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The following comment was written by Jason George, Business Manager and Financial Secretary, International Union of Operating Engineers, Local 49. See our comment guidelines for more information.
It is not entirely new to say that clean energy could transform the economy of our region.
In 2019, nearly half of Minnesota’s electricity came from sources such as wind and solar. The state’s wind generation capacity is ranked in the top 10 nationally and North and South Dakota are not far behind. And recent research has shown that investments in this emerging sector will create more jobs – and more economic growth – than comparable investments in fossil fuel power generation.
Indeed, some analysts have noted that the cost of building solar and wind installations has dropped by 72% to 90% over the past decade. Wind and solar are cheaper than existing coal plants and competitive with natural gas and nuclear alternatives.
However, there are very real challenges that could threaten this progress.
Prior to COVID, the industry faced a shortage of skilled workers needed to fabricate, build, or install these facilities. Research found that workers in the clean energy sector face a wage penalty of up to 22% compared to workers in the fossil fuel sector, and at least 7% compared to skilled workers on other types of infrastructure.
As a result, many projects have relied on less skilled travelers from out of state for their labor needs. A study found that 86% of wind project workers in North Dakota came from out of state, costing the state economy nearly $62 million.
This is clearly a problem. So how to fix it?
From high schools and community colleges to labor union employment centers, we already have many of the workers we need to lead America’s energy transformation. But we need a policy framework that encourages more of our next generation energy companies to compete for them and to invest in the institutions that can help this fledgling industry attract the workforce it needs. need for future generations.
One of the main reasons why we don’t face similar shortages of fossil fuels or most infrastructure projects can be attributed – at least in part – to the role unions have played in ensuring that these sectors relatively older people invest in their workers. These efforts have not only resulted in market-competitive pay and benefit rates, but also in a fully privately funded apprenticeship system that trains new workers and secures them to in-demand careers.
This last point cannot be stressed enough. Qualified unions and their signatory employers negotiate pennies-per-hour contributions into their apprenticeship programs, which train the next generation of workers (who earn a paycheck while in school and graduate debt-free). Over 90% of skilled trades apprentices in Minnesota come from these privately funded, union-affiliated programs.
Importantly, a growing body of research has concluded that these investments do not increase school construction costs and are unlikely to affect the cost competitiveness of school projects. clean energy.
There are two main reasons for this. First, labor represents less than 20% of overall project expenses. Second, unionized work has been linked to improvements in productivity, efficiency, safety, and workforce retention that have offset higher wage and benefit levels. In Minnesota, researchers also found that higher wages and benefits negotiated by qualified unions supported more than 15,000 additional jobs through increased consumer spending, while reducing dependency on social assistance programs such as food stamps and Medicaid.
Without institutional or policy mechanisms that promote investment in the workforce, there is too often an incentive to lower wages or forgo training expenditures in an effort to reduce project bids or maximize profits. short term. Such dynamics, which are not uncommon in the non-union side of the construction and energy sectors, can lead to an erosion of job quality and labor market competitiveness. And that can invite the skilled worker shortages we see today in clean energy and so many other industries.
Late last year, the U.S. House of Representatives passed new tax credits and incentives to accelerate America’s clean energy transition by encouraging greater use of labor. union work and materials made in the USA. These provisions – which could soon be considered in the US Senate – would ensure that the industry not only creates more good jobs in the construction and maintenance of its facilities, but also invests in apprenticeship programs. joint management that operate as a skilled workforce. pipelines. With unions enjoying their biggest public endorsement in more than 50 years, these provisions are clearly popular with the public. When considered alongside the imperatives of protecting our environment, growing our economy, and securing more workers for good jobs and in-demand careers, it is clear that this is also sound policy.