How the Federal Government Will Influence Construction Growth in 2021

Editor’s Note: This article was written prior to the inauguration of President Joe Biden, and appeared first in our January 2021 print issue. 

After a contentious 2020 election, the United States is now days away from the inauguration of its 46th President Joe Biden. And whether you’re happy about the passage of leadership or not, there is much change ahead for the country. Below, find out what several leading construction organizations are watching in infrastructure funding, construction regulations and an overarching pandemic response.

Infrastructure Funding

Discussion surrounding the potential for a comprehensive federal infrastructure bill may sound like a broken record at this point, but in the 2020 election cycle President Donald Trump and President-elect Biden both campaigned on promises of delivering funding for widespread infrastructure projects. Much of the timing and the final version of the bill depends on the party that controls the Senate in 2021.

In 2020, Biden’s campaign unveiled a plan to infuse $2 trillion into green infrastructure and energy over his 4-year term. The president-elect said the plan would create millions of jobs in infrastructure, housing, building construction and more. The plan, which includes a goal to achieve carbon-free power generation by 2035, focuses on a massive overhaul of the nation’s roads, bridges, trains, auto industry and broadband system. The plan received criticism from lawmakers on both sides of the aisle for being too big. However, both parties have expressed interest in working together to push a long-awaited bill through Congress.

The Democratic-controlled House of Representatives will likely propose a bill similar to its infrastructure proposal (H.R.2) from the last Congress, which increased federal funding for water and road projects and for widespread broadband deployment.

With Democrats in control of the Senate, too, the nation could expect to see something similar to the Green New Deal, but rephrased specifically for infrastructure—resilient infrastructure projects, reduced carbon output, etc. 

“What [the Associated General Contractors of America (AGC)] are saying to the president-elect and his team—even more so than 12 months ago—is that it’s an excellent time to invest in infrastructure. With so many Americans working from home, our highways and roads aren’t as heavily taxed as they normally would be,” said Brian Turmail, vice president of public affairs and strategic initiatives for the AGC. “And with thousands of Americans looking for jobs, it’s a great opportunity to bring individuals who are looking for work, are hirable and could start new, profitable careers in the construction industry.”

Brian P. McGuire, president and chief executive officer (CEO) of the Association for Equipment Distributors (AED), noted that the Fixing America’s Surface Transportation. (FAST) Act will expire on Sept. 30, 2021, making it an imperative that Biden’s administration and Congress act quickly and resolutely to find a compromise.

“The federal Highway Trust Fund (HTF) is on the verge of bankruptcy. Unfortunately, because the federal fuel tax hasn’t been increased since 1993, revenue into the HTF falls short of the current funding levels, let alone the actual road and bridge investment needs in this country,” McGuire said. “ … The best way to create certainty is for Congress to ensure the long-term viability of the HTF by raising the federal fuel tax or identifying another mechanism that provides a steady stream of revenue to fund road and bridge projects.”

The prospect of federally funded broadband projects is especially promising for utility contractors, according to National Utility Contractors Association (NUCA) CEO Doug Carlson. “The need for broadband access as the nation continues to address the impacts of the coronavirus cannot be understated,” Carlson said. “Closures of hospitals, schools and other critical buildings underscore the importance of remote-work directives intended to slow the spread of the virus and ensuring that Americans have access to broadband is now more essential than ever before.”

All that activity, Carlson notes, requires higher internet speed requirements. Only 32% of today’s subscriber broadband service is provided by high-speed fiber optics cable that reaches the minimum required speed of 15/3 Mpbs.

One building project that would not be included in the infrastructure plan is Trump’s border wall. Biden said during his campaign that his administration would not have any part in continued funding of the wall. It’s anticipated that the administration will redistribute funds back to the Army Corps of Engineers for the projects they were originally intended to fund.

Construction Regulation

Where the Trump administration was known for easing building restrictions, permitting requirements, workforce and labor law and more, the incumbent administration is expected to return to some level of Obama-era standards and regulations, including stricter Environmental Protection Agency permitting requirements.

Carlson said NUCA expects to see more action from the Occupational Safety and Health Administration (OSHA) in the coming year as well as other U.S. Department of Labor (DOL) offices affecting business operations McGuire echoed Carlson’s remarks. “Federal permitting reforms were part of the FAST Act. AED isn’t expecting a Biden administration to pick up where the Trump administration left off when it comes to project permitting and regulations,” McGuire said.

Where the workforce is concerned, Associated Builders and Contractors (ABC) President and CEO Michael Bellaman said Biden’s plans for immigration will likely undo any of the policies that the Trump administration has pursued over the past 4 years that have limited legal immigration and attempted to eliminate the Deferred Action for Childhood Arrivals (DACA) program and the Temporary Protected Status program for some immigrants.

“It is expected that the Biden administration will eliminate the ‘public charge’ rule from the Trump administration, which has resulted in more visa denials, particularly for poorer immigrants. Biden is also expected to reinstate the DACA program and TPS protections,” Bellaman said. “The industry employs over 100,000 DACA and TPS workers. Biden could also pursue legislative goals that would require bipartisan agreement in Congress, such as providing a pathway to citizenship for undocumented immigrants and increasing employment-based visas to help U.S. employers.”

Immigration reform has the potential to play a key role in alleviating the industry’s acute labor shortage. “There are significant numbers of Americans out of work, particularly in the hospitality sector. These jobs aren’t likely to come back in the near-term and the government must provide the resources to educate and train these individuals for in-demand careers,” McGuire said. “Immigration reform must be a part of the solution. Congress and the Biden administration should reform immigration laws to strengthen national security, enforce the rule of law, address workforce shortages and provide certainty to employers and employees.”

Another regulation that organizations and contractors alike are watching with apprehension is the Protecting the Right to Organize (PRO) Act, a law designed to strengthen workers’ rights to unionize which passed the House in early 2020. “We have concerns with the incoming administration, depending on how the Senate elections go, that the Senate will try to impose [the PRO Act] via executive order,” Turmail said. “These are dramatic changes to long-standing labor relations laws that would undermine the current bargaining system and punish contractors that work with unions to find craft labor.”

Proponents of the act say it will protect worker strikes and other protest activities, make it easier to bargain, and help strengthen protections for workers forming a union. According to Turmail, regardless of what happens with new regulations, there’s important work that needs to be done regarding regulatory reforms.

“The Trump administration was good about looking at what regulations we have on the books and what isn’t working. For every new regulation that is added, a construction firm has to designate a current employee or add a new one who ensures compliance,” Turmail said.

Pandemic Protocol

President Biden is not expected to implement a nationwide shutdown, nor is he expected to change construction’s designation as an essential industry. However, industry leadership has voiced worry that strategies intended to slow the spread of the virus will inadvertently cause harm to construction operations.

Bellaman referenced various federal organizations and individual safety and COVID-19 policies within companies as proof that the industry is in a relatively good place regarding the control of the spread of the virus on jobsites. “OSHA’s comprehensive response to the COVID-19 outbreak currently eliminates the need for President-elect Biden to issue an emergency temporary standard for infectious diseases and COVID-19 covering all employees. The government continues to learn new information about COVID-19 and how best to mitigate related hazards on an almost-daily basis, which is why a static, intransigent rule would not be an appropriate response,” Bellaman said.

He noted OSHA’s resources are better deployed by developing timely and situational-specific guidance documents since the organization can adapt to the changing conditions of the pandemic more quickly than broader, sweeping regulations. McGuire said the AED will be closely monitoring the DOL and other agencies that could “promulgate overly burdensome COVID-19 regulations and reporting requirements on business.”

“It’s vitally important that Congress enact liability protections to ensure that companies that were open during the pandemic and followed local, state and federal health guidelines aren’t subjected to frivolous lawsuits and legal actions,” McGuire said.

There are some benefits to be had in the federal government taking a more direct approach to mitigating the pandemic, though. Consistent leadership that trickles down to the state and local levels concerning logistics, vaccination distribution plans and more will provide a framework moving forward.

“What we don’t want is California to have one set of criteria, New York to have another, and so on,” Turmail said. “We also don’t want to have local officials making the decision to stop or pause the economy until a vaccine is widely available.”