President Obama's proposed jobs bill could have a substantial impact on a construction industry that continues to weaken as Recovery Act funding dries up. The bill offers $447 billion in federal funding, much of which is devoted to infrastructure spending in the education, transportation, and housing industries. It would further delay the 3% withholding tax on government contractors and establish a national infrastructure bank to facilitate long-term investment in infrastructure projects. It also carries some restrictions. Although it is far from clear that the bill will make it through Congress, some of its provisions bear further consideration.
Titled the American Jobs Act of 2011 [pdf], the bill focuses heavily on infrastructure spending and making improvements to schools, transit systems, and housing. The proposed allocation of funds follows:
- $25 billion to modernize and renovate elementary and secondary schools
- $5 billion for state grants to modernize and renovate community colleges
- $2 billion for airport development grants
- $27 billion for restoration of highways, passenger and freight rail, and port infrastructure
- $2 billion for repair and upgrade of Amtrak railroad assets and infrastructure
- $3 billion for new buses and for repairing rail and bus systems in urbanized areas
- $6 billion to modernize existing guideway systems and bus facilities
- $15 billion to redevelop abandoned and foreclosed housing properties and affected neighborhoods
Much of the funding would come with restrictions, including preferences for compliance with energy-efficient rating systems and local hiring and prevailing wage requirements. Projects would also be subject to the Buy American provision that appears in the American Recovery and Reinvestment Act of 2009, which prohibits the use of funds for a public-works project unless all of the iron, steel, and manufactured goods used in the project are produced in the United States.
Delay of 3% Withholding Tax
The bill offers contractors various forms of tax relief, including a further delay in the imposition of the 3% withholding tax on government contractor invoices. As we discussed in an earlier post, the Recovery Act pushed the effective date of the tax back to December 31, 2011, which was then extended to December 31, 2012. The Jobs Act would push the effective date back another year, to December 31, 2013.
To facilitate long-term infrastructure investment, the bill includes the Building and Upgrading Infrastructure for Long-Term Development (BUILD) Act, which would set aside $10 billion to establish the American Infrastructure Financing Authority (AIFA). As a wholly owned Government corporation, AIFA would operate as a national infrastructure bank, providing direct loans and loan guarantees on infrastructure projects with reasonably anticipated costs of $100,000 or greater—$10 billion worth of loans would be available for each of the first two years; $20 billion for each of the next seven years; and $50 billion thereafter.
"Unemployed" as a Protected Status
The bill also includes the Fair Employment Opportunity Act of 2011, which is intended to prevent employers and employment agencies from disqualifying a job applicant on the basis of the applicant's unemployed status. If passed, the act would make it an unlawful employment practice to publish a job posting indicating that an unemployed status disqualifies the applicant from consideration. It would also be unlawful to screen, or refuse to consider, or hire a job applicant because of his unemployed status, though employers and employment agencies would not be prevented from considering the applicant's employment history or examining the reasons for the current unemployment in assessing his ability to perform. The act authorizes a plaintiff to obtain injunctive relief and to recover liquidated damages and attorney's fees.