IRA’s labor standard requirements could create 3.9M ‘high-quality’ jobs: report

The Inflation Reduction Act’s tax incentives tied to labor standards could generate around 3.9 million jobs across 6,285 clean energy projects in development, according to a new report from the Climate Jobs National Resource Center.

The report was released on Thursday to mark the two-year anniversary of the IRA’s passage. Each of the 6,285 projects the authors examined “could be eligible for IRA incentives tied to labor standards,” the reports says. Those standards include hiring a certain number of registered apprentices and offering pay that meets the prevailing wage.

Meeting those standards allows developers to “maximize” their IRA benefits, the report says, and as a result the standards “represent a significant opportunity to boost pay and job quality for clean energy workers across America.”

The prevailing wage in a given area is “often the union wage,” the report said, and the provision requiring it can “help ensure that clean energy jobs, rather than undercutting high-paying work in fossil fuels, can become lifelong, family-sustaining careers for workers nationwide.”

“It seemed like all the good jobs were hours away. You kind of had to choose between raising your kids or making enough money to support them. You just couldn’t do both,” said Caleb Littlefield, a member of the International Union of Operating Engineers Local 4 working on Walden Leeds Solar in Leeds, Maine, in a release from the CJNRC. “But the [IRA] is changing that. Those investments are creating good union jobs that make people’s lives better.”

In addition, labor unions can assist with the implementation of the IRA by providing “a highly-skilled, well-trained, and reliable workforce that can execute large-scale, complex projects effectively and efficiently,” the report said.

The report examines IRA job creation potential in all 50 states plus D.C. Texas has a significant lead with a potential 1.2 million jobs, while Nevada is the runner-up with 552,442. Vermont and D.C. lag with 215 and 208, respectively. 

Battery projects offer the most job creation potential, according to the report’s analysis — there are a possible 2.6 million new battery jobs, with standalone solar as the runner-up with 723,909 jobs.

The clean energy industry has been facing labor shortages, along with a lack of registered apprentices. The final guidance from the IRS on its wage and apprenticeship requirements provided a “good faith” exception, allowing employers who made a genuine effort to hire apprentices but were unable to find any to still claim the tax credit.

The report notes that the final guidance also included an incentive for developers to enter into Project Labor Agreements — “pre-hire collective bargaining agreements negotiated between employers and construction unions that will help developers easily meet the IRA’s labor standards to maximize their federal tax credits and tap into a trained union workforce to avoid project delays and get projects built on time and budget.”