The Free Enterprise Alliance (FEA) is the action arm for small businesses, entrepreneurs and advocates of limited government, open and fair competition, and the economically sound principles upon which America was built.
Founded by the Associated Builders and Contractors (ABC), the Free Enterprise Alliance’s mission is to educate ABC members and their employees, elected officials, and the public about the issues important to open competition in America. At the heart of the Free Enterprise Alliance’s mission is the belief that while we need government for common sense regulations, the scales have tipped too far in favor of government intrusion.
Given the workforce shortage impacting the U.S. construction sector, any comprehensive infrastructure package must also include investment in building a safe, skilled, and productive workforce. ABC estimated 440,000 jobs needed to be filled today just to meet construction backlog – a shortfall that will only be exacerbated by an infrastructure package. This is a critical issue for ABC and our members. ABC member contractors invested an estimated $1.6 billion per year in workforce development in 2018 to educate and upskill nearly 1 million course attendees annually, up from $1.1 billion in 2013.
Policymakers must commit to supporting an all-of-the-above strategy for workforce development. Apprenticeships, both industry recognized and registered, should have equal access to incentives such as tax breaks, tuition assistance, scale wages and increased access to career and technical education programs. The construction industry is not a rigid career pathway. Rather it provides limitless opportunities for students, veterans and people re-entering the workforce or changing careers to reach their full potential. Once they decide on a career in construction, workers can participate in multi-skill training, where they can learn more than one skill to give themselves a competitive advantage in the marketplace.
To bring more Americans into skilled construction careers and help companies find the workers they desperately need, the public and private sectors need to train the construction professionals of the future using innovative and flexible apprenticeship models like just-in-time task training, competency-based progression, work-based learning and government-registered training to build a safe, skilled and productive workforce.
This radical legislation includes provisions that would:
- strip away workers’ free choice in union elections as well as their privacy rights;
- codify into law the NLRB’s controversial Browning-Ferris Industries joint-employer standard that has threatened our country’s small and local businesses;
- curb opportunities for people to work independently through gig economy platforms or more traditional independent contractor roles;
- eliminate Right-to-Work protections for workers across the country, including in the twenty-seven states that have passed Right-to-Work laws;
- interfere with attorney-client confidentiality and make it harder for businesses, particularly small businesses, to secure legal advice on complex labor law matters;
- prohibit arbitration agreements in employment contracts;
- infringe on the due process rights of employers; and
- strip away “secondary boycott” protections that prevent unions from using their anti-trust exemptions and immunity from certain state laws to target businesses for anti-competitive purposes other than organizing.
A recent analysis by the American Action Forum proved the PRO Act’s economic cost would be disastrous for the economy. The provision limiting independent contractors’ rights would affect 8.5% of GDP and put up to $12.1 billion of additional annual cost pressure on employers, and the joint employer provision would cost up to $33.3 billion in lost annual output for the franchise business sector alone.
The Tax Cuts and Jobs Act (H.R. 1) has provided a simpler and fairer tax code, leading to more economic freedom and global competitiveness. The vast majority of construction companies will benefit from the new 20 percent deduction for qualified pass-through income. Along with the largest corporate rate cut in U.S. history to 21 percent, the doubling of the estate tax exemption, reductions to individual tax rates, the repeal of the corporate alternative minimum tax and expansion of small business accounting methods, the tax reform bill has eased some burdens on the construction industry, family-owned businesses and hardworking Americans.
The Tax Cuts and Jobs Act has continued to help unlock the full potential of the construction industry, creating new jobs and growing the economy. As construction businesses feel the positive effects of tax reform, contractors can plan to hire more employees and to invest in workforce development. In addition, their employees have seen an increase in their paychecks.
Congress should act to ensure permanent enactment of the Tax Cuts and Jobs Act’s expiring provisions, including the qualified business income deduction under Section 199A, 100 percent bonus depreciation, the current individual rate schedule and increased estate tax exemption levels.
In order to create the conditions for innovation and free enterprise, the ultimate priorities must be to promote open competition, efficiency, fairness and equality in government contracting. Mandating project labor agreements (PLAs) needlessly limits the pool of experienced and qualified bidders able to deliver the best possible product to taxpayers at the best possible price. Government-mandated PLAs have shown drive up the cost of construction projects by 12% to 20% and discriminate against the 88.3% of U.S. construction workers who choose not to join a union.
In 2009, President Obama issued an executive order encouraging federal agencies to require the use of PLAs on federal and federally assisted contracts exceeding $25 million. This EO currently remains in place, but will be replaced with a new Biden administration policy requiring PLAs on federal contracts of $35 million or more once regulations are finalized in 2023. Legislation should be enacted that would restore fairness and neutrality in government contracting by prohibiting federal agencies from encouraging, requiring or prohibiting contractors to execute PLAs as a condition of winning a contract to build a federal or federally assisted construction project. The Fair and Open Competition Act (H.R. 1209/S. 537) has been introduced in both chambers of Congress. States also have taken action to guarantee a level playing field in government contracting and that more projects get done at the best possible price.
To date, 25 states have taken action ensuring government neutrality in contracting by prohibiting government-mandated PLAs on projects funded by taxpayers.
Systemic labor shortages rank at the top of companies’ lists of most significant problems and are already contributing to rising costs in construction. Despite efforts to recruit and train American workers, the construction sector faces a very real growth and affordability crisis if work is increasingly delayed or even cancelled due to a lack of domestic labor. True immigration reform must include a mechanism for construction industry employers to get the temporary foreign workers they need when American workers are unavailable. Our industry must be able to access a program where we can hire legal, foreign-born workers in order to supplement the U.S. construction workforce when the economy needs them.
There is also a need to establish a fair, efficient and workable national employment verification system that provides confirmation of the work authorization status of prospective employees but that also ensures liability protections for employers who comply in good faith. Congress must recognize the concerns of the business community by including strong safe harbor protections for employers and, of significant importance to companies operating in the construction field, continue the requirements of current law by mandating all employers be held responsible for the work authorization status of their direct employees, maintaining current liability for employers who knowingly use subcontract labor to circumvent immigration law.
Congress also must address the presence of the undocumented population in a respectful, common-sense manner that aids the workforce needs of industry sectors like construction. Opportunities to create an earned path toward legal permanent status or citizenship for undocumented workers who meet certain requirements, particularly those “Dreamers” who were brought here as children and have voluntarily come out of the shadows to pursue an education, establish careers, and serve our country in uniform, should be pursued.
Concerning TPS designations, the sudden exodus of legally authorized workers from the construction sector will only exacerbate existing labor shortages and lead to project delays at a cost to taxpayers and consumers. Congress should work with the administration to find an opportunity to extend TPS status for deserving nations, and to provide an opportunity for TPS designees who are productive members of the workforce to remain in the United States, to ensure these hardworking individuals continue to participate in the American workforce at a time when they are most needed.
One of the most abusive federal contracting policies affecting the construction industry is the expanded enforcement of “prevailing wage” requirements under the Davis-Bacon Act.
The federal Davis-Bacon and Related Acts govern wage requirements for contractors and subcontractors performing federally funded or assisted contracts in excess of $2,000. Administered through an unscientific and fundamentally flawed survey process by the U.S. Department of Labor (DOL), these so-called “prevailing” wages hinder economic growth, increase the federal deficit, and impose enormous burdens. Davis-Bacon stifles contractor productivity by raising project costs, and imposes rigid craft work rules that ignore skill differences.
Congress should carry out full repeal of the Davis-Bacon Act, and state and local legislative bodies should also repeal their prevailing wage laws that mandate wage and benefit rates that do not reflect the current construction market. In the absence of full repeal, legislative and regulatory efforts designed to mitigate the Act’s negative effects should be supported, and any expansion of Davis-Bacon into areas of public and private projects in which it has not been previously mandated should be opposed.