In the highly competitive construction industry, the strength of our labor force is critical. If a company can’t get the skilled construction tradespeople they need to complete a project, their position in the market may become obsolete. With workforce development issues affecting almost every industry, companies need to play an active part in the solution. This is where apprenticeship programs come in.
Apprenticeships create and maintain a viable labor source to sustain current and future business demands. Previously very union-focused, apprenticeship programs are now growing into open markets as well and usually span between two and four years to complete. These programs aim to teach workers additional skills to move into positions they weren’t previously qualified for, a concept referred to as “upskilling.” Apprenticeship programs usually are designed to teach specific knowledge and skills required to fill open positions in a local market.
Employers are struggling to fill open positions with qualified candidates while employment demand is projected to grow by 8.3 million jobs by 2031. Passed by the U.S. federal government in 2022, the Inflation Reduction Act (IRA) amended the Internal Revenue Code to include registered apprenticeship and prevailing wage requirements for the construction of energy projects to qualify for tax credits. Due to these market factors, apprenticeship programs are more important than ever – is your business ready? Here are three critical steps construction companies must address to establish and operate a successful apprenticeship program:
Step 1. Ensure Compliance with Requirements
To benefit from increased tax benefits, the IRA requires that a designated number of construction labor hours must be performed by qualified apprentices on federally funded projects. A qualified apprentice refers to any individual participating in a program registered under the National Apprenticeship Act. Companies may hire from an existing registered apprenticeship program or register their own program, but all registered programs are intended to be industry-driven, high-quality career pathways to develop and prepare the workforce.Be sure to consider the different regional requirements for all areas your company is currently or plans to perform work in. It’s beneficial to design your apprenticeship program standards to be easily scalable so they are quicker to deploy in multiple states. Planning and preparation are key to establishing a successful program; account for a lengthy review process to officially register your program.
Step 2. Determine an Appropriate Pay Scale
Employees can’t afford or are unwilling to take unpaid time off work to attend training sessions; they should be compensated appropriately for participating in workforce development initiatives. The Davis-Bacon Act authorizes the U.S. Department of Labor to determine local prevailing wage rates for federally funded projects. Under the IRA, companies must adjust the rate listed for each stage of an apprenticeship outlined in the agreement. For example, in order to receive the full 30% investment tax credit for renewable energy projects equal to or greater than 1 MW in size, the IRA’s prevailing wage and registered apprenticeship program requirements must be met.
Most apprenticeship agreements provide a specific percentage of the journeyworker rate due for each level of apprenticeship, which should then be applied to the prevailing wage rate.There are special case-by-case decisions to be made; for example, if an experienced employee is coming from a state without apprenticeship requirements, they will still need to register as a licensed apprentice, but they could be paid licensed journeyworker wages if they have the qualifications to back it up. These pay scales for registered apprenticeship programs must be submitted to the Labor Department for approval, which protects workers from being taken advantage of.
Step 3. Focus on Recruitment and Retention
Recruitment and retention are essential to the future of the construction industry. There are various strategies that companies can implement to address workforce development challenges:
Align training with industry needs through apprenticeship programs that mix pre-employment instruction with on-the-job training
Educate students on the career path and earning potential of skilled trades professions
Partner with local high schools and community colleges through career placement and advancement programs
Make benefits and training program information publicly available in a variety of formats and languages
Offer training for industry-recognized certifications (such as OSHA 30)
Provide additional employment benefits including per diem for transportation to the job site and Flexible Spending Accounts (FSA) for childcare
Leverage marketing and outreach opportunities in your community. Successful outreach and recruitment efforts will attract individuals who maybe wouldn’t have considered careers in the construction industry if they hadn’t been informed of the benefits. Don’t be wary of hiring workers who came from other company apprenticeships; the workforce is fluid, and while you may relinquish trainees to other companies, you’ll also gain apprentices from other credible programs. Owners may be interested in investing in programs and even the recruitment process since the success of their projects depends on the quality of labor. These programs are truly life-changing for individuals and holistically benefit our workforce.
Case Study: Power Sector Apprenticeship Programs in Texas
Black & Veatch, in partnership with newly acquired subsidiary Bird Electric, works with the Labor Department and various state agencies to operate successful registered apprenticeship programs across the country. The IRA is expected to bring an estimated $66.5 billion in funding for large-scale clean power generation and storage in Texas between now and 2030. Texas also has been identified as the leading state for renewable energy development. Thanks to the IRA clean energy tax credits, it’s anticipated that more than 100,000 jobs will be added to the Texas power sector by 2030. As a result, Black & Veatch recently opened a recruitment, onboarding and workforce development office in Deer Park, Texas. Nicknamed “Contractor Row,” the location is known for its convenient access to employment opportunities and intends to support the ongoing infrastructure boom by upskilling craft professionals for the rapid growth of renewable energy projects. Black & Veatch’s recent acquisition of Bird Electric brings the company’s construction capabilities to a wider client base; therefore, additional field professionals are needed to support expanded efforts. Black & Veatch aims to hire close to 800 professionals within the next nine months to staff more than 500,000 manhours-worth of upcoming Texas projects.
With Apprenticeship Programs, Everyone Wins
To comply with the IRA and be successful in today’s business climate, it’s critical to access a trained workforce (and therefore a safer workforce) through apprenticeships. Employers with apprenticeship programs benefit from improved company culture, employee loyalty and productivity, reduced turnover, innovative ideas, on-time delivery and reduced downtime. Apprenticeships and other workforce development initiatives cultivate a rare “everyone wins” situation:
Give community members fulfilling long-term careers, not just jobs
Offer lucrative alternatives to traditional higher education
Identify the best fit for individual skills and interests with opportunities to get licensed in multiple trades
Provide potential paths to company senior leadership, as many leaders historically worked their way up through the trades
Attract big companies to put down roots in locations where skilled labor is available, generating higher tax revenue
The registered apprenticeship system is the nation’s most successful federal workforce development program; 93% of registered apprentices are employed upon completion, earning an average starting annual wage of $77,000. Businesses also are estimated to earn $1.44 for every dollar invested in apprenticeships. Apprenticeship investments benefit workers, employers and even taxpayers due to increased tax revenues and reduced spending on unemployment insurance and other public assistance programs.