GO Item 2
March 12,2015
Worksession
MEMORANDUM
TO:
Government Operations and Fiscal Policy Committee
FROM:
Robert H. Drummer, Senior Legislative Attorney
t:;)
Prevailing Wage
SUBJECT:
Worksession:
Bill 40-14, Contracts and Procurement
Requirements - Apprenticeship Training
Expected attendees:
David Dise, DGS
Direc~or
Bonnie Kirkland, Assistant CAO
Grace Denno, DGS
Jack Gibala, DGS
Bill 40-14, Contracts and Procurement Prevailing Wage Requirements - Apprenticeship
Training, sponsored by Councilmembers Riemer and Branson, was introduced on September 9,
2014. A public hearing was held on October 7.
Bill 40-14 would require a contractor or subcontractor on County construction contracts
subject to the County Prevailing Wage Law to provide apprenticeship training directly or by
making payments to support apprenticeship training programs operated by other organizations,
including the Building and Construction Technology Program operated by Montgomery College.
The Bill would also permit required payments made by a contractor or subcontractor for
apprenticeship training programs to be deducted from the applicable prevailing wage rate.
Background
Although the construction industry is an important source of middle class jobs, many
construction contractors report that they are having trouble fmding qualified workers to fill key
positions. Apprenticeship training for construction craft workers is declining. Chapter 687 ofthe
2009 Laws of Maryland established a State Apprenticeship Training Fund and required State
construction contractors to provide apprenticeship training or pay into the Fund. Bill 40-14 would
provide a similar requirement for County construction contractors. Councilmember Riemer
explained the purpose of the Bill at ©13-16.
Public Hearing
Each of the 5 speakers at the public hearing supported the Bill. DGS Director David Dise,
speaking on behalf of the Executive, supported the Bill as a necessary effort to increase funding
for apprenticeship training. (©24) Jeff Guido, of the Community Hub for Opportunities in
Construction Employment (CHOICE), an organization that represents 25,000 skilled construction
craft workers in Maryland, Virginia, and the District ofColumbia, supported the Bill (©25). Joslyn
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Williams, President of the Metropolitan Washington Council, AFL-CIO (©26-28) and Victoria
Leonard (©29), representing the Laborers' International Union of North America (LiUNA) both
supported the Bill. Finally, Jason Roberts, representing the Associated Builders and Contractors
of Metro Washington (ABC) also supported the Bill to increase funding for apprenticeship
training. (©30-33)
Issues
1.
What is the fiscal and economic impact of the Bill?
To implement the Bill, DGS would probably add this responsibility to the County's
Prevailing Wage monitoring contractor. OMB estimated that this added responsibility would cost
between $47,000 and $130,000 (8% to 24% cost increase) each year, depending on how the
apprenticeship contribution information is tracked. (©18-20) One
part
of the Bill would permit a
contractor or subcontractor to satisfy the requirements by making payments to the Building and
Construction Technology Program operated by Montgomery College; consequently, the Bill may
result in an undetermined amount of additional revenue for Montgomery College. OMB was
unable to provide a dollar estimate for additional staff time, but did note that this added
responsibility would require the Prevailing Wage Program Manager to spend at least 3 hours per
week on this new requirement. OMB also noted that bid prices on construction contracts may rise
to cover the cost to comply with this new program.
Finance was unable to estimate the economic impact of the Bill because they could not
estimate the future need for more skilled craft workers in the County. (©21-23) Finance pointed
out that the Bureau of Labor Statistics data shows increasing demand greater than average
nationally for 8 of the 9 skilled craft job categories. However, they pointed out that construction
work in the County is cyclical and that they could not locate data showing a lack ofskilled workers
in the County.
2. How does the State Apprenticeship Training Program work?
Although the General Assembly enacted the law requiring State construction contractors
to support apprenticeship training programs in 2009, the State did not adopt regulations and
implement the program until July 1,2013. Bill 40-14 is similar to the State law. A contractor or
subcontractor on a State construction contract valued at $100,000 or more must contribute 25 cents
per hour for each hour worked by an employee in a covered craft on a prevailing wage contract to
an approved apprenticeship program or to the State Apprenticeship Training Fund. A State
Division of Labor and Industry publication explaining the program is at ©34-37.
Under the State program, only a subcontractor performing work valued at $100,000 or
more must satisfy the apprenticeship training program. According to the C. Edward Poarch II,
Administrator ofPrevailinglLiving Wage Units for the State Division of Labor and Industry, some
contractors have been able to avoid the law by awarding subcontracts valued at less than $100,000
on large contracts. Some contractors have avoided the training requirement completely by
breaking down the entire contract into subcontracts valued at less than $100,000. Since July 1,
2013, the State has only collected approximately $28,000 in its State Apprenticeship Training
Fund. Bill 40-14 does not have an exemption for a subcontract valued at less than $100,000.
Under Bill 40-14, all work performed on a prevailing wage contract valued at $500,000 or more
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would be covered. Bill 40-14 would substitute payments to the Building and Construction
Technology Program operated by Montgomery College instead of the State Apprenticeship
Training Fund.
3. What
is
the Building and Construction Technology Program at Montgomery College?
Montgomery College provides training for a career as a carpenter, plumber, electrician,
HV AC technician, trade supervisors, code officials, and builders. The program is approved by the
Suburban Maryland Building Industry Association. The College is a member of the Registered
Apprenticeship College Consortium. See a description of the program is at ©38. The program is
best described as a pre-apprenticeship program. Councilmember Riemer plans to introduce an
amendment at Committee that would amend lines 20-24 of the Bill as follows:
Building and Construction Technology Program
means the pre-apprenticeship­
related instruction programs operated
Qy
Montgomery College for building trades,
including, carpentry, drywall, electricity, heating, ventilating and air conditioning
(HVACt plumbing, sprinkler fitting, and steam fitting.
Bill 40-14 would require a contractor or subcontractor
to
contribute 25 cents for each hour
worked in a covered trade on the County contract to an approved apprenticeship training program
or to the College.
An
apprenticeship training program must be approved by the Maryland Division
of Labor and Industry.
4. Should the Bill be included in the prevailing wage law or as a separate section?
The County Attorney Bill review memorandum (©39) suggests that the training
requirement in the Bill be made a separate section of the Code. However, the training requirement
is part of the Prevailing Wage Law, only applies to contracts subject to the Prevailing Wage Law,
and would be paid out ofthe fringe benefit requirement in the prevailing wage rate set by the State
Division of Labor and Industry. Council staff continues to recommend that the training
requirement remain part of the County Prevailing Wage Law. The County Attorney's Office also
suggested that DGS may have some business issues with the Bill. However, DGS has not
communicated any business issues with the Bill to date.
5. Should the Bill be enacted?
Bill 40-14 is another new requirement for County contractors and subcontractors with a
noble purpose. It is important to note that all of the public hearing testimony supported the Bill.
We received testimony from labor unions representing these workers, an association of building
contractors, and the Executive. As OMB noted, the current prevailing wage program is
administered by 1/3 of a full-time equivalent manager and a contractor. This would add work for
an already overburdened County program manager. DGS did not indicate that another employee
would be needed to administer this new program. DGS plans to add the monitoring responsibility
to the County's contractor at a cost of between $47,000 and $130,000 per year.
It
also may
r~sult
in increased bid prices from contractors who must comply and must ensure their subcontractors
comply. The potential benefits are unknown. The State has not published any studies showing
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the effect of the State apprenticeship training requirement on the availability of skilled workers in
the State. Career training for careers that are needed is beneficial
to
all residents of the County.
Workforce development is an important part ofthe mission ofthe Department ofEconomic
Development. If Bill 40-14 results in additional opportunities for residents to obtain training that
qualifies the recipients for family-supporting careers, it would be a success. Skilled construction
craft work can be a family-supporting career when construction work is plentiful. A local law firm
that regularly represents skilled craft unions recently published a report arguing that there is a great
need for skilled construction craft workers in the Washington Metropolitan Area and that
additional support for apprenticeship training would be beneficial. See ©40-56. Although Bill
40-14 would make both executing and administering construction contracts more complicated and
costly, the fiscal impact statement does not indicate that the cost is unreasonable in relation to the
potential benefits.
Council staff recommendation:
enact the Bill with amendments described
below.
6. What should the effective date be?
The Bill, as introduced, would take effect 90 days after it is signed into law by the
Executive. However, it is unclear if it applies to contracts awarded before the effective date. Bill
40-14 would impose a new requirement on contractors and subcontractors and should be part of
the original solicitation documents that contractors bid on. In addition, DGS may need some
Council staff
additional time to set up the monitoring of contractor compliance.
recommendation:
add a new Section 2 that makes it clear when the law takes effect and that the
law applies to contracts awarded on or after the date the law takes effect as follows:
Sec. 2. Effective date.
This law takes effect on
. The amendments made in Section 1 apply to a
contract awarded on or fl.fter the date the law takes effect.
Council staff recommends that DGS representatives be given the opportunity to recommend an
effective date that gives them adequate time to get the program running.
This packet contains:
Bill 40-14
Legislative Request Report
Council member Riemer Memorandum
Fiscal and Economic Impact Statement
Testimony
David Dise
Jeff Guido
Joslyn Williams
Victoria Leonard
Jason Roberts
Division of Labor and Industry Program Description
Montgomery College Program Description
County Attorney Bm Review Memorandum
Construction SkiH Shortages Policy Brief
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Circle #
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Bill No.
40-14
Concerning: Contracts and Procurement
- Prevailing Wage Requirements ­
Apprenticeship Training
Revised: September 1, 2014 Draft No.
§
Introduced:
September 9. 2014
Expires:
March 9, 2016
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _:--_ _ _ _ _ __
Sunset Date: --=-=.No=n::""e'":----:-:---_ _ __
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Councilmembers Riemer and Branson
AN
ACT
to:
(1)
require a contractor or subcontractor on certain County financed construction
contracts to provide apprenticeship training directly or by making payments to
support apprenticeship training programs operated by other organizations;
provide that payments made by a contractor or subcontractor to the Building and
Construction Technology Program operated by Montgomery College satisfY the
obligation to provide apprenticeship training programs under the applicable
prevailing wage;
.
provide that certain payments made by a contractor or subcontractor for
apprenticeship training programs can
be
deducted from the applicable prevailing
wage rate; and
generally amend the prevailing wage law.
(2)
(3)
(4)
By amending
Montgomery County Code
Chapter l1B, Contracts and Procurement
Section llB-33C
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unqffected by bill.
The County Council for Montgomery County, Maryland approves thefollowing Act:
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BIll
No. 40-14
1
Sec. 1. Section IIB-33C is amended as follows:
IIB-33C. Prevailing Wage Requirements -
(
a)
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4
Construction Contracts.
Definitions.
In
this Section, the following words have the meanings
indicated:
5
6
7
Apprentice
means an individual who:
(1) is at least 16 years old;
(2) has signed an agreement with an employer or employer's agent,
an association of employers, an organization of employees, or a
joint committee, that includes a·statement of:
(A) the trade, craft, or occupation that the individual
learning; and
(B) the beginning and ending dates of the apprenticeship; and
(3) is registered in a program of a Council or Bureau of
Apprenticeship and Training of the United States Department
of Labor.
IS
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9
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Apprenticeship training program
means an apprenticeship training
program that is registered with, and approved
Qy,.
the Maryland
Apprenticeship and Training Councilor the United States Department
of Labor.
19
20
21
Building and Construction
Technology Program
means
the
apprenticeship-related instruction programs operated
Qy
Montgomery
College for building trades, including, carpentry, drywall, electricity,
heating, ventilating and air conditioning (HVAC), plumbing, sprinkler
fitting, and steam fitting.
22
23
24
25
Construction
means work defined in Section IlB-l (c).
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BILL
No. 40-14
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County financed construction contract
means a contract for
construction work that is awarded by the County or where County
funds are used to finance all or part of the cost ofthe contract.
County funds
means any:
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31
(1)
(2)
funds directly appropriated by the County; or
grant funding for construction under Section 20-75 that
cumulatively exceeds $500,000.
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33
Covered craft
means
f!
classification of workers listed in the
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prevailing wage determination applicable to the County financed
construction contract.
Employee
means a laborer, apprentice, journeyman, or mechanic
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employed by a contractor or subcontractor on a County financed
construction contract.
Participates in an apprenticeship training program
means that
f!
contractor or subcontractor makes regular fmancial contributions for
each covered craft to apprenticeship training programs for covered
crafts during the term of the County financed construction contract
that are at least equal to the hourly fringe benefit contribution rates
required for apprenticeship training
by
the applicable prevailing wage
determination for the contract.
Prevailing wage
means the hourly wage rate set by the State
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Commissioner of Labor and Industry for State-funded construction
contracts in the County.
(b)
Exclusions.
This Section does not apply to a County financed
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construction contract:
(1)
(2)
of less than $500,000;
that is subject to a Federal or State prevailing wage law;
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BILL No. 40-14
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(3)
(4)
(5)
awarded without competition under Section
IlB-14;
with a public entity;
to the extent that the contractor is expressly precluded from
complying with this Section by the terms of any Federal or
State law, contract, or grant;
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(6)
(7)
entered into as a bridge contract under Section
IlB-42;
entered into as a cooperative procurement under Section
IlB­
40; or
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(8)
which results from an emergency procurement under Section
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llB-16.
(c)
Payment of prevailing wage.
Any contractor and subcontractor that
performs direct and measurable construction work on a County
financed construction contract must
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ill
pay each employee at a rate equal to or more than the prevailing
wage in effect when the solicitation is published for the type of
work performed.;. and
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ill
(d)
satisfy the apprenticeship training requirements established in
subsection
ill.
Prevailing wage.
(1)
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Basic rate.
The prevailing wage rate is the prevailing wage rate
established annually by the Commissioner of Labor and
Industry for State financed construction work performed in the
County by an employee who performs direct and measurable
work.
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(2)
Overtime rate.
A contractor or subcontractor must pay an
employee at a rate equal to or more than the prevailing wage
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BILL
No. 40-14
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rate for overtime for the type of work performed for each hour
that the employee performs direct and measurable work:
(A)
(B)
(C)
more than 10 hours in any single calendar day;
more than 40 hours in a workweek; or
on a Sunday or a legal holiday.
(3)
Deductions.
A contractor or subcontractor may only make fair
and reasonable deductions that are:
(A)
(B)
required by law;
authorized in a written agreement between an employee
and an employer signed at the beginning of employment
that:
(i)
(ii)
concerns food, sleeping quarters, or similar items;
is submitted by the employer to the Chief
Administrative Officer or a designee; [or]
(C)
required or allowed by a collective bargaining agreement
between a bona fide labor organization and a contractor
or subcontractor; or
ill}
payments made for apprenticeship training programs
required
Qy
subsection
ill.
(4)
Apprentices.
Each apprentice must be paid at least the rate that
the State's Apprenticeship and Training Council sets for an
apprentice in the trade involved, based on a percentage of the
prevailing wage rate in that trade.
(d)
Contract requirements.
Each contract covered by this Section must:
(1)
require the contractor and subcontractor to comply with this
Section; and
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BILL
No. 40-14
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(2)
specify that an aggrieved employee, as a third-party beneficiary,
may by civil action recover the difference between the
prevailing wage for the type of work performed and the amount
actually received, with interest and a reasonable attorney's fee.
(e)
Misclassification ofemployees.
(l)
A contractor or subcontractor must not split or subdivide a
contract, pay an employee through a third party, or treat an
employee as a subcontractor or independent contractor to avoid
any requirement of this Section.
(2)
A laborer may perform any work that is not ordinarily
performed by a mechanic or mechanic's apprentice, but must be
paid the prevailing wage rate for the work performed.
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(3)
A laborer receiving the prevailing wage rate for laborers must
not perform work ordinarily performed by a mechanic or
mechanic's helper.
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(4)
If a laborer performs work ordinarily performed by any
mechanic or mechanic's apprentice, the laborer must be paid for
the entire time of performance of that work at the prevailing
wage rate for a mechanic.
(f)
Helper and trainee restrictions.
A contractor or subcontractor must
not employ any individual classified as a helper or trainee to perform
direct and measurable work on a contract covered by this Section.
(g)
Posting requirements.
Each contractor and subcontractor must post a
clearly legible statement of each prevailing wage rate in a prominent
and easily accessible place at the work site during the entire time work
is being performed in English and any other language that is primarily
spoken by the employees at the work site.
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BILL NO.
40-14
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(h)
Payroll records.
(1)
Each contractor and subcontractor must submit a complete copy
of its payroll records for construction work performed on a
contract covered by this Section to the Chief Administrative
Officer or a designee within 14 days after the end of each
payroll period.
(2)
The payroll records must contain a statement signed by the
contractor or subcontractor certifying that:
(A)
(B)
the payroll records are correct;
the wage rates paid are not less than those required by
this Section; and
(C)
the rate of pay and classification for each employee
accurately reflects the work the employee performed.
(3)
Each payroll record must include:
(A)
the name, address, and telephone number of the
contractor or subcontractor;
(B)
(C)
the name and location of the job; and
each employee's:
(i)
(ii)
(iii)
(iv)
(v)
name;
current address, unless previously reported;
specific work classification;
daily straight time and overtime hours;
total straight time and overtime hours for the
payroll period;
(vi)
rate of pay;
(vii) fringe benefits by type and amount; [and]
(viii) gross
wages~
and
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BILL
No.
40-14
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fix)
apprenticeship training program payments made
under subsection
ill.
(4)
Each contractor or subcontractor must:
(A)
keep
payroll records
covering
construction work
performed on a contract covered by this Section for not
less than 5 years after the work is completed; and
(B)
subject
to
reasonable
notice,
permit
the
Chief
Administrative Officer or a designee to inspect the
payroll records at any reasonable time and as often as
necessary.
(5)
The Chief Administrative Officer or a designee must make
payroll records obtained from contractors or subcontractors
under this Section available for public inspection during regular
business hours for 5 years after the Chief Administrative
Officer receives the records.
(i)
Apprenticeship training requirements.
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ill
A contractor or subcontractor that performs direct and
measurable
(A)
construction
work
on
~
County
financed
construction contract must:
participate in an apprenticeship training program for each
covered craft in which it will employ persons for the
County financed construction contract;
Qll
M
to the Building and Construction Technology
Program the amount determined
lIT
the Secretary of
Labor, Licensing, and Regulation for payments to the
State Apprenticeship Training Fund established under
Section 17-602 of the State Finance and Procurement
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BILL
No. 40-14
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Article for State financed construction work performed in
the County; or
(Q
~
to
!!
registered apprenticeship program or to an
organization that has
!!
registered apprenticeship program
for the purpose of supporting these programs the amount
determined
Qy
the Secretary of Labor, Licensing, and
Regulation
for
State
financed
construction
work
performed in the County.
ill
If a contractor or subcontractor
Pill
the Building and
Construction
Technology
Program
under
subparagraph
(i)(1)(B), the contractor or subcontractor must:
®
~
each employee in
!!
covered craft in wages any
amount of
!!
required fringe benefit contribution for
apprenticeship programs that is greater than 25 cents per
hour; and
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.an
ill
(1)
~
monthly
to
the
Building
and
Construction
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Technology Program.
Enforcement.
The Chief Administrative Officer or a designee may perform
random or regular audits and investigate any complaint. of a
violation of this Section. If the Director determines that a
provision of this Section has been violated, the Director must
issue a written decision, including appropriate sanctions, and
may withhold from payment due the contractor, pending a final
decision, an amount sufficient to:
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BILL No. 40-14
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(i)
pay
each
employee
of the
contractor
or
subcontractor the full amount of wages due under
this Section; and
(ii)
satisfy a liability of a contractor for liquidated
damages as provide in this Section.
(2)
A contractor or subcontractor must not discharge or otherwise
retaliate against an employee for asserting any right under this
Section or for filing a complaint of a violation.
(3)
The
sanctions
of Section
llB-33(b)
which apply
to
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noncompliance with nondiscrimination requirements apply with
equal force and scope to noncompliance with this Section.
(4)
Each contract subject to this Section may specify the payment
of liquidated damages to the County by the contractor for any
noncompliance with this Section.
(5)
Each
contractor
is
jointly
and
severally
liable
for
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noncompliance with this Section by a subcontractor.
(6)
If a contractor or subcontractor is late in submitting copies of
any payroll record required to be submitted under this Section,
the County may deem invoices unacceptable until the contractor
or subcontractor provides the required records, and may
postpone processing payments due under the contract or under
an agreement to finance the contract.
(7)
A contractor may appeal a written decision of the Director that
the contractor violated a provision of this Section to the Chief
Administrative Officer within 10 working days after receiving a
copy of the decision. The Chief Administrative Officer must
designate a hearing officer to conduct a hearing under Chapter
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Bill
No.
40-14
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2A upon receipt of a timely appeal. If the contractor does not
appeal a written decision within 10 working days after receipt,
the decision of the Director becomes final and binding.
(0)]
00
Report.
The Chief Administrative Officer must report annually
to the Council and Executive on the operation of and compliance with
this Section.
Approved:
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George Leventhal, President, County Council
Date
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Approved:
Isiah Leggett, County Executive
Date
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249
This is a correct copy ofCouncil action.
Linda M. Lauer, Clerk ofthe Council
Date
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LEGISLATIVE REQUEST REPORT
Bill 40-14
Contracts and Procurement Prevailing Wage Requirements Apprenticeship Training
DESCRIPTION:
The Bill would require a contractor or subcontractor on certain
County financed construction contracts to provide apprenticeship
training directly or by making payments to support apprenticeship
training programs operated by other organizations, including the
Building and Construction Technology Program operated by
Montgomery College.
There is a shortage of trained workers for construction projects in the
County.
The goal is to increase the availability of trained workers for
construction projects in the County.
DGS, County Attorney
To be requested.
To be requested.
To be requested.
The State of Maryland recently enacted a similar law requiring its
construction contractors to provide funding for apprenticeship
training.
Robert H. Drummer, Senior Legislative Attorney
Not applicable.
PROBLEM:
GOALSAND
OBJECTIVES:
COORDINATION:
FISCAL IMP ACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
Contractual remedies.
f;\law\bills\1440 contracts and procurement-prevailing wage requiremen
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MONTGOMERY COUNTY COUNCIL
Rockville, Maryland
Councilmember
Hans Riemer
At Large
MEMORANDUM
To:
From:
Re:
Date:
A.l
Councilmembers
Councilmember Hans Riemer
kJl~
Bill on Craft Training
September 2, 2014
1\
to'
Colleagues, I am writing to ask that you co-sponsor and support the attached bill I plan to
introduce to encourage craft training in the construction industry. I believe this bill is
necessary to ensure a continued supply of skilled labor on county construction projects as
well as to reinforce a vital part of our middle class. This bill modeled on a recent state law ­
HB 644 passed in 2009 - and requires that most construction firms that receive County
contracts either provide apprenticeship training directly or pay a fee to support the
Building and Construction Technology Program operated by Montgomery College.
The construction industry is critical to our economy. Trained construction workers are
necessary for completing all building and transportation projects, as well as renovations,
additions and rehabs. In Montgomery County, the construction industry directly employed
23,264 people in 2012 (5% of total employment), but because of its nature in servicing other
sectors, the industry touches nearly all forms of economic activity.
The industry is also an important source of middle-class employment, especially for workers
who do not have bachelors' or graduate degrees. Following are the average hourly wages
earned by common construction occupations in the Washington-Arlington-Alexandria
Metropolitan Area.
Mean Hourly Wage, Washington-Arlington-Alexandria Metropolitan Area, May 2012
Source: U.s. Bureau of Labor Statistics
occupation
Mean Hourly Wage
Plumbers/Pipefitters
$27.76
Electricians
27.10
Reinforcing Iron Workers
24.76
Sheet Metal Workers
23.81
Operating Engineers
23.11
Carpenters
21.93
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Structural Iron Workers
Brickmasons
Roofers
Cement Masons
Painters
Construction Laborers
21.65
20.71
20.26
18.80
18.19
15.23
The County Council recognized the importance of this industry when it passed the county's
prevailing wage law in 2008. That law requires that construction workers employed on
county projects be paid at least the prevailing rate of compensation in their trades. This
provides a fair floor for these workers and ensures that their construction contractors do
not win county work by low-balling worker pay.
But the prevailing wage law does not address an issue of critical importance for workers,
employers and the broader community: craft training.
The construction trades are demanding occupations. Workers in this industry must acquire
and maintain exacting skill sets to complete often-complicated projects. The traditional
model of construction training involves jOint labor-management funds providing four or five
years of apprenticeship, combining both classroom instruction and on-the-job training.
Graduates from these programs go on to regular upgrade and safety training to keep their
skills contemporary and competitive. Because the training is provided by funds sustained by
large groups of contractors, employers could pay for training and have confidence that
those workers would not be hired by competitors who did not pay those costs.
This system has broken down badly in recent years. According to data from the U.S. Bureau
of Labor Statistics, the percentage of construction workers enrolled in building trades
unions has fallen from 40% in 1973 to 14% in 2013. That has reduced the ability of labor­
management funds to train the next generation of construction workers. The non-union
side of the industry has not filled the gap with a comparable training model.
Consider what has happened as a result.
1.
In 2013 dollars, the average hourly wage in construction has fallen from $30.23 in 1972
to $24.22 last year, a decline of 20%. This injures the ability of the construction industry to
attract qualified applicants who are willing and capable of learning its demanding skills.
2. In September 2013, the Associated General Contractors of America (the industry's largest
general contractor association) reported that ilseventy-four percent of construction firms
report having trouble finding qualified workers amid growing labor shortages." The AGC
commented:
Nearly three-fourths of construction firms across the country report they are having
trouble finding qualified craft workers to fill key spots amid concerns that labor
shortages will only get worse, according to the results of an industry-wide survey
released today by the Associated General Contractors of America. Association
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officials called for immigration and education reform measures to help avoid worker
shortages.
IIMany construction firms are already having a hard time finding qualified workers
and expect construction labor shortages will only get worse," said Stephen E.
Sandherr, chief executive officer of the Associated General Contractors of America.
"We need to take short- and long-term steps to make sure there are enough
workers to meet future demand and avoid the costly construction delays that would
come with labor shortages."
Of the 74 percent of responding firms that are having a hard time finding qualified
craft workers, the most frequently reported difficulties are in filling such onsite
construction jobs as carpenters, equipment operators and laborers, Sandherr said.
Fifty-three percent are having a hard time filling professional positions - especially
project supervisors, estimators and engineers.
3. In September 2009, a report by the Governors Workforce Investment Board of Maryland
discussed construction labor shortages in our state. The report said:
With the industry poised for recovery and expansion, significant construction
workforce training and education challenges must be addressed. Currently there is
an inadequate pipeline of qualified workers within the state to fuel the future
growth of Maryland's construction industry. Prior to the downturn in the economy,
shortages of workers already existed, both in the skilled trades and in occupations
such as engineering, construction management and project management. An aging
workforce, and the predicted loss of workers through retirement or attrition, adds
to the problem.
Maryland companies have been struggling to attract, recruit and train sufficient
numbers of qualified construction employees from within Maryland to meet the
growing needs of the construction industry. In spite of excellent earnings potential,
including hourly wages that exceed the national average for non-supervisory
workers in private industry, sufficient numbers of young people and career changers
do not opt for a career in construction. Further, as the construction industry
becomes more technologically advanced, current employees may lack the necessary
technical and professional skills. With initiatives such as BRAC expected to bring
new high-tech buildings to Maryland, having sufficient numbers of construction and
building trades workers skilled in the latest technologies is critical.
4. The state's Department of Labor, Licensing and Regulation has informed me that the
state's registered apprentice programs had just 8,324 enrollees as of September 30,2011.
According to the U.S. Bureau of Labor Statistics, the state had 146,009 construction
workers in that month, meaning that just 6% of them were in training.
The State of Maryland chose to remedy this problem with HB 644 (2009), which was set in
place with regulations last year. The law requires construction contractors on state projects
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to participate in a state-registered apprentice program or pay a fee to the state intended to
promote craft training. Contractors can no longer "free ride" by paying nothing for training
while their competitors bear the costs. My bill (attached) is modeled on the state's law and
institutes similar requirements for county projects. I have discussed it with representatives
of both the labor community and the business community. In my bill, any fees will be paid
to the Building and Construction Technology Program operated by Montgomery College,
helping to support this critical program.
This bill is good for construction workers. It's good for responsible construction contractors
who already pay to train their employees. It's good for the county as a construction owner
since it will contribute to our ability to build quality projects. And it's good for our local
economy since it encourages skill development in a vital section of our middle class.
I ask you to co-sponsor and support it.
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ROCKVILLE, MARYLAND
MEMORANDUM
October 13,2014
TO:
FROM:
Joseph~
Jenni~~-~-:-
os,
~ofManagement
and
Budget
Director,
Craig Rice President, County Council
=
~ent
of Finance
J
SUBJECT:
Council Bi1140-14, Contract') and Procurement - Prevailing Wage
Requirements - Apprenticeship Training
Please find attached the fiscal and economic impact statements for the above­
referenced legislation.
JAH:mc
cc: Bonnie Kirkland, Assistant ChiefAdministrative Officer
Lisa Austin, Offices ofthe County Executive
Joy Nurmi, Special Assistant
to
the County Executive
Patrick Lacefield, Director, Public Infonnation Office
Joseph F. Beach, Director, Department of Finance
David Platt, Department of Finance
David Dise, Director, Department of General Services
Robert Hagedoorn, Department of Finance
David Dise, Director, Department of General Services
Pam Jones, Office ofProcurement, Department of General Services
Susan Madden, Montgomery College
Erika Lopez-Finn, Office of Management and Budget
Naeem Mia, Office of Management and Budget
Felicia Zhang, Office ofManagement and Budget
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Fiscal Impact Statement
Council Bill 40-14
Contracts and Procurement - Prevailing Wage Requirements - Apprenticeship Training
1. Legislative Summary.
The bill requires a contractor or subcontractor on certain County-financed construction
contracts to provide apprenticeship training directly to or by making payments to support
apprenticeship training programs operated by third-party organizations. The legislation
allows for contractors and subcontractors to make payments to Montgomery College's
Building and Construction Technology Program in lieu ofproviding apprenticeship
training. The legislation also allows for contractor or subcontractor payments to be
deducted from the prevailing wage rate pay to the employee for the cost of apprenticeship
training programs.
2.
An
estimate of changes in County revenues and expenditures regardless of whether the
revenues or expenditures are assumed
in
the recommended or approved budget. Includes
source of information, assumptions, and methodologies used.
No County revenues are affected; however Montgomery College may experience a
change in
its
revenue.
The compliance monitoring requirement under the proposed bill is currently not
in
the
scope ofthe contract with the County's Prevailing Wage compliance monitoring
contractor. To add this responsibility, DGS estimates an additional cost between $47,000
and $130,000 (8% to 24% cost increase) annually based on its discussions with the
contractor. The contractor estimates a cost of $25 - $50 per contractor/subcontractor per
month which it would bill on an hourly basis to the County. The contractor noted that the
additional cost would be driven by how the apprenticeship contribution information is
tracked and whether this information will be able to be verified quickly with online
access or a more cumbersome process.
3. Revenue and expenditure estimates covering
at
least the next 6 fiscal years.
The proposed legislation does not affect County revenues. County expenditure estimates
for the next six years range from $282,000 to $780,000.
According to Montgomery College, the bill would have a fiscal impact on their
operations; however, the specific impact cannot yet be quantified because there are
multiple variables in the legislation the College does not have the capacity to calculate
such as the number of contracts
that
might be subject to the legislation and the number of
individuals employed by such contractors.
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Additionally, the legislation appears to allow revenues to flow to different entities, again
impacting the ability to calculate the fiscal impact. The College is committed to "learn
and earn" opportunities and currently supports approximately 900 individuals in
apprenticeships.
It
is likely a marginal increase to that number would not create a fiscal
challenge. A significant increase would likely mean ilie need for increased staff and
faculty to manage and teach the appropriate courses.
4.
An
actuarial analysis through the entire amortization period for each bill that would affect
retiree pension or group insurance costs.
The proposed bill does not affect retiree pension or group insurance costs.
5. Later actions that may affect
future
revenue and expenditures
if
the bill authorizes future
spending.
The proposed bill does not authorize
future
spending.
6.
An
estimate ofthe staff time needed to implement the bilL
Assuming
that
the primary monitoring responsibilities
will
be included as an added
requirement in the County's existing compliance monitoring contract County
staff
time
for monitoring would be minimal. However, once a noncompliance issue is identified by
the contractor, DGS staffwill need to follow up, investigate, and decide what actions the
County needs to take. A low end workload scenario assumes an additional 3 hours per
week of staff time would be needed to implement the bill.
7.
An
explanation of how the addition of new staff responsibilities would affect other duties.
The additional staffresponsibilities would be a part ofthe responsibility ofthe Prevailing
Wage Program manager. DGS currently has
1/3
PTE working in the Prevailing Wage
Program.
8.
An
estimate of costs when an additional appropriation is needed.
If
CCMI is tasked with monitoring this requirement, CCMI will increase their rate to the
County by $47,000 to $130,000 annually.
9. A description of any variable that could affect revenue and cost estimates.
There is a potential for Bidders or Offerors to build increased rates into their bids or
proposals to the County resulting from the apprenticeship training requirements.
The number of workers and their work hours under each construction contract can affect
the cost to the County.
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10. Ranges of revenue or expenditures that are uncertain or difficult
to
project.
No revenue is expected
to
be generated for Montgomery County Government. The
revenue range for Montgomery College is difficult to predict. Please see response
to
item
2 on expenditure estimates.
11.
If
a bill is likely to have no fiscal
Not Applicable.
12. Other fiscal impacts or comments.
DGS notes
that
this requirement may also reduce competition by qualified construction
contractors as companies who would not choose
to
make payments would not participate
in
the
bidding process.
13. The following contributed
to
and concurred with this analysis:
Pam Jones, Office of Procurement, Department of General Services
Grace Denno, Office of
Procuremen~
Department of General Services
Beryl Feinberg, Department of General Services
Angela Dizelos, Department of General Services
Susan Madden, Montgomery College
Linda Hickey, Montgomery College
Erika Lopez-Finn, Office of Management and Budget
impac~
why that is the case.
Date
r
'
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Economic Impact Statement
Bill 40-14, Contracts and Procurement - Prevailing Wage Requirements ­
Apprenticeship Training
Background:
This legislation would:
• require a contractor or subcontractor on certain COWlty financed construction
contracts to provide apprenticeship training directly or by making payments to
support apprenticeship training programs operated by other organizations,
• provide that payments made by a contractor or subcontractor to the Building and
Construction Technology Program operated by Montgomery College satisfy the
obligation to provide apprenticeship training programs Wlder the applicable
prevailing wage, and
• provide that certain payments made by a contractor or subcontractor for
apprenticeship training programs can be deducted from the applicable prevailing
wage rate.
This economic impact statement provides an analysis ofthe construction industry in
terms of demand for occupations that learn their trade through an apprenticeship and the
recent construction economy, both new constructions starts and employment, in
Montgomery COWlty. This analysis
will
help determine whether Bill 40-14 will have an
impact on employment, investment, and incomes in Montgomery COWlty.
Bill 40-14 identifies apprenticeship-related programs operated by Montgomery College
for building trades, including carpentry; drywall; electricity; heating, ventilating and
air
conditioning
((IN
AC), plumbing, sprinkler fitting, and steam fitting.
1. The sources of information, assumptions, and methodologies used.
Sources ofinformation and data include:
• Department ofGeneral Services (DGS),
• Maryland Association ofGeneral Contractors (MAGR),
• Bureau of Labor Statistics, U.S. Department of Labor (BLS), and
• McGraw-Hill
Dod~e
Construction (Dodge)
According to BLS, construction occupations include boilermakers; brickmasons,
blockmasons, and stonemasons; carpenters; cement masons and terrazzo workers;
construction and building inspectors; construction equipment operators; construction
laborers and helpers;
drywall
and ceiling tile installers,
and
tapers; electricians;
elevator installers and repairers; glaziers; hazardous materials removal workers;
insulation workers; painters, construction and maintenance; plumbers, pipefitters, and
steamfitters; roofers; sheet metal workers; solar photovoltaic installers; structural iron
and steel workers; and tile and marble setters.
Page 10f3
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Economic Impact Statement
Bill 40-14, Contracts and Procurement - Prevailing Wage Requirements­
Apprenticeship Training
Of those twenty occupational categories in the construction and extraction industry
nine occupations leam their trade through an apprenticeship (Source: BLS). Those
occUPatioll;S include boilermakers; brickmasons, blockmasons, and stonemasons;
carpenters; electricians; elevator installers and repairers; glaziers; plumbers,
pipefitters, and steamfitters; sheet metal workers; and structural iron and
steel
workers.
BLS reported the job outlook between 2012 and 2022 for each of the nine
occupational categories as follows:
Boilermakers (4% - slower than average growth)
Brickmasons
etc.
(34% - much faster than average growth)
Carpenters (24% - much faster than average growth)
Electricians (20% - faster than average growth)'
Elevator etc. (25% - much faster
than
average growth)
Glaziers (17% - faster than average growth)
Plumbers (21% - faster
than
average growth)
Sheet metal workers (15% faster than average growth)
Structural iron and steel workers (22% - much faster than average growth)
While the BLS
data
represent demands for these occupations
at
the national level,
they can be applied
to
Montgomery County albeit dependent on the new construction.
Based on the BLS forecast, growth rates among eight ofthe nine occupational
categories (excluding boilermakers) range from 1.6 percent per year (glaziers) to 3.0
percent per years (brickmasons etc.).
However, the construction industry is highly cyclical and over ten calendar years
(CY2003 - CY2012), both construction projects and employment experienced a
distinct cyclical ,pattern
in
Montgomery County. For example, new construction of
single-family and multi-family units averaged over 4,100 units per year between 2003
and 2007. Between 2008 and 2012,
that
averaged declined to slightly over 2,100
units
per year - a decrease of 49 percent. Employment
in
the building construction
averaged nearly 10,300
per
year between 2003 and 2007 but declined
to
nearly 8,700
- a decrease ofnearly 16 percent. Between 2003 and 2012, the number of employees
per new residential construction starts averaged 3.70 per
unit.
According
to
information provided by MAGR regarding the survey taken
in
January
ofthis year by the Association ofGeneral Contractors of America, there was
insufficient responses from Maryland
based
companies/contractors to determine
whether there is difficulty in finding qualified workers to fiU key positions and
whether apprenticeship training for construction skilled/craft workers is declining.
However, MAGR did provide anecdotal
data
from MAGR members that construction
professionals such as project managers, project engineers, and superintendents have a
more critical shortage
than
skilled/craft workers.
Page 2 of3
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Economic Impact Statement
Bill
40-14, Contracts and Procurement - Prevailing Wage Requirements­
Apprenticeship Training
The Division of Facilities Management (DFM), Department of General Services, does
not have any data from local studies that can verify whether there is a shortage of
skilled trade workers in the area However, during the past year or more, DFM
has
seen a low number of qualified applicants for skilled trade positions that have been
advertised.
2. A description of any variable that could affect the economic impact estimates.
The demand for skill trade positions versus the current supply of skilled trade
positions could affect economic impact estimates.
If
there is either a shortage or
surplus of skilled workers, it would have an impact on the economic estimates.
However, the estimate is difficult to quantifY without detailed data on the demand for
skilled workers and the current supply. Also, the estimate is dependent on the short­
and long-term construction outlook a:Qd specifically
the
types of construction that
would require specific types and experience of skilled workers. Moreover, there may
be a wage effect as a result of either surplus (negative wage effect) or shortage
(positive wage effect) of skilled labor. For example, adding more skilled labor to the
labor market may result
in
a lower wage for both incumbents and new labor, which
may partially offset the benefit ofthe additional employment to the economy.
3. The
Bill's
positive or negative effect,
if
any on employment, spending, saving,
investment, incomes, and property values in the County.
Without
data
on the lack of skilled workers
in
the County and the short- and long­
term outlook for construction, the effect on employment, spending, saving,
investment, incomes, and property values in the County is uncertain.
4.
If
a
Bill
is likely to have no economic impact, why is that the case?
See paragraph #3
S. The following contributed to or concurred with this analysis: David Platt and Rob
Hagedoom, Finance.
Jo h F. Beach, Director
Department of Finance
Page
3 of3
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Testimony on behalf of County Executive Isiah Leggett
Bill 40-14,
Contracts and Procurement - Prevailing Wage Requirements­
Apprenticeship Training
October 7,2014
i
Good afternoon members of the County Council. I am David Dise, Director of Montgomery
County's Department of General Services, and I am here to testify on behalf of County
Executive Isiah Leggett regarding Bill 40-14, Contracts and Procurement Prevailing Wage
Requirements - Apprenticeship Training.
A recent article in
Forbes
cited a 2012 study indicating that 53 percent of skilled-trade workers
in the U.S. were 45 years and older and 18.6 percent were between the ages of 55 and 64.
In
Maryland, 50.1 % of the skilled-trade workforce is over 45 and almost 20% is over 55.
Electricians have the largest percentage of aging workers where nearly 70% of the workforce is
45-plus years old and will need an influx ofnew talent sooner than others. All skilled trades have
far fewer 65-and-older workers than the total labor force
(~2%
compared to
~5%),
which is a
clear sign that these jobs are more physically demanding than the typical job. The heavy
proportion of older skilled-trade workers puts into focus the pending retirement of baby boomers
and ongoing concern between the skills that employers need and available workers possess.
Considering all ofthis,
it
isn't surprising that market forecasts indicate a significant gap in
available skilled construction trades workers and the future job market reflect this. Skilled trades
can provide a promising career path if an individual possesses the appropriate level oftraining.
Construction industry leaders are acutely aware of this and have invested in apprenticeship
training programs across
all
trades. Supporting a training and educational program through
Montgomery College helps ensure we are building a strong local resource of skilled workers and
future owners of successful local businesses.
In
keeping with his broad commitment to education and, further, to ensure that contractors
building Montgomery County's public facilities et.nploy a workforce having a uniform level of
skills and training, County Executive Leggett supports the intent of this bill and commits
executive branch staff to working with the Council to work out details on how this may be
effectively implemented.
Thank you for the opportunity to speak with you this afternoon.
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Mark
Coles
Executive Director
(202)
756-4660
www.CHOICEworks.org
To: Council President Mr. Craig Rice
Montgomery County Council
Ref: Bill
40-14
Contracts and Procurement - Prevailing Wage Requirements -Apprenticeship Training
Please accept this testimony in support of Bill 40-14 Contracts and Procurement - Prevailing Wage Requirements­
Apprenticeship Training
Dear Council members,
I am the field representative for C.H.O.I.C.E. the Community Hub for Opportunities In Construction Employment.
I represent over 25,000 skilled construction craft workers in Maryland, Virginia and the District of Columbia.
Construction always has a need for skilled labor. The project must be built in place and cannot be manufactured
overseas and shipped in. Employers need a trained work force to mitigate construction costs for on time and on budget
completion of projects. Single contractors may find it unfeasible to commit funding to training programs and incur a loss
when employees migrate to a competitor, hence the need for an inclusive funding program. The Montgomery County
Community College pre-apprenticeship courses are a first step for individuals wanting to learn a skilled craft.
Apprenticeship programs registered with the Maryland Apprenticeship Training Council and the U.S. Department of
labor are the best vehicle for training the next generation of skilled labor in Montgomery County. As the skilled workers
of today begin to retire it is imperative to train the next generation to take their place. The Maryland Center for
Construction Education and Innovation 2012 study states the reason for people not seeking a career in construction is
the perception it is dirty, dangerous and low paying. The solution for this is to coordinate educational opportunities
between Career and Technological education, Community Colleges and registered apprenticeship programs. Only the
Building and Construction Trades affiliated Unions have the capacity to train and fill skilled craft positions that are
becoming so in demand in the coming boom for mixed use development, schools, industrial energy and infrastructure
capital improvement projects. The Building and Construction Trades and our Signatory contractors spend approximately
$20M annually in the State of MD on apprenticeship training and consequently graduate nearly 80% of all apprentices in
the State. With the passage of Bill 40-14 we will look forward to working directly with Montgomery County to develop a .
means of direct entry into our apprenticeship programs and maintain a path to the middle class so vital to all of our
economic interests. I urge the Council to give Bill 40-14 a favorable report. Thank you.
Jeffry Guido - Field Representative -240-687-5195
[C]
COMMUNITY HUB
for
OPPORTUNITIES
in
CONSTRUCTION
EMPLOYMENT
815 Sixteenth Street,
N.W.
Suite600
• Washington, D.C. 20006-4104
-
@
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Metropolitan Washington Council, AFL-CIO
888 16th Street, NW, Suite 520 • Washington. DC 20006 • (202) 974-8150 • Fax (202) 974-8152
An AFL-CIO HUnion City"
EXECUTIVE BOARD
Officers
Joslyn N. Williams
President (AFScME 2477)
Gino Renne
1st Vice President (UFCW 1994)
Doris Reed
2nd Vice President (ASASP)
Sandra Falwell
3rd Vice President (DCNA)
Dena Briscoe
Secretary (APWU-NCSML)
Linda Bridges
Treasurer (OPEIU 2)
Members
John Boardman (UNITE HERE 25)
Eric Bunn (AFOE District 14)
Steve Courtien (WBTC)
Dan Dyer (OPEIU
2)
Mark Federici (UPCW 400)
Anthony Frederick, Sr. (LIUNA 657)
Carl Goldman (AFSCME Cn 26)
Jackie Jeter (ATU 689)
Geo T. Johnson (AFSCME Cn 20)
Kendall Martin (Iron Workers 5)
Michael Murphy (IUOE 99)
Thomas
Ratliff
(IBT 639)
Carnell Reed (SEIU
400)
Jimmy Tarlau (CWA District 2)
Trustees
Fred Allen (GCC 538C)
Testimony of Joslyn N. Williams, President
On Bill 40-14
Contracts and Procurement-Prevailing Wage
Requirements- Apprenticeship Training
Before the Montgomery County Council
7 October 2014
Elizabeth Davis
(WI1J
6)
BRINGING LABOR TOGETHER SINCE
~21
1896
www.dclabor.org
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Good afternoon Members of the County Council. I am Jos Williams and I am here on
behalf of the 150,000 area members of the Metropolitan Washington Council, AFL-CIO.
We are in support ofBi1140-14. Construction is an industry that can offer great wages
and benefits with chances for advancement and entrepreneurship for those with an
interest and aptitude for challenging blue collar work.
It
is also an industry that
has
a
demand for more and more skilled individuals for jobs in Montgomery County and in the
metro area as we anticipate major transportation, infrastructure and federal and
commercial building projects in the near future.
The building of a workforce development pipeline- which we believe this bill helps to do­
is critical to first, aid area employers in finding the prepared employees they need from
among our local Montgomery County popUlation, and second, to assist a variety oflocal
residents with solid preparation for entry into the industry. These days, it takes more than
just a warm body with muscles to do construction, and many residents would be able to
successfully enter eam-while-you-Ieam apprenticeship programs leading to
joumeyworker status, or start jobs directly with contractors, if they had access to pre­
apprenticeship programs that provided math review, construction industry and
apprenticeship awareness and overview, job readiness skills, and certifications in OSHA
10, CPR, First Aid and Flagger Safety. These programs cost money to operate, but they
pay for themselves by helping move low-income, immigrant, ex-offender men and
women into good-paying opportunities in the construction, transportation and energy
sectors, where employers are always looking for ready-to-work trained workers.
We urge the Council to support this bill, and we are anxious to work with the County
Council and the County's workforce development system to help build a great pipeline
from communities into living wage jobs in this critical sector.
Thank
you and I'm happy to answer any questions you may have.
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Community Services Agency
of the
M1.ao"""""""'Smka ....
llltltrdlllry........".,
~J.k:S!1!
Iii
MetropoUtan Washington Council, AFL-CIO
888 16th Street, NW,II520 • Washington, D.C. 20906 • (202) 974·8220 • Fax (202)
974~8152
• Email: kmckirchy@dclabor.org
BOARD OF TRUSTEES
OFFICERS
Joslyn
N.
Wi.1ama
President
Connecting Area Residents with Good Jobs in Construction
The Community Services Agency ofthe Metro Washington Council,
AFL-CIO operates the Building Futures program, which is a pre­
apprenticeship training and job placement program for low-income metro
area adults, men and women, 18 and over. The program's aim is
to
prepare and place trained graduates into family-sustaining jobs in the
construction industry and related occupations. The program has operated
for 7 years and has a 95% completion rate, and an 80%placement rate of
program graduates.
Individuals are academically tested and must score at 8th grade reading
and math or above, must be drug-free, and must attend a 6-week pre­
apprenticeship class with a curriculum which includes construction math
review, blueprint reading, tool identification and use, OSHA 10, CPRIFirst
Aid, and Flagger Safety and Traffic Control certifications, as well as job
readiness preparation. A green jobs/weatherization element, hands-on
training at the area's union apprenticeship schools, problem-solving and
conflict resolution, and gender-focused topics for women are also part of
the curriculum. Case management services pre-and post-placement help
ensure retention in the schools and on the job.
This program is designed to provide READY-TO-WORK individuals to
assist contractors and apprenticeship programs with screening,
recruitment, hiring and retention ofthe target populations.
The Community Services Agency is the non-profit arm ofthe local
AFL­
CIO and has been providing worker-centered services since 1991.
It
receives funding from the United Way, Combined Federal Campaign, the
Maryland Department of Labor, Licensing and Regulation, the DC
Workforce Investment Council, and other area private foundation funders.
It
is a preferred training provider for the Maryland Transit Administration
for work on the proposed Purple Line project
Mike Murphy. IUOE 99
VIce
PmsidfJnt
Jenny Sylvester, CWA 2108
8emJtaIy
linda Bridges. OPEIU 2
Treasurer
MEMBERS
Dennis
Desmond
Mld·Atlsnfic
Laborers
Dan Ouncen
Northem
VugInIa At.
Labor
Federation
Randy
Erwin
NFFE
Jim Grllfin
IBCW1900
Ann
Hollmen
National Wrlten
Union
UAW 1981
l<endan Martin
Iron
WotIuH5
Local
5
Ralph
Aanctaa
AFSCME CouncJI26
Alp
Thompson
A
71!ompsan Associates
ThQmssWebb
AFGE
3615
(Relired)
Kathleen McKlrchy
EXBCUtiv9
Director
Sylvia Casaro Dlelart
Client Services
CoorrflflaliJr
United Way/DC
One Fund
Designation Number
8253
Combined Federal
Campaign
Number 19519
MlIrylBnd ChBrity
Csmpalgn
Number
9320
DONATENOWJ
Go
to
www.dclBbor.org,
c:llckon
Community Services Agency
@
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TESTIMONY OF VICTORIA LEONARD
Before the Public Hearing on
B40-14: Prevailing Wage Apprenticeship Training Requirements
October
7,
2014
Thank you Council President Rice for holding this public hearing on Bill 40-14.
My name is Victoria Leonard. I am employed by the Mid-Atlantic Laborers' Cooperation
Trust. The Trust represents more than 200 Washington area construction firms, as well as
the thirty-five hundred union construction laborers that they employ. The Trust is part of
the Laborers' International Union of North America, or LiUNA for short. LiUNA represents
more than 500,000 construction workers across the United States and Canada. LiUNA has
three locals that serve the Washington region, and many of their members live and work
in Montgomery County.
LiUNA believes in training. Our apprenticeship training program for construction craft
laborers-or CCL for short-is the only one of its kind. LIUNA fought very hard to gain an
approved apprenticeship program for the CCL trade. In the early 1990s, we worked with
the US Department of Labor to register CCL apprenticeship standards. Approval was
awarded in 1994. Here in the Baltimore/Washington area, LiUNA operates three
apprenticeship training centers.
We support the goals ofB40-14, which is to fund construction apprenticeship programs.
Construction is an occupation that provides a career pathway and good, family-supporting
wages, and we need to ensure training options exist for County residents interested in the
field.
We are concerned however, about lines 188 through 193 of the bill. This section of the bill
allows construction companies that choose
not
to participate in an apprenticeship
program to
instead
either make a payment to a registered apprenticeship program or
make a payment to an organization that operates one.
Making a payment
to and
participating in
an apprenticeship program are two very different things, especially when
the source of the funds for the payment is a worker's wages. Non-union companies more
often than not pay all or part of prevailing wage fringes in cash instead of offering benefits
such as health care or retirement, or funding a training program. When a company simply
makes a payment to an apprenticeship program or an organization that sponsors one
instead of actually participating, the workers who have the 25 cents debited from their
paychecks have no access to and do not benefit from the training programs they are
helping to pay for.
We believe this disconnect needs to be addressed, and look forward to working with
Councilmember Riemer and his staff to do so. Thank you for the opportunity to comment
on B40-14.
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Associated Builders
and
Contractors. Inc.
Metro Washington
Chapter
Chairman of the Board
Bob Jones
Ruppert Landscape
October
7.
2014
Chairman-elect
Jim Anglemyer
WCS Construction, LL C
TO:
FROM:
Montgomery County Council
Associated Builders and Contractors (ABC) of Metro
Washington
Bill 40-14, Contracts and Procurement- Prevailing
Wage Requirements- Apprenticeship Training
Vice Chairman
Robert C. Henley
Henley Construction Co., Inc.
Secretary
Mark W. Drury
Shapiro
&
Duncan, Inc.
Treasurer
Christopher Vasquez, CPA
Aronson LLC
RE:
Past Chairman
Gregory E. Harraka
Coakley
&
Williams Construction, Inc.
BOARD OF DIRECTORS
Jeremy Bardin
HITT Contracting Inc.
Sidney G. Chapman
Goldin
&
Stafford LL
C
Mr. President and members of the Council. I am Jason
Roberts, Director of Education for Associated Builders and
Contractors (ABC) of Metro Washington and responsible for the
administration and oversight of our apprenticeship programs both in
Maryland and the District of Columbia.
We welcome the opportunity to comment on Bill 40-14 which
addresses the issue of apprenticeship training. All of ABC's
apprenticeship programs have been approved by and are registered
with the Maryland Apprenticeship Training Council. We currently have
21 approved programs which allows us to offer a variety of training
opportunities in the Washington metropolitan area. Both ABC
members and non-members can participate in the training programs.
The programs range from two years for drywall and cement mason to
the more comprehensive four-year programs for electrical, plumbing
and HVAC.
Bill 40-14 is patterned after legislation first enacted by the
Maryland General Assembly back in 2011 but just recently
implemented in July of 2013. We are only now starting to see the
impact of the State program.
We encourage the administration of this law be transparent and
efficient so that the contractors fully understand their responsibilities.
We want the contractor's experience with this process to be as
seamless as possible.
We have included with our testimony information on
apprenticeship training nationally. It is imperative that we continue to
provide quality training to the industry as it is anticipated there will be
a need for 1.6 million new skilled workers between now and 2022.
Hopefully this legislation will help address this shortage as
it
relates
to
Montgomery County.
Paul P. Elias
The JBG Companies
Christopher L. Grant
Attorney At Law
Brett Harton
Foulger-Praff Contracting, LLC
Melissa P. Koehler
B. Frank Joy, LLC
Dale Kopnitsky
Skanska USA BUilding Inc.
David R. Laib
Balfour Beatty Construction
Cidalia Luis·Akbar
M.
Luis Construction Co.. Inc.
James P. Martinko
Cohn Reznick
John R. Miller
The Millstone Companies
Donald H. Spence Jr.
Greenburg
&
Spence, LLC
Neil J. Stablow
Donohoe Construction Company
Shane W. Warren
WalTen Brothers Construction, LLC
Debra A. Schoonmaker CAE
Presidenl/CEO
6901 Muirkirk
Meadows Drive
Beltsville,
MD
20705
(T) (301) 595-9711
(F) (301) 595-9718
1725 I Street NW, Suite 300
Washington,
DC 20006
(T) (202) 349-3821
(F) (202) 349-3915
abcmetrowashington .org
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As to the specifics in the Bill, we ask that it provide a clear
effective date and that the Council consider language that it apply to
projects advertised for bid after July 1, 2015. This would give the
County a reasonable amount of time to get the program up and
running and provide the industry with enough time to understand and
prepare for this new requirement.
We also recommend the County consider offering workshops to
contractors to assist them in understanding and complying with the
law. The State did this and it proved invaluable to the industry.
We thank Councilman Riemer for his sponsorship of the bill and
look forward to vvorking with the Council on this important issue.
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Construction is a great career path with limitless possibilities
Middle School
(Career Awareness)
.
-',
~
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HlghSchQo\or
Tech'
School'
Craft Training
University Degree
Craft
Professional
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Project
Manager
Senior MGMT
CEO, Executive
or Officer
,
,~
us
Department of Labor's 2013 Occupational Outlook Handbook
workforceu nderconstruction.com
abc.org
«ac
~2
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and
COnt....ctors.
Inc.
@
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ABC IS DOING ITS
PART TO TRAIN
THE FUTURE
WORKFORCE
SCHOOLS
COMMITTED TO
CAREER AND
TECHNICAL
EDUCATION ARE
HAVING GREAT
SUCCESS
High
School
eTE
Graduates earn
Post-Secondary
eTE
more per quarter on average
2% more employable long term. '
National Research
Center
for Career and Technical Education, conducting return an investment analyses
for secondary. and postsecondary CTE:
A
framework; January2011
.
AMERICA IS
STILL FACING A
HUGE SHORTAGE
OF SKILLED
CONSTRUCTION
CRAFT
PROFESSIONALS
workforceu nderconstruction .com
abc.org
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Overview - Maryland Apprenticeship and Training Program
Page 1 of2
Division
of
Labor and Industry
Overview - Maryland Apprenticeship and Training Program
Overview of Apprenticeship
Registered apprenticeships are voluntary, industry-driven programs sponsored by employers, employer
associations, and jointly by management and labor. Apprenticeships combine supervised, structured, on-the­
job training and related technical instruction to teach apprentices the skills necessary to succeed in a specific
occupation.
Registered Apprenticeship means the apprenticeship is registered with the State of Maryland. By completing
the registration process, the program has to comply with the State and Federal regulations regarding
apprenticeship. The main regulations concerning Registered Apprenticeship include: supervised on-the-job
training with a ratio of one apprentice to one journeyperson (skilled craftperson), the on-the-job training meets
the minimum 2,000 hours (per year if the apprenticeship is longer than 1 year) and related classroom
instruction meets the minimum 144 hours (per year if the apprenticeship is longer than 1 year). To read the
full regulations please visit the Regulations (apprregs.shtml) tab above
Apprenticeships are Jobs:
Apprenticeships are
jobs.
The apprentice works full time and receives training from the sponsoring
organization. Typically apprentices are hired at a percentage of a journeyperson's salary. As the apprentice
completes training section as and demonstrates skills mastery, the percentage of a journeyperson's wage
received increases until the apprentice makes journeyperson's wages upon completing the program.
Apprenticeships are designed to meet the workforce needs of the sponsors. Because of a need for highly
skilled workers many sponsors use apprenticeship as a method to train employees in the knowledge
necessary to become a skilled worker. This also means the number of apprenticeships available are also
dependent on the current training needs of the industry.
Apprenticable Occupations:
A position must require at least 2,000 hours of training to be considered as an apprenticeable occupation. If
an occupation is apprenticeable, an apprenticeship program will then be divided into on-the-job-training and
related instruction.
On-the-job training must consist of at least
2,000
hours per year of the apprenticeship, the equivalent of
working fulltime. On-the-job training for apprentices takes place at the work site under the direction of a highly
skilled joumeyperson(s). The related instruction component is the classroom training apprentices receive to
supplement the on-the-job training and teach fundamental principles of the trade. Each apprenticeship must
have at least 144 hours of related instruction per year of the apprenticeship.
Maryland encourages any organization with a training need meeting the above criteria to consider
apprenticeship. No industry is unwelcome.
Apprenticeships are In-Depth and Certified:
The minimum length of an apprenticeship is one year, however, most apprenticeship programs take 3-6
years to complete. Successful completion of a registered apprenticeship leads to a nationally recognized
Certificate of Completion of Apprenticeship
attesting to the individual's attainment of skills and knowledge to
be considered a journeyperson.
Apprenticeships are Diverse:
http://www.dllr.maryland.govllabor/appr/approverview.shtml
3/212015
®
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Overview - Maryland Apprenticeship and Training Program
Page 2of2
In Maryland there are over 230 registered occupations and over 9,000 registered apprentices. Most
apprenticeships are within the building trades and construction industries; however there are also
apprenticeship opportunities in non-construction occupations such as Child Care Development Specialist. For
a complete list of all the occupations registered to have apprenticeship programs please visit Find an
Apprenticeship (. .Iapproccl) .
Retum
to
the Maryland Apprenticeship and Training home page G.lapprl)
Retum
to
the Division of Labor and Industry home page (..I..llaborl).
Questions or comments about Apprenticeship and Training may be directed
to
matp@dllr.state.md.us
{mailto:matp@dllr.state.md.usJ.
Questions or comments regarding the Division of Labor and Industry may be directed
to
dli@Jjllr.state.md.us
(maifto:dli@dllr.state.md.us) .
Questions or comments regarding the DLLR website may
be
directed
to
webmaster@c;lllr.state.md.us
(maifto:webmaster@c;lllr.state.md.us) .
Updated January
19,
2010
http://www.dllr.maryland.govllabor/appr/approverview.shtml
3/2/2015
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Frequently Asked Questions (FAQs) - State Apprenticeship Training Fund - Division ofL... Page 1 of2
Division
of
Labor and Industry
Frequently Asked Questions (FAQs) - State Apprenticeship Training Fund
June 2013
1. When does this law become effective? (#When)
2. Who is covered by this law? (#Who)
3. What do contractors and covered subcontractors need to do prior to commencing work on a
State prevailing wage project? (#Whatprior)
4. What do contractors and covered subcontractors obligations once work has commenced?
(#Whatonce)
5. What do approved apprenticeship programs need to do? (#approvedl
1. When does this law become effective?
The State Apprenticeship and Training Fund law will apply to prevailing wage projects that have been
advertised for bid or proposal on or after July 1, 2013.
2. Who is covered by this law?
The requirements of this law apply to contractors and certain subcontractors (those performing work on a
prevailing wage project valued at $100,000 or more) on State public work projects.
Approved apprenticeship programs, an apprenticeship program or organization with an apprenticeship
program, that are registered with and approved by the Maryland Apprenticeship and Training Councilor
the U.S. Department of Labor, have certain obligations under this law if they receive contributions from
contractors and subcontractors.
3. What do contractors and covered subcontractors need to do prior to commencing work on a
State prevailing wage project?
The first step for contractors and covered subcontractors is to register online with the Division of Labor
and Industry, Prevailing Wage Unit (https:llwww.dllr.state.md.uslprevwageD .
Contractors and covered subcontractors will be required to complete the required project log information
including the project number, contract value, identification of all subcontractors on the project and the
subcontract amount.
Contractors and covered subcontractors also will be required to select the approved apprenticeship
program or the State Apprenticeship and Training Fund to receive their contributions prior to the
commencement of work on a State prevailing wage project.
Contractors and certain subcontractors who hire subcontractors performing work valued at $100,000 or
more are required to provide their covered subcontractors with written notice of the requirement that
subcontractors and their subcontractors performing work valued at $100,000 or more are required to
register and complete the required project log information and make contributions under this law.
Contractors and covered subcontractors are required to retain a copy of the written notice provided to
subcontractors for 3 years after the completion of their work on the public work project.
4. What do contractors and covered subcontractors obligations once work has commenced?
Contractors and covered subcontractors are required to make a contribution of $0.25 per person per
hour for each employee in each covered craft on the prevailing wage project to an approved
apprenticeship program or the State Apprenticeship and Training Fund.
It is important to note that a contractor's and covered subcontractor's obligations under the Maryland
Prevailing Wage Law still apply so a contractor or subcontractor is obligated to pay the full prevailing
wage rate that includes the basic wage rate and fringe benefits. A contractor or subcontractor may count
http://www.dllr.state.md.usllabor/apprfundlapprfundfaqs.shtml
3/612015
@
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Frequently Asked Questions (FAQs) - State Apprenticeship Training Fund - Division ofL... Page 2 of2
the $0.25 apprenticeship contribution toward the fringe benefit portion of a prevailing wage rate required
under the applicable wage determination. However, if there are no fringe benefits in the wage
determination, an employer under the Apprenticeship and Training Fund law is still required to make a
contribution of $0.25 per person per hour for each employee in each covered craft while continuing to
pay the prevailing wage basic wage rate.
The contributions of $0.25 are required to be reported on the contractor and subcontractor electronic
certified payroll reporting system that is required for all State prevailing wage projects.
Contractors and subcontractors are required to certify that their contributions were received by an
approved apprenticeship program or the Fund.
Contractor and subcontractor payments to the State Apprenticeship and Training Fund shall be made
payable to the State of Maryland and mailed to the Prevailing Wage Unit, Department of Labor,
Licensing and Regulation. 1100 North Eutaw Street, Room 607, Baltimore, Maryland 21201. Payments
to the State Apprenticeship and Training Fund are due within 14 days after the end of the previous
month.
5.
What
do approved apprenticeship programs need to do?
The Prevailing Wage Unit of the Division of Labor and Industry will notify an approved apprenticeship
program that it has been deSignated by a contractor or subcontractor for contributions.
Once an approved apprenticeship program has received notice from the Prevailing Wage Unit, the
approved apprenticeship program is required to register on the Department's website
(https:/Iwww.dllr.state.md.us/prevwageD .
Once registered, the approved apprenticeship program is required to report on-line the contributions
received on a quarterly basis.
Approved apprenticeship programs are required to certify that the contributions that they have received
from contractors and subcontractors are being used for the purpose of improving or expanding
apprenticeship training in the State.
Return
to
the Maryland Apprenticeship and Training home page (..Iappr/)
Return
to
the Division
of
Labor and Industry home
page
(.J..IIaborl}
Questions
or
comments about Apprenticeship and Training may
be
directed to matp@dllr.state.md.us
(mailto:matp@dllr.state.md.us) .
Questions or comments regarding the Division of Labor and Industry may be directed
to
dll@dllr.state.md.us
(mallto:dli@dllr.state.md.usJ .
Questions or comments regarding
the
DLLR website may
be
directed to webmaster@dl/r.state.md.us
(mallto:webmaster@dllr.state.md.us) .
Updated June
13,
2013
http://www.dllr.state.md.us/labor/apprfundlapprfundfaqs.shtml
3/612015
®
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3/6/2015
Building and Construction Technology
Skip to Main Content
Building and Construction Technology
1'
.
~..;
Montgomery College
~~I':cuIIiI\~
Building and Construction Technology training provides students with a comprehensive mixture
of academic and practical training in areas of residential building. Coursework is laboratory
intensive complemented with additional classroom studies. Career paths include carpenter,
plumber, electrician, HVAC technician, trade supervisors and code officials, and builders. This
program is approved by the Suburban Maryland Building Industry Association. Montgomery
College is a member of the
Re~istered
Apprenticeship-College Consortium. Apprenticeship­
related instruction programs includes such trades as: Carpentry, Drywall, Electricity, Heating,
Ventilating and
Air
Conditioning
(HVAC),
Plumbing, Sprinkler Fitting, and Steam Fitting.
In addition, Building and Construction Technology responds to business needs by providing
customized training
as
requested. For more in-depth course information or to design a training
program specific to your needs, contact the Program Director; John Phillips, either by telephone
(240)-567 -7942 or e-mail:
John.Phillips@montlmmerycoUege,edu
NEW: Connect with BRAC Training Opportunities. Specialized SCIF Training for Construction
Professionals. (Sensitive Compartmented Information Facility Construction). See
http:(/www.scifinfo.com for a complete listing of course offerings at Montgomery College. See
SCIF Training brochure for more details.
• Buildinli Trades
Technolo~
De&rees and Certificates
Associate of Anpljed Science Degree
Carpentry Certificate
Electrical Wiring Certificate
HYAC Certificate
Residential Remodeling
and
Repair Certificate
• Building Trades Technology Letters of Recognition
Carpentry Letter of Recognition
Electrical Wiring Letter of Recognition
HVAC Letter of Recognition
Residential Remodeling Letter of Recognition
• Licensing Exam Preparation and Maintenance Courses
• Apprenticeship Training
• Continuing Education Courses
• Customized Training for Industry
Montgomery College
Montgomery County, MD
240-567-5000
©2015, MOIltgomery College
http://cms.montgomerycollege.eduledu/department2.aspx?id=21425
1/1
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Isiah
Leggett
.County Executive
Marc P.
Hansen
County Attorney
OFFICE OF THE COUNTY ATTORNEY
MEMORANDUM
TO:
David E. Dise, Director
Department of General Services
MarcP.Hansen
fh~_
COWlty Attorney
VIA:
~
~~
(J
FROM:
Karen L. Fedennan Henry
~f<'
d-
~.JJ.i!../'\N'-A<.lA/
Chief, Division of Finance and Procurement
September 16, 2014
DATE:
RE:
Bill 40-14, Contracts and Procurement - Prevailing Wage Requirements ­
Apprenticeship Training
The above-referenced bill has been introduced and is scheduled for a public hearing on
October 7, 2014. I have reviewed the bill and see no legal issues that affect its passage. There
are a few logistical issues that may affect the use and implementation of the new provision.
First, the inclusion of the provision within the Prevailing Wage Law seems a bit
awkward. Rather than expand the Prevailing Wage, the bill really sets up a new program that
accompanies the Prevailing Wage Law.
The more important issue involves enforcement of the Apprenticeship Training
requirement. By including the provision within the Prevailing Wage Law, the remedies appear
ambiguous-if the goal is to ensure that apprenticeship programs exist, and payment into a fund
may suffice, the payroll records may not be enough to show compliance.
The bill mainly poses business issues that DGS will want to clarify during the legislative
process.
Cc:
Bonnie Kirkland, ACAO
Trevor Ashbarry, Assistant County Attorney
101 Monroe Street, Rockville, Maryland 20850-2540
(240) 777-6700. TID (240) 777-2545. FAX (240) 777-6705
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••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
Construction Skill Shortages
Policy Brief
••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
Gerard M. Waites, Esq.
O'Donoghue
&
O'Donoghue LLP
4748 Wisconsin Ave N.W.
Washington D.C. 20016
September 2014
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CONTENTS
Introduction .•••••.•••.•••••••.••••••.•••••..•.••••••••••...••••.•••••..••••••••••••••••••••••••••.••••..•••••••••••1
Executive Summary.•.••••••.•••••••••••.••••••••••••••••.••••.•••••.••••••.•••••••.•••••.•••••.•••••..•••.•.•••1
Construction Labor Skill Shortages •••••..••.•..••••.•••••.••••••••••.•.•••••••••••••.••••••..••..••••.•. 2
Major Trends
&
Driving Forces .•••••••••••••••••••••••••••••••.••••••.••••••••••••••••.•••••••••2
Cumulative Impact of New Market Challenges ..........................................6
Failure to Train: Consequences of Inaction ................................................8
Meeting the Challenge of the Skills Crisis ............................................................9
Mandating Training: Key Recommendations From Project Owners ...........9
Construction Institute Report-Positive Impact of Craft Training ••.••••.••••• 11
Regenerating Craft labor Supply Through Apprenticeship Training •••••.••• 12
Conclusion •••••••••••••••••••••••..••••.••••••..••.••.••••.••..•••..•••....•••••••••••.••••...•••••••••••••••••••• 14
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I.
INTRODUCTION
Construction is a highly skilled, highly labor intensive industry that requires the
systematic recruitment, training and deployment of multiple trades, and often hundreds of
workers, for a single project. Typically, construction labor also represents 25 to 30 percent
of total project costs. Craft labor not only plays a critical role in the construction process,
but also has a major impact on every aspect of project delivery, including cost, quality,
schedule and safety.
For these reasons, a reliable supply of well trained, highly skilled craft labor can help
ensure successful delivery in all respects. Inadequate supply, on the other hand, can cripple
a project and impose significant cost-overruns, schedule delays and other serious risks to
project owners. Yet the role of craft labor is often overlooked in the planning process,
overshadowed by other factors such as project delivery methods, design issues and selection
procedures for contractors and A/E firms. These issues are undoubtedly crucial. But craft
labor is just as important and is becoming an increasingly critical concern because the
industry is facing unprecedented and potentially massive skill shortages-a skills gap of up to
2,000,000 workers, according to a recent report supported by extensive industry research.
This paper summarizes the most comprehensive data on craft labor shortages,
including information from key studies from the 1990s to the present. The skill crisis has
been long in the making and is well documented. Fortunately, these same reports examine
the root causes of the problem and offer new strategies for the industry to begin addressing
its immense workforce development challenges.
II.
.
EXECUTIVE SUMMARY
The challenges of ensuring that sufficient craft labor will be available for a given
project are difficult under any circumstance. However, the industry currently faces unique
challenges due to the following three trends:
1) An expanding construction industry-driven by an enormous backlog of
work pent up from the Great Recession and fueled by major growth in
several big industries, including energy, healthcare and technology;
2) A steep decline in labor supply-caused by the mass retirement of the
industry's most experienced and skilled workers and exacerbated by a
decreasing number of young workers/new entrants in the field; and
3) A general, steady drop off over the past several decades of effective skill
training programs throughout most of the industry.
The convergence of these factors, creating what some have called a
Perfect Storm
in
the construction industry, represents growing risks for project owners that there will be
insufficient manpower to staff future projects. For several decades, natural market forces
have not fixed the problem; nor have government-supported training programs or voluntary
contractor initiatives.
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What's more, new construction workers cannot be trained and deployed with the
"flip of a switch" since it typically take three to five years to properly train craft persons in
the skilled trades. Simply hiring unemployed workers without the required knowledge, skills
or training will not solve the problem. Increasing wages, which will drive up construction
costs, may help in recruiting new workers but will not address the need for the type of large­
scale, systematic training needed in the industry.
Due to unique conditions and current market dynamics, owners face heightened risk
of exposure in project planning and greater uncertainty when seeking assurances from
contractors on the availability and reliability of their craft labor resources, a risk which grows
with each new project and each passing year.
Without effective solutions, project owners will pay more for craft labor as basic laws
of supply and demand play out, plus end up with a situation where they are paying more
and still getting less-less in terms of quality, productivity, safety and other key delivery
factors. Some experts predict that owners will be forced to cancel or significantly delay
major projects, no matter how critical.
The bright side of all this is that the project owner community is no longer viewing the
skill crisis as simply a "contractor" prob,lem. Instead, they are taking steps to exercise more
direct control over craft labor supply to protect investments and minimize risk. This paper
reviews the key facts and data surrounding this issue and examines key recommendations
by owner groups designed to address this challenge-namely, to establish specifications in
the bidding process, via prequalification or otherwise, that require contractors to participate
in reliable, effective craft training as a condition of performing work.
Experts agree. Project owners alone have the power to drive change needed in the
industry and, by all accounts, it is in their interests to do so. As mounting evidence shows,
new owner-driven strategies provide the most effective solution to craft labor shortages.
III.
CONSTRUCTION LABOR SKILL SHORTAGES
A.
MAJOR TRENDS
&
DRIVING FORCES
Numerous studies over the past fifteen years have documented a veritable skill crisis
that has been
dev~loping
in construction since the late 1990s, spurred by changing
demographics, an expanding industry and a general decline in the level of skill training
provided.
1
A 1997 survey of the Business Roundtable, for example, found that 60% of its
See, e.g., Confronting the SkiJ/ed Construction Work Force Shortage,
Business Roundtable, Construction Cost
Effectiveness Task Force (1997);
Apprenticeship Training in the U.S. Construction Industry,
Cihan Bilginsoy (Sept.
1998); Key Workforce Challenges Facing the American Construction Industry: An Interim Assessment,
Center for
Construction Industry Studies (Mar. 1999);
AGC Announces Model Language for '7raining for the Trades" in
RFPs,
AGC News
&
Bulletins (1999);
Workforce Conference Report,
BNA Construction Labor Report, Vol. 47 No.
2352 (Nov. 21, 2001);
Craft Labor Shortage Provokes More Studies of Pay and Safety,
Engineering News Record
(August 20, 2001);
Confronting the Skilled Workforce Shortage,
Construction Users Roundtable (June 2004);
The
Perfect Storm: Factors Come Together Creating a Storm in the Construction Workforce,
The Construction
Executive (June 2004);
America's Construction Industry: Identifying and AddreSSing Workforce Challenges,
ETN
Business Relations Group Report (Dec. 2004);
Craft Labor Supply Outlook: 2005-2015,
Construction Labor
1
2
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members reported skilled labor shortages on construction projects and conditions which
caused serious turmoil for construction planning and project delivery. A steady stream of
additional reports over the years shows this problem has persisted and is more acute today
than ever.2 Industry experts have identified several driving forces behind the skills crisis:
Factor #l-Fast Growing Demand:
As U.S. population expands, the construction industry grows to accommodate
increased demand. In addition to the need for greater housing stock and commercial
building, this triggers the need for massive infrastructure re-building to replace and expand
already seriously aging systems.
3
);>
In its
2013 Report Card for America's Infrastructure,
the American Society of Civil
Engineers estimates that the U.S. will need
$3.6
trillion in infrastructure
investments alone by
2020.
4
A number of other major market sectors are also poised for substantial growth,
including energy, healthcare, manufacturing and information technology, with
many huge building programs in these areas already underway.s
For example, between
2008
and
2012,
the share of the construction workforce
participating in direct oil and gas construction nearly doubled from
3.8%
in
2008
to
6.4%
by
2012.
FMI projects the share to climb to
10%
by
2017,
with the
segment requiring more than
500,000
workers.
6
In addition, a huge amount of pent-up work across various sectors, which had
been delayed by the Great Recession, is also moving from planning to
construction.
7
);>
);>
);>
Research Council (2004);
A Workforce Needs Assessment of the Arizona Construction Trades Industry,
Arizona
Department of Commerce (Feb. 2005);
The 2005-2006 U.S. Markets Construction Overview,
FMI Management
Consulting (2005);
Workforce Development Committee,
The Voice, Construction Users Roundtable (Summer
2006); Solving the Construction Industry Workforce Crisis
-
Ideas for Action,
McGraw Hili/ENR (2007);
In
Demand: Emerging Solutions for the Workforce Crisis,
The Voice, Construction Users Roundtable (Spring 2007);
The Construction Chart Book,
CPWR-The Center for Construction Research and Training (2008);
Maryland's
Construction Industry Workforce Report,
Governor's Workforce Investment Board (Sept. 2009).
2
Confronting
3
the Skilled Construction Work Force Shortage, supra
note 1, at 26.
Global Construction Market Set to Grow by Over 70%
to $15
Trillion by 2025,
Bloomberg, PR Newswire (July
17, 2013),
available at
http://www.bloomberg.com/articie/2013-07-17IaveLfgCxl.s8.htm.
citing Global
Construction 2025,
Global Construction Perspectives, Oxford Economics (July 2013),
full report available at
http:/{www.globalconstruction2025.comlworldwide!products#reportproducts.
4
Available at
http://www.infrastructurereportcard.org.
5
See
The 2013 U.S. Markets Construction Overview,
FMI Corporation (2012);
2013 Dodge Construction Outlook,
McGraw-Hili Construction Research
&
Analytics Group (Oct. 2012).
Skill Shortages in a Booming Market: The Big Oil and Gas Challenge,
FMI Corporation (2013) 1,
available at
http://www.fminet.com/media!pdf/reportlOilandGasChal1enge.pdf.
6
7
See
The 2013 U.S. Markets Construction Overview,
FMI Corporation (2012);
2013 Dodge Construction Outlook,
McGraw-Hili Construction Research
&
Analytics Group (Oct. 2012).
3
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Collectively, these factors indicate unprecedented growth. One global study
predicts that the U.S. and Canada will witness the highest overall investments in
construction among developed countries over the next twelve years. Specifically, it is
estimated that the U.S. will spend some $14.5 trillion in construction by 2020 and the
construction industry is expected to be 40% larger in 2025 than in 2007.
8
Factor #2-Fast Shrinking Supplv:
The construction labor pool is aging and supply generally is shrinking. This trend is
caused by shifting demographics-namely the aging of baby boom generation, which is
leading to massive retirement of the most skilled and experienced workers in the
construction industry. The industry is also failing to recruit and train sufficient numbers of
replacement workers.
);>0
One recent report estimates over half of the construction labor pool is 45 or
older and nearly 20% are between the ages of 55 and 65.
9
Moreover, a study by
the Construction Industry Institute (CII) found that the median age of the
construction workforce rapidly increased in the early 2000s, while retirement
age remained constant.
10
As a result of these factors, the skilled workforce has gradually been shrinking
over the last several decades relative to the overall size of the industry.ll
According to preliminary estimates by the Department of Labors Bureau of
Labor Statistics (BLS), the construction industry had 152,000 job openings left
unfilled by the end of June 2014, the second highest level since May 2008.
12
Another report indicates that 45% of general contractors surveyed expect to see
craft labor shortages in 2014.
13
);>0
);>0
8
See Bloomberg and Global Construction 2025
reports,
supra
note 3.
91s Your Workforce Ready for the Rebound,
The Voice, Construction Users Roundtable (Summer 2013) 20.
10
The Shortage of Skilled Craftworkers in the U.s.,
Construction Industry Institute (Sept. 2003) 10.
Confronting the Skilled Construction Work Force Shortage, supra
note 2, at 26.
11
12
Bureau of Labor Statistics Job Openings and Labor Turnover (JOLT) Survey. The Bureau of Labor Statistics
considers a job "open" if it meets the following conditions: (1) "[a] specific position exists and there is work
available for that position. The position can be full-time or part-time, and it can be permanent, short-term, or
seasonal"; (2) "[tJhe job could start within 30 days, whether or not the establishment finds a suitable candidate
during that time"; and (3) [tJhere is active recruiting for workers from outside the establishment location that
has the opening." Additional information on the JOLT survey is available at http://www.bls.gov/ilt/iltdef.htm.
The Importance of Owner Support for Workforce Development,
the Voice, Construction Users Roundtable,
(Summer 2013) 26.
13
4
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);>
According to a 2013 survey, nearly three-quarters of jointly managed
apprenticeship program representatives expect a shortage of skilled candidates
for apprenticeship training programs to be a challenge for the next two years.
Moreover, almost one-third of respondents expect it to be more difficult in the
future for training funds to recruit apprentices.
14
Similarly, according to an Associated General Contractors of America survey
conducted of its members, nearly three-quarters (74%) of firms report
challenges filling craft worker positions.
15
Top-level industry groups have likewise identified serious industry-wide
shortages as a major problem for future project planning. 16 According to a june
2014 survey, two-thirds of firms reported having labor shortages in the past
year.17 One-quarter of the firms reported turning down work due to a lack of
labor.18
);>
);>
The fact is that the skills crisis has been decades in the making-it has not and will
not be corrected by natural market forces. The potential negative impact of the downward
spiral of the craft labor supply is further examined below.
Factor
#3:
Decline in Training
&
Productivity:
Over the past several decades there has been a steady, consistent decline in skill
training throughout most of the construction industry that seriously compounds the
industry's other significant challenges. Evidence of this factor has been mounting:
);>
According to the Department of Labor data, while there were on average 5.78
million workers employed in construction during fiscal year 2013, there were
only 101,947 active apprentices participating in registered apprenticeship
programs in the construction trades, a participation rate of less than 1.8%.19
The survey findings are based on 153 responses received to a survey sent by the International Foundation of
Employee Benefit Plans in September and October 2013 to training funds in a number of industries in the
United States and Canada, including carpenters, plumbers, electrical workers, operating engineers, and iron
and steel workers. The survey report,
Top Trends in Jointly Managed Apprenticeship Programs
(2013)
available
at
https:!lwww.ifebp.org/pdf/research/RS 14003SApprentRprt. pdf.
14
15
AGC
oj
America
Worker
Shortage
Survey
Analysis
(2013),
available
http://www.nwagc.org/Resources/Documents/Owners%20Panel/2013 Worker Shortage Survey Analysis.pdf.
at
16
See 2013 U.S. Markets Construction Overview,
FMI Corporation (2012);
2013 Dodge Construction Outlook,
McGraw-Hili Construction Research
&
Analytics Group (Oct. 2012).
17
See
AGC If America Press Release,
Construction Employment Increases in
223
Metro Areas Between July 2013
&
2014 as
25
Percent oj Firms Report Turning Down Work Because oj Labor Shortages
{August 27, 2014},
available at
http://www.agc.orglcs!news media/press room/press release?pressreleaseJd:::1620.
181d.
19
These statistics are taken for the Office of Apprenticeship's fiscal year from 10/01/12-9/30/13. The number
of construction workers is the average taken from the number of construction workers reported on a
seasonally adjusted basis in the BLS Current Employment Statistics Survey for the Construction Sector (NAICS
5
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»
Similar facts were documented in a critical study from the National Institute of
Standards and Technology (NIST), which found a steep and steady decline in
craft training throughout most of the construction industry.20 A primary reason
for this is the general lack of training provided in the open shop sector.21 .
»
The
NIST study also reveals that productivity in the construction industry
currently ranks among the lowest, and possibly the lowest, of all non-farm
industries. Specifically, examining construction skill shortages, NIST found that
over the past
40
years, labor productivity in construction has actually trended
downward
at an average annual rate of
_0.6%.22
»
Not
surprisingly, the study finds that falling productivity is attributed in
substantial part to a decline in skill training.
23
less training means as older
workers increasingly leave the industry, their younger, less-experienced
counterparts are being neither recruited nor trained in sufficient numbers to
maintain supply and productivity levels. 24
23}
available at
http://www.bls.gov/iag/tgs/iag23.htm#workforce for that period; the apprenticeship
participation figure is taken from the Office of Apprenticeship's Fiscal Year 2013 data reported for the top 10
apprenticeship participation programs,
available at
http://www.doleta.gov/oa/data statistics.cfm.
See
Allison L Huang, Robert E. Chapman, and David T. Butry,
Metrics and Tools for Measuring Construction
Productivity: Tech'1ical and Empirical Considerations,
U.S. Department of Commerce, National Institute of
Standards and Technology, Office of Applied Economics (Sept. 2009) [hereinafter NIST report] 23,
available at
http:Uwww.nist.gov!customcf/get pdf.cfm?pub id=903603.
20
Id.
at 23. The study notes that
prior to
the last several decades, training had been provided comprehensively
throughout the industry, most typically through joint labor-management training programs administered by
contractors and building trade unions under collective bargaining agreements and that in the union sector this
continues. It further notes that, while "open shop training programs exist, they tend to be rare."
Id.
at 23.
Data from the past forty years has shown that "[w]ith the decline of union membership and collective
bargaining agreements, training programs and the number of apprentices also have declined."
Id.
21
Currently, the non-union sector appears to invest substantially less than the union sector, even though the
former accounts for over 80 percent of the industry. One report, for example, showed the open shop
Associated Builders and Contractors invested approximately $28 million in apprenticeship programs, while the
union sector invested $750 million in such programs.
The Perfect Storm: Skilled Worker Shortage Looms for
Construction
Sector,
International
Brotherhood
of
Electrical
Workers,
available
at
http://www.ibew.org/articies/13ElectricaIWorker/EW1307 /IBEW%20EW%20V07%20N07.pdf.
22ld.
at 39.
This statistic is even more troubling when construction labor productivity is compared to other industries.
The NIST report reveals that during the same time period labor productivity in
all non-farm industries has
increased at an average annual rate of
1.8%.
Id.
23
241d.
at 23.
6
'7
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»
Market
surveys support these studies. In one, some 56% of specialty trade
contractors surveyed believe that the
Il
ne
xt
generation" of employees are
receiving "inadequate education" to prepare them for the workforce.
25
Similarly, according to a survey conducted of general contractors, nearly two­
thirds of respondents (65%) report that the local pipeline for preparing new
construction craft workers is below average or worse and 64% responded that
there are too few local high school skills and technical-based programs.
26
While the economy is showing signs of continued growth and gradual post-2008
recovery,skill shortages threaten to impair broader growth and continue to limit the
industry's ability to fully revive itself. Years of underinvestment in skills training has led to a
serious, steady decline in productivity and construction quality, trends which will only grow
worse as the mass retirement of baby boomers continues to unfold. As the sources
reviewed below indicate, the collective impact of these trends will be to impede project
planning and undercut project delivery unless effective solutions are found.
B.
CUMULATIVE IMPACT OF NEW MARKETCHALLENGES
A 2014 Construction Labor Market Analyzer (IlCLMA") report predicts a nationwide
craft labor shortage of as many as two million construction workers by 2018-a figure that
could be even further due to demand for skilled labor from unidentified construction
projects and continued development in oil and gas.
27
The simple fact is that increased
project demand, shrinking labor supply and a general decline in training add up to huge
challenges that the industry must address in real time.
ClMA's prediction of a potential two million worker shortfall is not based on vague
estimates, but thorough research and analysis of key market factors, including planned
project data and demand for skill crafts.
28
ClMA analyses have been forecasting such a
shortage since at least 2012.
29
According to the Director of Operations of the Construction
Users Roundtable {"CURT"}, who offered a detailed review of the 2012 analysis, this
prediction was "aggressive and bold." He explained, "[s]ome people thought the number
was too high but most thought it was correct or actually too low. What everyone agreed on
was that the challenge our industry faces is tremendous."
30
Similar forecasts have been
25
26
See 2013 Dodge Construction Outlook,
McGraw-Hili Construction Research
&
Analytics,
supra
note 5, at 24.
AGC
of
America
Worker
Shortage
at
Survey
Analysis
(2013),
available
http://www.nwagc.org/Resources/Documents/Owners%20Panel
12013
Worker Shortage Survey Analysis.
pdf.
CLMA is an analysis tool developed in alliance with the Workforce Development Committee of the
Construction Users Roundtable (CURT).
See
CLMA,
Skilled Worker Shortage Escalates
(Winter 2014)
CLMA
Study
Summary],
summary available
at
http:Umyclma.com!wp­
[hereinafter
2014
content!uploads!2014-Winter-Report-Handout-SE.pdf.
27
281d.
See
CLMA and Southeast Manpower Tripartite Alliance ("SEMTA"),
Projected Demand for Craft Labor for the
Southeast United States (2012-2017)
(2012) [hereinafter 2012 SEMTA Handout],
available at
http:Umyclma.com!wp-content!uploads!Foresight-Report-SEMTA-Handout-20120ct18.pdf.
29
30
Is Your Workforce Ready for the Rebound,
The Voice, Construction Users Roundtable (Summer 2013), 18.
7
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given in other reports. For example, by one estimate the industry will need to recruit and
train
275,000
workers per year for at least the next
10
years to fill the growing skills gap.31
A primary factor for growth in the near future is that the construction industry is that
approximately one-sixth of workers are anticipated to retire in the near future. 32 While the
industry has increased the availability of skilled workers, the industry must continue to
replenish the labor supply.33
The study identified office, commercial, gas, and
manufacturing construction to be among the strongest performers in the industry in the
near term. In addition to the revival in traditional projects, the industry is also experiencing
major expansion in competition for labor in other industries, such as oil and gas. 34
Moreover, a recent study by McGraw Hill Construction predicts that green jobs will
account for
48%
of the commercial construction market by
2015.
35 However, as this sector
expands, green building firms face a lack of experience, certification and accreditation
among prospective workers, which poses a serious impediment to this important emerging
sector. 36
The McGraw-Hili report also underscores significant industry anxiety over future
workforce shortages, with two-thirds of the industry reporting concern. 37 Nearly half of
general contractors expected difficulty finding experienced craft workers by
2014.
38
Respondents anticipated that specialty trades would experience the highest shortage
levels. 39 Specifically, respondents suggest that the loss of knowledge and experience due to
retirement and layoffs would sharply reduce the number of skilled workers available. 4o
See e.g., Bad for Business: Skilled Labor Shortages in Alabama's Construction Industry,
The Associated
Schools of Construction (2012).
31
32
See
2012 SEMTA Handout
supra
note 29.
See
2014 ClMA Study Summary
supra
note 27.
33
341d.
35
2013 Dodge Construction Work Outlook,
McGraw-Hili Construction Research
&
Analytics,
supra
note 5, at 5.
361d.
371d.
at
21.
38ld.
at
1.
391d.
at 21. Notably, the skilled trades that expect "major expected shortages" are 1) carpentry, 2) electrical, 3)
HVAC/boilermaker,
4)
concrete finisher/cement mason, and
5)
ironworker/steel erection, fabrication and
welding.
Id.
40
Id.
at 24.
8
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To address the crisis created by a situation in which demand for a skilled workforce is
increasing as supply and skill levels decrease, the industry must make changes to ensure that
it recruits an adequate number of workers who have the necessary skills to perform
successfully for years to come. This includes ensuring that training opportunities are
available and that contractors are motivated and incentivized to participate in them.
Otherwise, project owners, who ultimately have to absorb the construction costs, will be
injured in both the short and long term by the adverse impact of a widening gap between
supply and demand of skilled workers.
C.
FAILURE To TRAIN: CONSEQUENCES
OF
INACTION
Leading experts agree: failing to address the skills crisis can produce multiple
negative effects. As one report from a top trade association stresses, "[p]otential project
delays or cancellations, loss of business, wage and benefit escalations and negative future
impact on attracting new facilities or expansions are just a few of the potential negative
consequences."
41
This report notes that such effects will also include lower productivity,
cost-overruns, schedule delays, increased safety incidents and outright project failures.
42
Similar findings were noted in the NIST study referenced above, which also found
that skill shortages produce higher costs for project owners and greater schedule delays.43
The NIST study further cautions that the challenge posed by a shortage of skilled workers is
only projected to grow worse in future years.44 In addition, a lack of skilled manpower has
other crippling repercussions for construction, including: poor quality workmanship,
increased re-work, higher life-cycle costs, lower overall value, excessive claims, change
orders, increased litigation and related financial and administrative burdens and headaches
for project owners forced to deal with major performance problems.
In sum, if project owners fall to act, they will, through the basic law of supply and
demand, inevitably be exposed to serious risks and increasingly debilitating problems. Now
more than ever, owners need to protect their short-term interests in securing successful
project performance and promote their long-term interests in promoting effective
workforce development.
41
Id. See also, The Importance of Owner Support for Workforce Development,
The Voice, Construction Users
Roundtable (Summer 2013) 26.
421d.
at 26-27.
43
See
NIST report,
supra
note 20.
44ld.
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IV.
MEETING THE CHALLENGE OF THE SKILLS CRISIS
A.
MANDATING TRAINING: RECOMMENDATIONS FROM PROJECT OWNERS
Recognizing the urgency of the skills crisis, the Construction Users Roundtable
(CURT), the nation's leading trade association for project owners, has repeatedly issued
strong recommendations to those responsible for capital facilities construction to take
ownership of this problem and drive the changes needed in the industry. The primary
solution CURT recommends in this regard is that project owners should
pregualify
contractors on the basis of
skill training
and mandate such requirements as a condition of
doing business.
CURT has made this recommendation repeatedly for almost a decade, increasingly
stressing the need for action in light of the growing nature of the problem. In its recent
2013 publication, it squarely addresses the issue as follows:
The Need
to
Mandate Craft Training:
While Owners have historically
considered it the contractor's responsibility to deliver a qualified and
competent workforce, it's clear that Owners will have to take a more active
role in workforce development for the industry to meet its current and future
workforce demands. Most importantly, Owners can drive greater industry­
wide commitment to workforce development by only doing business with
contractors who invest in training and maintain the skills of their workforces.
CURT and other forward thinking Owner groups have supported this idea for
years.
45
In its white paper on skill shortages, CURT further explains that: U[t]he most effective
and long-lasting changes in the industry are changes that are supported and encouraged by
the owner community."
46
To this end, CURT specifically urges owner companies to:
»
Recognize the necessity of investing in training.
»
Establish expectations in the areas of workforce
training and
development, workforce recruitment, and worker retention.
»
Only
do business with contractors who invest in training and
maintain the skills of their workforce.
»
Make
contractor commitment to craft training a factor in the
qualification processY
45
The Importance of Owner Support for Workforce Development,
The Voice
l
Construction Users Roundtable
(Summer 2013) 26.
Confronting the Skilled Workforce Shortage
l
Construction Users Roundtable
l
(2004) 9.
46
471d.
10
51
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In a follow-up report CURT again promotes the critical need of project owners to
require skill training because of its direct and substantial impact on project delivery both in
the short and long term.48 Explaining the context and rationale for CURT's
recommendations, this report notes at the outset that CURT's mission is to "promote cost
effectiveness for owners doing business in the United States by providing aggressive
leadership on issues that will significantly improve project engineering, maintenance and
construction processes, thereby creating value for the owners."49
Project owners, CURT explains, depend on skill training to protect their own interests
in securing successful projects and, therefore, should take a progressive and proactive role
to ensure contractors provide skill training to craft workers. 50 Reports and studies from
various other top industry groups also support these recommendations and similar proactive
strategies by project owners to address the construction skills crisis. 51
B.
CONSTRUCTION INSTITUTE REPORT: POSITIVE IMPACT OF CRAFT TRAINING
As reports from CURT and other sources show, the failure to train can result in
serious negative consequences for project owners. On the other hand, owners and the
industry at large both reap significant benefits from skill training, provided it is done right.
Available evidence conclusively demonstrates that investments in craft training make
significant positive returns, both for individual workers and for the industry as a whole.
As
explained by the
2007
industry report,
Construction Industry Craft Training in the United
States and Canada:
A preponderance of evidence demonstrates that training pays off} as
indicated not only in the analysis from this study but others as well. The
research team analyzed benefits from craft training from three perspectives:
employer} project, and craft worker. Craft training can benefit both the
individual worker and the employer.52
48
Construction Labor: Managing the Construction Workforce,
Construction Users Roundtable (March 2005),
available
at
http://www.nwoglca.org/PDF Files/up403%20Construt%20Labor %20Managing%20Construction%20Workfor
ce.pdf.
491d.
at 9
SOld.
at 9;
see also In Demand: Emerging Solutions for the Workforce Crisis,
The VOice, Construction Users
Roundtable (Spring 2007).
See e.g., Confronting the Skilled Construction Work Force Shortage,
Business Roundtable, Construction Cost
Effectiveness Task Force (1997);
AGC Announces Model Language for '7raining for the Trades" in RFPs,
AGC
News
&
Bulletins (1999);
Workforce Conference Report,
BNA Construction Labor Report, Vol. 47, No. 2352,
(November 21, 2001);
Craft Labor Shortage Provokes More Studies of Pay and Safety,
Engineering News Record
(8/20101); Confronting the Skilled Workforce Shortage,
Construction Users Roundtable (June 2004);
Craft Labor
Supply Outlook:
2005-2015,
Construction Labor Research Council (2004);
The
2005-2006
U.S. Markets
Construction Overview,
FMI Management Consulting (2005);
Workforce Development Committee,
The Voice,
Construction Users Roundtable (Summer 2006);
Solving the Construction Industry Workforce Crisis -Ideas for
Action,
McGraw Hill/ENR (2007).
51
52
Construction Industry Craft Training in the United States and Canada,
Construction Industry Institute (Aug.
2007) 12,
available at
http://ps.businesssocialinc.com/media/uploads/abceastflorida/craftstudy.pdf.
11
52.
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Some of the benefits of craft training include lesser percentages of voluntary
turnover and absenteeism as we" as a higher likelihood that the worker would be rehired on
another project by the same company.53
In reviewing this report, Sandra Olson, president of the Construction Industry
Training Council, explained that the study showed that "a 1 percent investment in training
netted benefits on both capital and maintenance projects, ranging from an 11 percent hike
in productivity to a
27
percent decrease in injury rates." The report also highlights the
potential benefits of reducing turnover, absenteeism, injuries and rework, and "estimated
improvements in all categories."54
Craft training is also an obvious way to attract the younger generation and help
rebuild a solid pipeline of productive, skilled workers. 55 Thus, in addition to improving the
quality of work and overall project success, training programs within the trades provide an
economically sound and commonsense way to bring new workers into the industry.
C.
REGENERATING CRAFT LABOR SUPPLvTHROUGH ApPRENTICESHIP TRAINING
Promoting the use of formal apprenticeship training programs in the construction
industry provides one of the most viable means for addressing the growing skills gap. This is
due to the fact that, as many experts agree, apprenticeship training offers the most reliable,
time-tested and effective options for educating the next generation of skilled construction
workers.56
In a report titled
The Bene/its and Challenges
0/
Registered Apprenticeship,
the Urban
Institute reviews the utility of registered apprenticeship programs based on how capable
such programs are in conducting effective skill training. 57 This report and an underlying
survey were commissioned by the Employment and Training Association of the U.S.
Department of Labor. Key findings are as follows:
at 12-13.
531d.
54
Sandra Olsen,
Construction Training is Goodfor Your Bottom Line,
Seattle Daily Journal of Commerce (March
27,2008), available at
http://www.djc.com!news!co!11198999.html.
See 2013 Dodge Construction Outlook,
McGraw-Hili Construction Research & Analytics,
supra
note 5, at 47­
55
48.
The NIST study referenced above likewise explains that skill training in construction yields substantial
benefits, noting that it increases productivity and reduces turnover, absenteeism, and rework. In addition,
craft training increases individual skills, knowledge, income, and job satisfaction - variables that help to
counteract industry-wide recruitment problems that have been linked to a poor industry image and perceived
limitations in career development opportunities.
56
Industry research indicates that contractors agree that on-the-job training and apprenticeship programs
were thought to be the most important and valuable means for combating these problems.
56
57
Robert Lerman,
The Benefits and Challenges of Registered Apprenticeship: The Sponsors' Perspective,
The
Urban
Institute
(2009),
available
at
http:Uwww.urban.org!UploadedPDF!411907 registered apprenticeship.pdf.
12
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»
The most frequently cited benefit of apprenticeship programs, identified
as very important by over
80%
of sponsors, was that it helped satisfy the
demand for skilled workers. The second most frequently cited benefit
(noted by 72% of sponsors) was apprenticeships' role in reliably showing
which workers have acquired the necessary skills.
»
Other benefits, cited by
68%
of sponsors as very important, were: ralsmg
productivity, strengthening worker morale and pride, and improving
worker safety.
A majority of sponsors also cited the role of
apprenticeship in worker recruitment and retention and in meeting
licensing requirements as important benefits.58
»
"Ninety-seven
percent of sponsors of registered programs said they
would recommend the program to others, with
86
percent stating they
would 'strongly' recommend it and
11
percent indicating they would
recommend it with reservations, due primarily to problems with accessing
related instruction."59 With few exceptions, those who decide to
participate in registered apprenticeship immediately realize the benefits.
report also found few drawbacks to formal apprenticeship training,
indicating they are relatively few and insignificant in comparison to the
overwhelming benefits. The most interesting of these is as follows:
"Competitor firms' bidding away trained apprentices, commonly called
'poaching,' and thought by economists to be a major disincentive to
employer involvement in apprenticeship, was a concern but not a
deterrent among current sponsors in the survey."60
»
The
»
Sponsors generally reported high program completion rates. Specifically,
the report found that "[f]orty-four percent of sponsors said that the
completion rate for their program was between
90
to
100
percent and
21
percent indicated it was between 70 and
89
percent, thus making a total
of
65
percent of sponsors who reported completion rates at or above 70
percent."61
»
The great majority of apprenticeship programs are funded, designed and
administered by private parties, usually employers or joint employer-labor
581d.
at
7.
591d.
[d.
"Surprisingly, only 25 percent of sponsors identified this as a significant problem while 29 percent saw it
as a minor problem, and 46 percent did not perceive it as a problem at all. However, even among sponsors
who perceived poaching as a problem, about
85
percent would still strongly recommend apprenticeship to
others."
Id.
60
6l/d.
at 8.
13
51
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programs. But all "registered" programs are overseen and assisted by the
U.S. Department of labor or state agencies. This report shows that
sponsors gave "high marks to their State Apprenticeship Agencies. Eighty­
two percent indicated the agencies did a 'good or 'excellent' job in being
timely; 80 percent gave similar ratings for clarity of guidance;' 70 percent
gave similar marks for use of on-line registration; and
64
said the SAAs
were 'good' or 'excellent' in promoting and publicizing registered
apprenticeship."62
According to the President's Export Council's Subcommittee on Workforce Readiness
"[a]pprenticeship training programs, especially those offered in the construction industry ...
provide viable career paths for those seeking employment in the skilled building trades." As
the subcommittee highlighted, the key characteristics of the construction industry
apprenticeships that make them so successful are: (1) apprentices are learning industry­
specific skill sets while receiving livable wages; (2) the program is completely self-funded; (3)
the program is demand-driven; and (4) apprentices are provided practical employment
training. 63
Similarly, as recognized in a recent study by Columbia University, "[u]nion
apprenticeship programs have been important for meeting the construction industry's need
for recruiting, training and educating skilled labor... [The] cost-sharing partnership is
essential to both labor and management for ensuring a highly skilled workforce without
placing an undue burden on either the industry or labor."64
A
2012
study commissioned by the Department of labor further highlights the
benefits of registered apprenticeship for participating workers and the public. The report
compared participants in registered apprenticeship to non-participants, without regard to
whether they completed the program, and found that participants earned significantly
more, experienced greater employment opportunities, and had less dependence on
government assistance. 65
621d.
at 10.
63
The President's Export Council,
Compilation of the Council's Recommendations during the First Term of the
Obama Administration, 2010-2012,
32
available at
http:Utrade.gov/pec/docs/PEC Term Report 2010­
Fuchs, Warren, and Bayer"
Expanding Opportunities for Middle Class Jobs in New York City: Minority Youth
Employment in Building and Construction Trades,
March 2014, Columbia University's School of International
and Public Affairs, p. 4
citing
Bertran, Nicole.
Meeting the Challenge of Increasing Diversity in the Unionized
Construction Industry: CSKILLS and the Role of Pre-Apprenticeship
(May 2011).
at
available
https:/Isipa.columbia.edu/system/files/Columbia%20SIPA%20Construction%20Skills%20Report%20Final%20­
%20March%202014 O.pdf.
64
See
Debbie Reed
et ai, An Effectiveness Assessment and Cost-Benefit Analysis of Registered Apprenticeship in
10 States,
Submitting by Mathematic Policy Research to the U.S. Department of Labor Employment
&
Training
Division (July 25, 2012),
available at
http://wdr.doleta.gov/research/FuIlText Documents/ETAOP 2012 10. pdf.
65
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With respect to higher earnings, participants in registered apprenticeship earned an
average of $5,839 more than non-participants in the ninth year after enrolling in the
program.
66
Over a career, participants in registered apprenticeship earned an average of
$98,718 more than nonparticipants, and those who completed the program earned an
average of $240,037 more than nonparticipants. 67 In addition to the apprentice's increased
earnings, when considering increased tax revenues and lower support spending, the report
found that "[olver the career of an apprentice, the estimated social benefits of [registered
apprenticeship] exceed the social costs by more than $49,000."68 This evidence .illustrates
that craft labor training investments produce a high return on investment.
V.
CONCLUSION
Considering current pressures placed on the industry by skill shortages and the
proven benefits of craft training, especially via registered apprenticeship programs, there is
a compelling rationale behind qualifying contractors based on their participation in such
programs. As studies continue to show a widening gap between the demand and supply of
skilled craft workers, it is clear that the industry must make changes to implement effective
policies that respond to these problems, and the research has demonstrated that increasing
commitments to craft training is one of the most effective solutions.
66
Id.
at xiv.
671d.
681d.
15