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The measure would restore an old definition of the “prevailing wage,” scrapped by President Ronald Reagan, that the Biden administration says would change pay standards on federal construction projects, the officials said. Under the new rule, employers would be required to pay construction workers the equivalent of wages made by at least 30 percent of workers in a given trade and locality.
The decision caps off months of debate among experts about how best to mandate union requirements for federal funds. Unease among some unions has threatened to cloud a boom in clean energy investment and production: Funding from President Biden’s Inflation Reduction Act has poured disproportionately into red states, with private developers of renewable energy projects seeking lower labor costs in parts of the country with nonunion workforces. The United Auto Workers, for instance, has sounded the alarm over relatively low pay for workers at one new battery factory, pushing to ensure union workers still benefit in the electric vehicle era.
The new rule, which updates the 1931 Davis-Bacon Act, is intended to ensure that labor unions are at the forefront of the projects resulting from the federal spending blitz, said the people familiar with the matter. Republican lawmakers have opposed requirements like this because they increase project costs, and even some liberal economists have expressed concern about whether they will hurt the administration’s other goals.
Some economists argue that union requirements undermine the impact of the original legislation approved by Congress. Under the Biden administration, lawmakers have approved three major bills creating trillions in new federal funding — one devoted to creating a domestic semiconductor industry, one to repairing the nation’s infrastructure and a third to transition the economy to clean energy. While the administration has touted the new domestic jobs that resulted, these laws were primarily aimed at solving other problems — the nation’s dependence on a foreign supply of semiconductors, for instance, and rising global emissions.
“We should be focused on ways of lowering infrastructure costs and speed up the processes, not burden them with additional cost and regulation,” said Adam Ozimek, chief economist at the Economic Innovation Group. “There are a variety of important goals the government has — around infrastructure, around clean energy — and we should be focused on achieving those goals, rather than raising costs to benefit labor.”
The American Prospect, which first broke news of the pending rule, reported that the Associated Builders and Contractors could file a lawsuit to stop it as soon as this week. A spokeswoman for the trade organization did not return a request for comment late Monday night.
The new rule is viewed as a win for organized labor. North America’s Building Trades Unions has commended the administration’s efforts, as has the United Association, which represents plumbers and welders, among others. Mark McManus, general president of the United Association, called Biden’s decision a “historic step.”
An initial Davis-Bacon proposal was released in March 2022 but hadn’t been moved forward. Supporters have argued that union support is essential for preserving the political constituency behind these efforts. And as Biden seeks the endorsement of the United Auto Workers for his reelection bid, the White House is eager to demonstrate it is doing what it can to ensure its members benefit from the administration’s new federal investments.
“A lot of plants have gone to the south, to nonunion states where very few workers are organized — and Biden is trying to do what he can to make sure as many jobs as possible are unionized,” said Dean Baker, an economist at the Center for Economic and Policy Research, a left-leaning think tank. “Biden is trying to do everything within his executive power to make sure the jobs created by these bills are good-paying jobs.”
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