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Why unions are excited about these provisions hidden deep in the Inflation Reduction Act
By Kristin Toussaint - Fast Company, January 27, 2023
The Inflation Reduction Act, which was signed into law last summer, is the U.S.’s largest-ever investment in clean and renewable energy. But it’s also a landmark policy for labor, tying $270 billion in tax incentives (of the bill’s $369 billion clean energy investment) to labor standards that will boost working conditions for those in clean energy jobs.
Those standards are set to go into effect on January 29, and labor advocates say it’s a historic opportunity to create a tremendous number of union jobs in the clean energy economy.
The IRA has tax credits that create financial incentives not only for developers to embark on more clean energy projects but also for those projects to meet high labor standards. Companies can get a 30% tax credit on their qualifying projects—from offshore wind to solar construction to energy storage—but only if they meet certain standards. That includes paying workers a prevailing wage (the federal government sets this rate for work on public projects; states can set theirs higher) and having a certain amount of work done by those in registered apprenticeship programs. (To start, 12.5% of total labor hours must be done by apprentices; that increases to 15% in 2024.)
If clean energy developers don’t meet those standards—say, paying only minimum wage and choosing not to hire any apprentices—they get a tax credit of just 6%. “The IRA provides a substantial and impactful financial benefit for developers to pay good wages, hire apprentices, and really create a pipeline to good careers in the clean energy economy,” says Dave Hancock, director of strategic campaigns at the Climate Jobs National Resource Center, which helps unions develop labor-led climate job coalitions and works toward a “worker-centered renewable economy.”
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