The Inflation Reduction Act Promises Booming Demand for Apprentices for Green Projects

In August 2022, President Biden signed the transformational, $740 billion Inflation Reduction Act (IRA). The IRA provides massive tax credits for energy efficient buildings, home, and EV charging stations—if the contractor provides good jobs for their workers. Most of these tax credits are not available unless contractors: (1) offer jobs to apprentices, and (2) pay prevailing wages. Contractors can receive five times the base tax credit for projects that meet these requirements.

These good jobs requirements promise to create a boom in quality work in the construction industry, also opening doors to organizing opportunities and the potential to lock these quality jobs in for the long term.

The ratio of apprentices to journey workers on the jobsite must be “consistent with proper supervision, training, safety, and continuity of employment” and any collective bargaining agreement provision on the subject. There are also strict penalties for contractors who fail to pay prevailing wages as promised.

In order to get the tax credit, contractors must request apprentices from a registered program. If the apprenticeship program denies the request, or if the apprenticeship program does not reply within five days, then the contractor may still receive the credit. Contractors who claim but fail to pay prevailing wages will owe backpay, with interest, to their workers plus a $5,000 federal penalty per worker. (26 U.S.C. § 45(f)(7)(B)(i).) Additionally, a contractor who intentionally disregards the requirement to pay prevailing wages will owe three (3) times as much backpay, with interest, to those workers, plus a $10,000 federal penalty per worker.

The tax credit is just now coming online: it is in effect for projects where construction begins on or after January 29, 2023. As a result, apprenticeship programs will likely see a substantial increase in the demand for skilled apprentices.