February 9, 2017

The Honorable Elaine Chao
U.S. Department of Transportation
1200 New Jersey Ave., SE
Washington, DC 20590

Re: Congratulatlons & Construction Employer Policy Priorities

Dear Secretary Chao:

On behalf of Construction Employers of America, our seven member associations, and our 1.5 million employees nationwide, we extend our heartfelt congratulations to you on your confirmation as Secretary of Transportation. We look forward to working with you and your team on a host of critical infrastructure and labor issues and stand with you as eager partners to build our economy through infrastructure investments and providing opportunities for hard working, blue collar construction workers.

CEA Is eager to engage with you to address Important Infrastructure and labor policy Issues that will help American smaII businesses prosper. From Investing In the country's transportation and energy infrastructure to ensuring we are training and preparing the next generation of craftsmen through innovative and proven apprenticeship programs, we stand ready to work with you to strengthen the American economy through sound investments. CEA and our member organizations would like to meet with you or your appropriate team member(s) at your earliest convenience to discuss the issues outlined below and identify opportunities to work together on behalf of our members' small business owners and employees.

We commend President Trump for the commitment he made during the campaign to invest in America's infrastructure, which is vital to strengthen the middle class. We are pleased to detail issues supported by the Construction Employers of America where you, as Secretary of Transportation, will play a critical role. We look forward to working with you and your colleagues in the Trump Administration to enact these common sense policies that will strengthen our industry and create skilled jobs across the country.

Invest in Infrastructure - Providing sufficient federal funds to invest in our nation's aging building, transportation, energy, and water infrastructure is vital to the country, the economy, and the construction industry. We are supportive of the President's commitment during the campaign to invest $1 trillion in infrastructure over the next ten years. While the President's plan, even at $1 trillion, won't meet all of the country's infrastructure needs, it is a much-needed step in the right direction and we look forward to working with you to ensure swift enactment of this important legislation.

Recent studies have demonstrated that every $1 billion invested in nonresidential construction would add $3.4 billion to gross domestic product (GDP), add $1.1 billion to personal earnings, and create or sustain 28,500 jobs. One-third (9,700) of these jobs would be on-site construction jobs. In addition, one-sixth (4,600) of the jobs would be indirect jobs from supplying construction materials and services. Most jobs would be in-state, depending on the project and the mix of in-state suppliers. Lastly, about half (14,300) of the jobs would be induced jobs created when the construction and supplier workers and owners spend their additional incomes. These jobs would be a mix of in-state and out-of-state jobs.

Promote Sound Infrastructure Policies - Federal procurement policy should continue to allow federal agencies to utilize project labor agreements (PLAs) in projects where they determine a PLA would provide the best value and highest quality for federal and federally-assisted projects.  PLAs are not mandatory, but allow agencies like the Department of Transportation to employ them when it makes sense for the Department and for the taxpayer. PLAs also ensure that only American citizens and documented workers are employed on federal projects with PLAs in place.

Prepare the Next Generation of Skilled Workers - The construction industry is facing potential labor shortages in coming years with the retirement of a significant portion of our workforce and insufficient new, trained construction workers in our employment pipelines. Skilled labor is vital to the success of our industry, and we have invested heavily in apprenticeship training.

The Department should impose federal construction industry Prompt Payment rules on grantees so that federally-assisted projects reap the benefits of improved payment flow. Greater use of public-private partnerships and tax credit financing for public works should ensure public contractor selection and contract administration protections, including prevailing wage standards; bonding protections for the agencies, subcontractors, and suppliers; public contract contractor and subcontractor selection procedures; payment protections; differing site conditions; and warranty protections.

Reduce Tax Gap by Closing Employee Misclassification Loophole - Miscassification and accompanying payroll fraud occurs when an employer improperly classifies an employee as an independent contractor to gain a competitive advantage at the expense of responsible, lawful companies. Misclassification deprives employees of benefits they deserve as well as federal, state, and local governments of money they are owed. It is estimated that between $3-4 billion in federal income and employment tax revenue is lost each year due to worker misclassification.  The federal government should reform existing tax law to identify bad actors so the government can recoup lost tax revenue and ensure all businesses compete under the same rules. This type of payroll fraud also includes paying workers "off the books", frequently involving undocumented workers.

Thank you for your time and for your consideration of these important national policies that will help spur employment across the country. We look forward to meeting with you or the other appropriate individual(s) at the Department. To confirm a meeting, please contact me at jack.jacobson@constructionemploversofamerica.com or at 202-637-6820.

The charter members of the Construction Employers of America include FCA International, the International Council of Employers of Bricklayers and Allied Craftworkers, the Mechanical Contractors Association of America, the National Electrical Contractors Association, the Sheet Metal & Air Conditioning Contractors' National Association, the Signatory Wall and Ceiling Contractors Alliance, and The Association of Union Constructors. CEA firms and workers are best qualified to handle high-skilled projects in a cost-effective manner and are the predominant force in the high end sector of the construction industry.

Sincerely,

Jack Jacobson