Report: IRA labour standards could create 3.9 million ‘high-quality’ jobs

The Inflation Reduction Act's labor-related tax incentives could create about 3.9 million jobs in 6,285 clean energy projects under development, according to a new report from the Climate Jobs National Resource Center.

The report was released Thursday to mark the second anniversary of the IRA's passage. Each of the 6,285 projects the authors examined “could be eligible for IRA incentives tied to labor standards,” the report said. Those standards include hiring a certain number of registered apprentices and paying compensation equivalent to the local wage.

By complying with these standards, project developers could “maximize” their IRA benefits, the report said. As a result, the standards “represent a significant opportunity to increase pay and job quality for clean energy workers across America.”

The prevailing wage in a given region is “often the collective bargaining wage,” the report says, and the provision mandating it could “help ensure that, rather than undermining well-paying work in fossil fuels, clean energy jobs can become lifelong, family-supporting careers for workers across the country.”

“It seemed like all the good jobs were just hours away. You had to kind of choose between raising your kids or making enough money to support them. You just couldn't do both,” said Caleb Littlefield, a member of the International Union of Operating Engineers Local 4 who works at Walden Leeds Solar in Leeds, Maine, in a CJNRC press release. “But the [IRA] changes that. These investments create good union jobs that improve people's lives.”

In addition, unions can help implement the IRA by providing “highly skilled, well-trained and reliable workers who can deliver large, complex projects effectively and efficiently,” the report says.

The report examines the potential for job creation through IRAs in all 50 states plus DC. Texas has a clear lead with a potential 1.2 million jobs, while Nevada comes in second with 552,442. Vermont and DC trail behind with 215 and 208, respectively.

According to the report's analysis, battery projects offer the greatest potential for creating new jobs: 2.6 million new jobs are possible in the battery sector, followed by standalone solar energy with 723,909 jobs.

The clean energy industry is suffering from labor shortages and a lack of registered apprentices. The IRS's final guidelines on its wage and training requirements provide a good faith exception that allows employers who have made serious efforts to hire apprentices but have not been able to find any to still claim the tax credit.

The report notes that the final guidelines also included an incentive for developers to enter into project labor agreements – “collective bargaining agreements negotiated between employers and construction unions prior to hiring that allow developers to easily meet IRA labor standards, maximize their federal tax credits, and use trained union employees to avoid project delays and complete projects on time and on budget.”