Inflation Reduction Act: limited funding for workforce, but not enough.

By Megan Evans, August 19, 2022

This week President Biden signed into law the Inflation Reduction Act (IRA) a reconciliation package that invests primarily in healthcare and fighting climate change. The IRA is a significantly pared down, compromise bill coming out of the unresolved negotiations of the Build Back Better Act.

Despite public commitments from Democrats that job-creating investments in infrastructure and energy would be paired with sufficient funding for the workforce training that is essential to filling these new jobs, IRA contains none of the $40 billion for workforce that skills advocates had been pursuing. While the IRA does contain funding and energy tax credits to support targeted workforce programs, there is no funding for programs inclusive of those serving youth and adults authorized under the Workforce Innovation and Opportunity Act (WIOA) and the Perkins Career and Technical Education Act. There is also no funding for strategies NSC’s network identified as critical for supporting infrastructure and energy job creation, including expanding federal financing for high-quality, short-term programs at community and technical colleges; investments in partnerships between industry, educators, and other workforce experts; or supporting worker access to and success in training for jobs for which businesses are and will be hiring.

This legislation falls short of what training providers need to support workers, businesses and communities. NSC looks forward to working with Congress, the administration and network partners to continue to advocate to policymakers on the critical need for robust investments in skills and tax credits that truly incentivize employers to provide training and career pathways for underrepresented populations.

Energy Tax Breaks

There are roughly a dozen energy related tax credits in the legislation that intend to facilitate access to clean energy and support workers’ access to apprenticeship and prevailing wages. For the most part, these credits are available to energy producers or to support the construction or retrofit of facilities to include energy efficient components. The programs provide either a base credit or a bonus rate if the contractors and laborers are paid prevailing wages and registered apprentices represent a percentage of labor hours scaled up over three years. For those employers who meet the prevailing wage and apprenticeship requirements, the bonus rate is five times the base credit rate.

These credits may help increase apprenticeship offerings in the clean energy and construction space, but fail to include a focus on access to apprenticeship or prevailing wage for workers of color or women – those who have historically and continue to be excluded from good jobs in energy sectors. A narrow selection of credits for illustrative purposes are included below:

  • The Production Tax Credit (PTC) for electricity generated from renewable energy sources which had been phasing out is extended to 2025 for energy produced from wind, solar, geothermal, biomass, and hydropower sources. Facilities that meet the prevailing wage and apprenticeship requirements can earn up to five times the credit of qualifying facilities who don’t leverage these priorities.
  • The Investment Tax Credit (ITC) is also extended through 2024 and provides a credit for installing renewable energy generation equipment. The base credit provided is 6%. For facilities that meet the prevailing wage and apprenticeship requirements, the bonus credit lands at 30%.

The tax credit programs, including those explained above, create a potential for increased demand for apprenticeship programs; however, they do not come paired with dedicated funding to help stand up these programs, empower businesses to hire workers from local communities, support partnerships between industry and training provider, or for federal agencies to track which workers the agencies are providing apprenticeship opportunities. While some employers may choose to meet the prevailing wage and apprenticeship requirements necessary to take advantage of the bonus credits, it is unclear how many employers who do not already meet these requirements will be impacted by these provisions.

Programmatic Funding

There is roughly $4.5 billion in the IRA that could be used for workforce or occupation-specific training. None of this funding is specifically allocated to support the costs of workers accessing or succeeding in training. Advocates may be able to collaborate with Energy agencies and contractors to support occupational-specific training and upskilling. The opportunities NSC has identified in the Inflation Reduction Act include:

  • $250 million is provided to support agricultural research and education including providing pathways to the agricultural sector or federal employment.
  • $200 million in assistance to states and municipalities to help provide training and education to contractors involved with the installation of energy efficiency improvements. These funds can be used to reduce the cost of training, provide testing and certification and partner with non-profits to develop and implement programs.
  • $330 million for grants to states and municipalities to adopt energy efficient building codes and provide training and enforcement programs to achieve full compliance
  • $670 million for grants to states and municipalities to meet or exceed codes zero energy standards and provide training and enforcement programs to achieve full compliance and adoption
  • $400 million for competitive grants to states, municipalities, tribes, or nonprofit school transportation entities to replace heavy-duty vehicles with those that are zero emissions. Workforce development and training to support maintenance, operations and charging/ fueling are eligible uses for funds under this program.
  • $2.8 billion for Environmental and Climate Justice Block Grants. Grants will be awarded to a partnership of tribes, local governments, Institutions of Higher Education and a non-profit community-based organization; a non-profit community-based organization; or a partnership of non-profit community-based organizations. Recipients may use the funds to monitor, prevent, and remediate investments in low and zero emissions technology and infrastructure as well as workforce development efforts that help reduce greenhouse gases.


What’s next

While skills advocates will be glad to see some limited funding for workforce, it simply isn’t enough.

The business leaders, labor leaders, community college leaders, industry training providers and other stakeholders who participated in our infrastructure Industry Recovery Panel (a group NSC convened to advise the Biden administration and Congress on federal recovery policies) have made it clear that local resident training, industry partnerships, equitable career pathways, short term training and flexible apprenticeships are critical components to meet our nation’s infrastructure and energy goals. Instead of the narrow, occupation-specific investments that continue to come out of Congressional spending packages, advocates require legislation that:

  • Makes robust investments in supporting businesses in the energy sectors working with each other to support training and education opportunities;
  • Support training and education providers’ capacity to support workers success in these opportunities; and
  • Where Congress does focus on tax policy, this policy should center on providing additional benefits to businesses who provide training and supports for workers who have been unemployed and who need access to additional training opportunities.

As NSC’s network continues to work with Congress and the Administration, these are the type of sensible legislative solutions we will pursue to make a real impact on workers and businesses alike.