpayer-funded construction projects will ultimately result in savings to taxpayers, more opportunities and jobs for all qualified local small businesses, minorities and women in the construction industry, and the construction of more quality infrastructure projects so America can Build Back Better and faster.”