In addition to the spate of workers’ comp bills Jerry wrote about, there are also numerous prevailing wage reform bills that have been introduced. Some seek to expand the scope of the act — to continue what seems to be a never-ending expansion of who must be paid prevailing wage, some seek to shrink the act back to its original job site boundaries, another requires certified payrolls on all projects. There are others that seek to increase transparency through public postings of wage determinations or remove the payment of prevailing wage from certain school construction. It’s much too early to predict where these bills might end up, but it certainly is proof that prevailing wage reform is a hot topic for organized labor and for construction firms — and should be for public owners and taxpayers who ultimately foot the bill when the application of prevailing wage increases the cost of roads, schools and other publicly funded construction projects.

We all know that while the recession officially ended in June 2009, the construction industry has continued to suffer from job losses and ever-tighter margins. At the start of 2011, the industry’s unemployment rate was 20.7 percent, roughly twice the overall unemployment rate.  Washington State’s construction industry shed seven percent of its workforce in the last year alone.

While it seems there’s not much to do but sit and wait for the overall economy to turn around, there actually are specific, proactive policy steps we could take to reenergize the construction industry.  AGC of America put all of these ideas into a single document and is working Congress to get as many of them enacted as possible.  Click Building a Stronger Future: A Blueprint for Economic Growth for details of the 36 recommendations.  Here’s a few:

Convert Commercial Building Energy Efficiency Tax Deductions into Tax Credits. In addition to boosting the deduction amount for efficiency upgrades to commercial buildings, Congress should convert the tax benefit into a tax credit. In an environment where many commercial building owners are likely to experience losses in 2010 and 2011, tax deductions will have limited to no impact. Converting deductions into credits will provide a significant financial incentive for property owners to improve the efficiency of commercial buildings.

Incentivize New Equity for Existing Real Estate Projects. As property values fall and lenders adopt more restrictive standards, new sources of equity capital will be needed. Congress should provide temporary tax incentives to attract new equity for existing projects. The incentives would provide bonus depreciation on the new investment equity and deduction of losses that are not subject to passive loss limits. At least 80 percent of the invested capital must be directed to reducing the outstanding balance of the commercial mortgage debt with the remainder going to capital improvement to qualify for the incentive. This will ease debt market concerns and boost the broader economy.

Encourage States to Enact Permissive Public Private Partnership Laws. All earmarked transportation funds that have been unused for at least 10 years, worth over $620 million, should be consolidated into a single Public Private Partnership Innovation Fund. The Department of Transportation would use this fund to encourage states to enact new, or revise existing, public private partnership legislation to encourage greater private-sector funding for transportation infrastructure projects. States will be able to win competitive grants from this fund based on their success in enacting permissive legislation and entering into viable public private partnerships.

Streamline Environmental Reviews for Infrastructure Projects. The current federal environmental review process for federally-funded infrastructure projects is unnecessarily slow and expensive. For example, it takes an average of 13 years for highway and 12 years for transit projects to receive federal approval. As a result, every effort should be made to streamline the environmental review process while protecting the environment by designating lead federal agencies, establishing and meeting clear timelines, simplifying analysis requirements and placing a statute of limitations on claims.

No doubt some will argue that new measures and regulatory reforms aren’t needed and that the construction industry will recover on its own. But just looking at the construction industry’s performance in the year and a half since the official end of the recession, it should be pretty clear that the sector’s revival is anything but guaranteed. Allowing this industry to continue to stagnate will have significant long-term impacts both on the strength of the domestic labor market and on the quality of America’s public and private infrastructure and buildings.

On the other hand, a resurgence in private and public sector construction will boost our global economic competitiveness. It will allow our businesses to operate more efficiently and improve their productivity. It will lower shipping costs, helping farmers earn more for what they grow and shoppers to spend less of what they earn. It will improve quality of life for all Americans, better safeguard our environment and reduce the amount of water, energy and fuel we consume each year.

Check it out: Building a Stronger Future: A Blueprint for Economic Growth.

After years of urging state leaders to address the state’s burdensome workers’ comp and unemployment systems, the construction industry received some welcome positive news from Olympia this week.  

Gov. Gregoire announced policy changes that, if enacted, would reduce the 2011 increase in unemployment insurance taxes and help stem the growth of future workers’ comp rates.

First, workers’ comp:  The business community has long maintained that the rules under which the system operates drive costs – and the rates employers pay – eternally upward.  Two statistics bear this out:  The average amount of time that a Washington State worker is out and receiving benefits is three times the national average, and the number of lifetime pensions has tripled in the last few years.

This week Governor Gregoire used the word that the construction industry has been promoting for some time:  “Reform.” 

The Governor said she plans to reduce lifetime pensions by offering lump-sum benefits to older workers unlikely to reenter the workforce and adjusting pensions of totally disabled workers who earn income through limited work. 

Governor Gregoire also said she will introduce legislation to create a network of credentialed health care providers for state and self-insured employers. Other proposed changes included incentivizing employers to keep injured workers on the job by subsidizing wages in exchange for offering employees light-duty work, and expanding Centers of Occupational Health and Education, which encourage health care providers to adopt best practices and return workers to their jobs.

By no means does this package of reforms include all the changes that are necessary.  For example, we still need to recalculate how timeloss benefits are awarded to prevent the all-too-often scenarios of workers receiving more in benefits than they did by working, and the pension reform should go farther.  On the other hand, many of the Governor’s reforms seem supportable as good first steps (caveat:  Specific legislation has not yet been introduced). 

More to the point, after years of pushing by the business community, the door appears to be open for real discussion of workers’ comp reform with tangible benefits for business. 

Unemployment insurance: The Governor’s unemployment insurance changes are more straightforward but no less welcome, as rates are set to rise by an average of 36 percent in 2011.

Using reserves in the insurance system’s healthy trust fund, the Governor would reduce and cap the shared-cost portion of unemployment taxes in 2011, reducing businesses’ unemployment taxes by $300 million.  That’s a prudent move in today’s economy.  The Governor also suggests permanently expanding training benefits in order to qualify for one-time federal dollars to modernize the UI system.  That’s something that should be analyzed closely to determine its long term cost/benefit effect.