The Sheet Metal and Air Conditioning Contractors' National Association (SMACNA), supported by more than 3,500 construction firms engaged in industrial, commercial, residential, architectural and specialty sheet metal and air conditioning construction throughout the United States, applauded the final rule issued by the Biden Administration last week, designed to address the skilled workforce crisis shortage by requiring private developers to comply with Project Labor Agreement’s (PLA), 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,” said 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.”
SMACNA has long championed nearly identical “high road” workforce quality enhancements the IRA now has enacted across the construction industry, especially for registered apprenticeships. Those who have opposed a widely recognized necessity for such high-quality workforce standards perhaps now will reconsider their decade’s long neglectful underinvestment in skilled apprenticeship training. SMACNA has long advocated, along with allies, for these national apprenticeship, wage and benefit standards as well as investments in retraining.
We have many decades supporting and investing far above the industry standard in registered apprenticeship programs (RAPs) to build an industry able to complete ever more complex private and public mega projects. High road contractors now successfully bid these IRA created projects every week. Along with other quality contractors, these extraordinary IRA driven workforce investments already are helping to boost construction markets to record levels and alleviate the shortage of highly skilled workers. 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.
According to SMACNA, 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, according to SMACNA.
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.
Without question, the industry's ability to meet ever changing design complexities, and owner demands for project excellence have been and continue to be compromised. Simply put, DOL has reviewed this crisis in the skilled labor marketplace and considered owner-developer concerns and proposed long overdue RAP reforms.
PLA 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, according to SMACNA. 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.
SMACNA noted 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. According to SMACNA, owners in both the public and private sectors know they need contractors meeting PWA requirements to complete facilities on time and within budget. It is owners in the private sector who demand use of PWA’s the most, SMACNA concluded.
