SMACNA applauds the final rule issued by the Biden Administration that is designed to address the skilled workforce crisis shortage by requiring private developers to comply with Project Labor Agreements (PLAs) and Prevailing Wage and Apprenticeship requirements on federal projects. The Biden Administration’s long overdue regulatory actions were taken to address a workforce skills crisis and shortage due almost entirely to the predictable and avoidable result of intentional underinvestment in skill and workforce quality over decades.
“This updated rule will help ensure that large-scale federal projects are completed professionally and timely, while also supporting high skilled and high paying jobs,” says Aaron Hilger, Chief Executive Officer at SMACNA. “Importantly, PWAs level the playing field by allowing all union and non-union contractors to bid using the same high quality workforce standards. These necessary new construction rules were needed to counter a skill shortage created by too many industry firms and organizations badly shortchanging the industry’s obvious workforce needs for decades, not political calculations.”
Thankfully these elevated standards arrived just in time to build an increasing number of highly complex national construction mega projects for national security facilities and CHIPS and Science Act projects.
Decades ago, it was abundantly clear to the construction industry that a skilled labor crisis was coming and was directly caused by an insufficient commitment to registered apprenticeship training investment across too much of the construction industry for far too long. These IRA rules seek to restore workforce quality and apprenticeship training to the marketplace. In addition, the IRA and related rules seek to rectify an all too widespread and persistent aversion to investing in job training in any formal or consistent manner outside the organized construction employer sector. Simply put, shortchanging workforce training has been greatly harmful to the industry’s ability to respond to a more complex building portfolio. These corner-cutting and improvised sham training efforts by non-union contractors opposing the registered apprenticeship model have noticeably and negatively impacted workforce supply and quality. Private and public owners and developers have noted this burgeoning workforce crisis for decades and tried to incentivize contractors to do the right thing by the industry and its current and future workforce.
PLAs and prevailing wage and registered strict apprenticeship (PWA) requirements are valuable tools and key elements to ensure fair wages, skilled labor and contracting transparency throughout a project to create the conditions needed for highly complex and often exceptionally large projects. This final rule that was developed by the Treasury Department, in conjunction with the Department of Labor, provides clarity and certainty on the PWA workforce quality requirements to ensure the clean energy transition is completed with the quality taxpayers expect and owners’ demand.
When taxpayers pay prevailing wages to laborers and mechanics and hire registered apprentices for projects supported by most of the Inflation Reduction Act’s clean energy tax incentives, then taxpayers can claim an increased credit equal to five times the base incentive. This includes projects utilizing the investment and production tax credits that help finance utility-scale wind, solar, and battery storage projects, as well as for credits for carbon capture, utilization, and storage and clean hydrogen projects. Owners and taxpayers wishing to undercut the widely supported quality and workforce standards in the IRA may do so but forfeit the generous tax incentives designed to address a skilled workforce shortage as well as reduce harmful industry practices.
The intent of the PWA requirements is to spur more clean energy projects that lead to good-paying, high-quality jobs — like projects that are already underway across the country. This final rule ensures when seeking highly skilled contractors and union labor on large projects, that the work meets the highest possible quality standards, which is common in private sector projects, especially in the tech sector where no margin for error is acceptable. Sophisticated owners in both the public and private sectors know they need the best contractors meeting PWA requirements to complete the facility on time and within budget at the highest quality.
