July 2022 Vol. 77 No. 7
Features
Inside Infrastructure: Labor Policy Must Recognize Workforce Capacity Challenges
Eben Wyman | Wyman Associates
EDITOR’S NOTE: Eben Wyman is a veteran advocate for key underground utility and pipeline associations. He points out that maintaining an effective advocacy program is fundamental to the success of any organization interested in the happenings of the federal government. He can be contacted at eben@wymanassociates.net.
Last year, passage of the Infrastructure Investment and Jobs Act (IIJA) provided unprecedent funding in a wide range of markets. From deploying broadband systems to hardening the electric grid, replacing gas distribution systems to building and repairing America’s interstate pipeline network, to upgrading sewer and water systems, the federal investment provided in IIJA reflects a federal commitment we haven’t seen before.
While the $550 billion bill in new federal investment is promising, the construction industry continues to face stubborn challenges related to job capacity. Over the past several years we have seen a “greying workforce,” where older, seasoned workers are retiring, and the industry has struggled to replace them. These problems are already formidable, and the last thing the country needs is for the federal government to makes things worse.
When then President-elect Biden indicated that he would support and encourage policy that favors organized labor and create countless “union jobs,” many industry groups cautioned against overzealous favoritism for union work, especially with regard to mandated project labor agreements (PLAs). Despite the president’s promises to provide hundreds of thousands of union jobs, more than 85 percent of construction workers across the country come from merit-shop entities. Now is not the time to enact policy that would cut out the majority of the workers needed to meet the demand coming our way.
PLA requirements essentially exclude many construction firms from the opportunity to compete on contracts that include federal financing assistance. While this language was proposed as guidance and not as a mandate, the construction industry is concerned that encouragement of PLAs and related reporting requirements could lead to confusion. Further, it would discourage state and local governments from contracting with qualified nonunion contractors and local workers who could provide the best quality and cost for taxpayers.
Agency hurdles present formidable challenges
One of the biggest challenges facing the construction industry is the lack of enough workers in the market to meet the ever-increasing demand for the construction of American infrastructure. Mandating union labor while cutting out valuable nonunion workers though mandated PLAs exacerbates our workforce capacity challenges at a time when demand for construction workers is only rising. These policies will unquestionably delay the construction of the infrastructure needed.
While the Biden administration’s executive actions have not mandated PLA, they certainly encourage them as well as other biased policies. A few examples include:
- S. Department of Agriculture’s Rural Utilities Service (RUS) “ReConnect” Program – A recent announcement regarding funding to the RUS ReConnect program indicates that it is “important that necessary investments in broadband infrastructure be carried out in ways that produce high-quality infrastructure, avert disruptive and costly delays, and promote efficiency.”
- RUS then indicated that applicants should describe how they will incorporate strong labor standards, including “whether the project will be covered by a project labor agreement.”
- “Guidance” from U.S. Department of Treasury – In 2021, industry weighed in with the U.S. Department of Treasury concerning guidance related to federally assisted state and local infrastructure projects, including those related to water infrastructure and broadband deployment. PLAs are clearly encouraged in this guidance.
- Department of Labor’s proposed rule on expansion of prevailing wage requirements – DOL has proposed to change the definition of “prevailing wage” and to the scope of data to be considered in its wage surveys to set prevailing wages. Under current law, a single wage and benefit rate may be identified as prevailing in the area “only if it is paid to a majority of workers in a classification on the wage survey. Otherwise, a weighted average is used.” DOL proposes to return to the “30 percent rule,” where in the absence of a wage rate paid to a majority of workers in a particular classification, a wage rate will be considered prevailing if it is paid to at least 30 percent of such workers.
DOL also proposes to expand the scope of prevailing wage requirements. Payment of prevailing wages to workers currently applies to performing duties at the “site of the work.” The rule seeks to expand the definition of site of the work to include sites that are currently excluded, including off-site construction of “significant portions” of a prefabricated building.
According to DOL, these changes will “increase efficiency and reduce confusion for the regulated community where projects are covered by both federal and local or state prevailing wage laws and contractors are already familiar with complying with the local or State prevailing wage requirement.”
Any, all qualified needed
Most construction associations represents both union and merit shop contractors, and the reality is that the traditional argument of “labor vs. merit shop,” should take a back seat to addressing a much more the formidable problem of filling the gap between the workforce available and what’s needed to get the job done.
Importantly, industry groups have lined up against requiring PLAs on federal infrastructure projects and other overzealous labor policies. This not a debate about union vs merit shop labor – it’s about ensuring we have enough skilled labor to meet the unprecedented demand coming our way.
In the wake of the IIJA, where America anticipates unprecedented funding in a range of markets, most of the construction industry have opposed passage of the “Build Back Better” (BBB) legislation, which has little to do with building and will only set America back by picking favorites when it comes to the workforce needed to meet this unprecedented construction challenge.
While the BBB bill, as passed by the House last year does not include language that directly requires government-mandated project labor agreements (PLAs) that would unnecessarily cut out merit-shop construction entities. However, it did include provisions that favor union labor and would exacerbate the already formidable workforce capacity challenges facing the construction industry.
This would set a very disturbing precedent, and Congress must recognize the detriments of policy proposals that would effectively cut out non-union labor at a time when the industry already struggles to provide the workforce needed to meet demand. In addition, language that would allow for personal liability for corporate officers and executives for violation of labor law is overreaching and will result in unnecessary litigation.
One only needs to look back at the criticisms of the American Recovery and Reinvestment Act of 2009, when “shovel-ready” projects were compromised by overzealous federal policies that hampered key infrastructure improvement projects. We encourage Congress to enact policies that would allow and encourage all construction entities to bid on American infrastructure improvement projects.
While the BBB bill, doesn’t stand much of a chance in the remaining months of the 117th Congress, efforts to promote government-mandated PLAs that would unnecessarily cut out merit-shop construction entities continue to be rolled out.
One of the biggest challenges facing the construction industry is the lack of enough workers in the market to meet the ever-increasing demand for the construction of broadband infrastructure. The importance of keeping Americans connected and while completing many other vital infrastructure projects only exacerbates our workforce capacity challenges at a time when demand continues to rise. UC
WYMAN ASSOCIATES offers strategic consulting with its clients and direct advocacy before the United States Congress and executive branch agencies. Working with several allies in Washington and around the country, provides clients a constant voice in the national debate.
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