Clean Energy Projects Can Reflect Local Standards of Compensation without Impacting Installation Costs
La Grange, IL: Sweeping legislation proposed by a bipartisan group of Illinois lawmakers would boost wages and improve diversity in Illinois’ clean energy sector without significantly impacting the cost to install solar, wind, and other renewable energy projects – according to a new white paper from the Illinois Economic Policy Institute (ILEPI).
“Bold clean energy investments with comprehensive labor standards can reduce carbon emissions in Illinois while also creating pathways into the state’s middle class, especially for communities disproportionately impacted by both climate change and the COVID-19 pandemic,” said ILEPI Policy Director Frank Manzo IV. “The Climate Union Jobs Act would represent a strong commitment by Illinois lawmakers to achieving these goals.”
The Climate Union Jobs Act was introduced on March 29, 2021 by Democratic Reps. Lawrence Walsh Jr., Marcus C. Evans and Jay Hoffman, Democratic Sen. Michael Hastings, and Republican Sen. Sue Rezin. The bill would expand prevailing wage standards to renewable energy projects, expand apprenticeship readiness programs, and include diversity hiring goals in moving towards a 100% clean energy economy through wind, solar, and nuclear power. The bill also includes a Carbon Free Schools Initiative that would install 2.5 gigawatts of solar, invest in energy efficiency improvements, and transition every bus to electric at Illinois’ public school districts.
The ILEPI report points to recent economic research which shows that prevailing wage standards – which are local minimum wages for different types of skilled construction work performed on construction projects – improve worker productivity, reduce construction worker fatalities, and increase the hiring of local contractors by 10%. Prevailing wages standards have also been found to increase the incomes of blue-collar construction workers by as much as 16%.
“Wind and solar developers must compete with fossil fuel-based companies that currently pay 21% more in annual wages and benefits in Illinois,” Manzo added. “With prevailing wage and other labor standards, clean energy employers can attract and retain skilled local workers rather than relying on low-paid workers imported from out-of-state.”
The report notes that, despite increasing pay for skilled tradespeople, the preponderance of peer-reviewed academic studies has concluded that prevailing wage standards have no effect on total construction or installation costs. On solar and wind projects, installation labor accounts for just 7% to 10% of total costs. Since labor represents a very small portion of total costs, higher levels of productivity and other changes offset the effects of including prevailing wage and labor standards on these clean energy projects.
“Construction projects receiving state tax dollars and state-created ratepayer subsidies should reflect the quality, diversity, and economic development priorities of the people of Illinois,” Manzo concluded. “The Climate Union Jobs Act would uphold local standards of compensation and craftsmanship and create thousands of middle-class careers in the growing clean energy economy – all without increasing costs for taxpayers and ratepayers.”
The Illinois Economic Policy Institute (ILEPI) is a nonprofit research organization that uses advanced statistics and the latest forecasting models to promote thoughtful economic growth for businesses and working families in Illinois and the broader Midwest.