While the future of clean energy jobs is a hot topic of debate these days, the Biden administration is right to connect labor standards to renewable energy tax credits, pushing the industry towards good, union jobs. Indeed, virtually every major newspaper in the country has covered the story, including The Hill.
President Biden himself said, “When I think of climate change and the answers to it, I think of jobs. A key plank of our build back better recovery plan is building a modern resilient climate infrastructure and clean energy future that will create millions of good paying union jobs, not $7, $8, $10, $12 an hour, but prevailing wage and benefits.”
The policy proposition is simple. In fact, it’s common sense — taxpayers should not, with their own tax dollars, undermine construction workers’ wages in their communities when they build public works, utilities, and energy projects. Further, the quality of the construction suffers when pay, safety, and productivity of the workforce plummets, which is exactly what happens in the absence of labor protections.
Through a host of longstanding tax credits, taxpayers underwrite close to one-third of the total construction cost of large-scale solar or wind projects. That has cost taxpayers billions since the inception of these programs, yet wages for construction workers building these projects continues to lag even as their share of the energy workforce grows.
Wind and solar producers employ 222,000 construction and installation workers in the U.S., according to a 2020 report compiled by the National Association of State Energy Officials and former Energy Secretary Moniz’s nonprofit, Energy Futures Initiative. Overall, 4 percent of solar photovoltaic workers and 6 percent of wind workers belong to unions, the report says, lower than in nuclear and coal. It’s also less than half the 13.4 percent rate in the private construction industry, according to U.S. government data.
Davis-Bacon prevailing wage establishes a wage floor for blue-collar construction workers, whether they are union or non-union, when they build federally assisted construction projects. This wage floor is established by a survey at the Department of Labor, and union wage rates do not prevail unless the survey reveals them to be dominant in a local construction labor market. In that way, the prevailing wage rates reflect the community’s standards.
The prevailing wage rate says nothing about a contractor’s union status. Instead, it just requires that those contractors pay workers the rates revealed in the survey, whether union or non-union. Where the survey reveals that pension, health care, and training investments prevail, contractors must also make those investments in their workforce.
Prevailing wage rates simply level the playing field for contractors, preventing employers from discriminating against any group of workers by paying them less. Prevailing wage laws are a pathway to the middle class and protect all workers against exploitation — regardless of race, ethnicity, or any other protected classification.
Under prevailing wage laws, contractors must compete for work based on who can best train, best equip, and best manage a construction crew — not based on who can assemble the cheapest, most exploitable workforce, either locally or through the importation of labor.
Studies show that prevailing wages have little or no effect on construction costs. This is because construction labor costs comprise less than one-third of total project costs. High-road contractors, those contractors who pay workers with family sustaining wages and benefits, can offset the hourly labor costs attributable to prevailing wage laws by hiring the most skilled and productive craftworkers.
Prevailing wage laws also support investments in the future workforce and help expand diversity in the trades by bringing women and people of color into the workforce through the system of registered apprenticeship — the “earn while you learn,” on-the-job training model utilized by Operating Engineers and other construction crafts.
Senate Finance Committee Chairman Ron WydenRonald (Ron) Lee WydenOn The Money — House pushes toward infrastructure vote Hillicon Valley — Presented by Xerox — EU calls out Russian hacking efforts aimed at member states Why Democrats opposing Biden's tax plan have it wrong MORE (D-Ore.) recently introduced the Clean Energy for America Act, legislation designed to modernize the federal tax code for building 21st century energy infrastructure. His bill overhauls the system that has over 40 different energy tax incentives that expire at different times and provide different levels of tax support. Essential to the members of the Operating Engineers, the Clean Energy for America Act would require energy infrastructure projects that receive this taxpayer assistance to comply with federal prevailing wage requirements and employ registered apprentices on construction job sites.
As bipartisan talks proceed on how we will build new, climate resilient infrastructure and transition towards a clean energy future, policymakers must continue to put workers first and ensure that we create family-sustaining jobs that pay prevailing wages, at a minimum. Connecting clean energy tax credits to strong labor standards can power both the nation’s economic recovery and the clean-energy economy.
James T. Callahan is General President of the 400,000-member International Union of Operating Engineers, one of North America’s largest construction unions. Callahan is Chairman of the IUOE National Training Fund and the Central Pension Fund, the second-biggest multiemployer pension fund in the United States.