[Editor's note: This story originally was published by Real Clear Policy.]
By Ben Brubeck
Real Clear Policy
As Democrats in the U.S. Senate attempt to save the Build Back Better Act (H.R. 5376), passed by the House on Nov. 19, taxpayers, small business champions and climate change advocates should pressure the Senate to permanently eliminate controversial policies that will needlessly increase costs, reduce competition and undermine America’s swift transition to clean energy.
Tucked in the House’s tax-and-spending package is language that forces private developers of solar, wind, hydrogen, carbon sequestration, electric vehicle charging stations and other clean energy projects to either hire union-signatory contractors and unionized construction workers or lose critical tax incentives that help grow America’s clean energy marketplace.
While not an explicit mandate to use unionized firms and labor, in practice this policy is a brazen attempt to leverage federal tax policy to boost union membership while penalizing the 87.3% of the U.S. construction workforce who have chosen to work for a nonunion contractor and not to join a union.
The legislation slashes the longstanding current levels of clean energy tax credits from 30% to a baseline credit of 6%. However, developers receive a bonus tax credit 500% higher than the baseline credit if they require contractors to use government-registered apprentices and pay workers union-scale, government-determined hourly wages and benefits via the archaic and inflationary Davis-Bacon Act of 1931.
For decades, construction trade unions have lobbied lawmakers for a host of anti-competitive and costly union-favoring policies, like government-registered apprenticeship requirements and Davis-Bacon prevailing wage mandates on government construction projects, to steer contracts to unionized firms and labor. However, rewriting the U.S. tax code to enact pro-labor policies, reward special interests and distort the free market’s workforce development and compensation practices on private construction projects is unprecedented.
All the more concerning to climate change advocates, these provisions have the potential to slow down America’s transition to clean energy and meet President Joe Biden’s climate goals.
The construction industry is experiencing a skilled workforce shortage of 430,000 workers this year, which does not account for the additional $550 billion in new construction spending to come from the infrastructure bill signed into law by President Biden last month. Artificially excluding most or all of the clean energy market’s nonunion builders and workforce, who already provide quality construction to clean energy producers and pay their skilled workforce at rates comparable to the overall energy industry construction workforce, will undermine the administration’s plan to reduce emissions and secure a greener future.
For example, if the Biden administration is serious about increasing the number of EV charging stations across America from 48,000 to 500,000 by 2030, it needs all hands on deck, not just the 13% of the construction workforce that is unionized. ABC supports government-registered apprenticeship programs as one key strategy of the industry’s all-of-the-above solution to workforce development. However, in many markets there are no government-registered apprenticeship programs or too few with the capacity to handle new demand. Most contractors upskill their workforce through proprietary and/or community workforce development programs that are not part of the government’s registered apprenticeship system.
Likewise, it’s a huge administrative burden for developers and small businesses installing EV stations to follow the Davis-Bacon Act’s bureaucracy and red tape, which increases compliance costs and kills the efficient use of labor on private projects. Besides its negative impact on the environment, consumers and energy ratepayers, it will be especially devastating to local, small, veteran-, disabled-, women- and minority-owned contractors and their workers, because the majority of them are nonunion and do not participate in government-registered apprenticeship programs or perform work subject to the Davis-Bacon bureaucracy.
In many markets, increasing costs, exacerbating the skilled workforce shortage, and cutting out quality contractors already in the sector or eager to enter it will make both tranches of tax credits useless for both the EV charging market and other green energy producers. This means less investment in clean energy projects, fewer jobs and more carbon emissions for America.
This policy joins a controversial provision providing tax breaks for union-built EVs as one of many politically motivated, union-friendly sweetheart deals in this bill.
If the White House and Congress want more investment in clean energy projects to combat climate change and create well-paying jobs, they should encourage all workers and businesses to rebuild America’s clean energy economy via tax incentives that maximize private sector investment. It’s bad public policy to needlessly impose limits on fair and open competition, which will slow down clean energy deployment and stifle new job creation. If the United States truly intends to lead in the fight against climate change and the transition to clean energy, voters should urge members of Congress and the Biden administration to reject this proposal in the Build Back Better Act or legislative alternatives Congress will explore in 2022.
Ben Brubeck is the vice president of regulatory, labor and state affairs for Associated Builders and Contractors.
[Editor's note: This story originally was published by Real Clear Policy.]
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