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[Editor's note: This story originally was published by Real Clear Policy.]
By Anirban Basu & Mike Bellaman
Real Clear Policy
The recent historic rate hike by the Federal Reserve is an alarming reminder that inflation still has the economy in a chokehold. American consumers and businesses are feeling the pain of rising prices in every sector of the economy, especially in construction. According to the U.S. Bureau of Labor Statistics, the cost of construction inputs rose 46% from the start of the pandemic to June 2022. While certain commodity prices like softwood lumber have moderated, others, like iron and steel, are up nearly 100% since February 2020.
The more costs rise, the less infrastructure taxpayers get per dollar. That’s a big problem for implementing the infrastructure bill enacted into law last November. And while Americans might assume the Biden administration would pull every policy lever available to help bring inflation and costs under control, the White House is instead poised to implement an inflationary executive order that will compound the problem by hiking construction costs by 12%-20% and needlessly exacerbating the industry’s skilled labor shortage.
Any day now, the White House will issue a controversial regulation implementing a February executive order mandating project labor agreements on large-scale federal construction contracts. PLA mandates discourage quality nonunion contractors from participating in infrastructure projects, particularly small, women-, minority- and veteran-owned businesses. In other words, EO 14063 requires big infrastructure projects to be largely built by just 12.6% of the U.S. construction workforce who are unionized.
Eliminating almost nine out of ten construction workers from rebuilding America because they are nonunion as the 7.6-million-person U.S. construction industry faces a skilled labor shortage of 650,000 construction workers in 2022 alone is sure to increase costs, create project delays and prevent some of the best and most qualified contractors and workers from rebuilding America.
Simply put, anti-competitive and costly White House policies steering federal and federally assisted infrastructure projects to union contractors and their unionized workers will result in lower return on investment. Taxpayers deserve better: your hard-earned dollars should create as many high-quality infrastructure projects and good-paying jobs as possible.
To combat rising inflation and recessionary trends, lift the U.S. economy and create jobs throughout America, the Biden administration should consider these common-sense policies.
First, construction craft professionals are among America’s great unsung heroes, often entering the industry at an early age and honing skills over the course of decades to build the places where we live, work, learn, pray and heal. And yet, in many instances, students and career-seekers have been persuaded by educators, family members and other influencers to pursue a four-year college degree. While this makes sense for some, others would have benefitted from debt-free education and exposure to the myriad career pathways that the skilled trades offer. The Biden administration should champion an all-of-the-above strategy to build the construction workforce pipeline and encourage more women, veterans, minorities and second chance seekers to join our ranks.
Second, the White House should support equitable treatment of qualified firms across the construction industry so that all can compete on a level playing field to fully participate in rebuilding America. Preserving the right for a worker to choose the employment value proposition that works best for their career path will create the conditions for the best model of construction service delivery — union or nonunion — to win competitively bid public works contracts.
Third, America needs immigration policies that are coherent, clear and enforceable. To support efficient infrastructure investment, merit-based worker visa programs must be part of comprehensive immigration reform that secures our borders and addresses the dynamic workforce needs of industry.
The bipartisan Infrastructure Investment and Jobs Act embodies the most significant investment in our nation’s infrastructure in a generation — $550 billion in new spending — and was passed with the intent to help America complete globally and foster broadly shared prosperity through the balance of the 21st century. Let’s rebuild with this intent in mind.
Anirban Basu is the chief economist and Mike Bellaman is the president and CEO of Associated Builders and Contractors.
[Editor's note: This story originally was published by Real Clear Policy.]
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