A bill is out there to provide tax credits for training apprentices. But why does that make them want to work for us, asks Frank Blau?

Some people in the industry are all excited about H.R. 1824, the Skilled Workforce Enhancement Act (SWEA). It's a proposal that's been kicking around in Congress for more than a year to provide a $15,000-a-year tax credit for each employee trained by a small business in a "highly skilled trade." My understanding is that it remains doubtful whether the bill will ever get passed.

If it does, my firm would be happy to pocket the $15,000-per-man government subsidy. Who in their right mind would turn down such a bonanza? But I'd hold my nose while I'm doing it: This legislation represents what is wrong with the business world in general and our industry most particularly.

Corporate Welfare

H.R. 1824 is nothing more than corporate welfare, although directed at the "small-business" community rather than Fortune 500 companies. The Small Business Administration defines a "small business" as any company doing less than $50 million a year in revenues. So, 99 percent of all companies in our industry would qualify for the proposed tax credits.

Supposedly, the bill would help solve the nation's skilled labor shortage by reimbursing employers for the cost of training employees. But I fail to see the logic there. Our problem is not a lack of funds or the wherewithal to train apprentices. Our problem is finding enough good people attracted to the pipe trades as a career.

And the reason is the industry at-large doesn't pay them enough in relation to the skills and effort we demand of pipe trades workers. That $15,000 isn't intended for the workers. It's for their employers.

Some argue that with this extra money, employers might be able to boost pay scales for the trade, but that argument is full of holes. For one thing, ours is an industry of privately-held companies that practice tax avoidance. Many companies in our industry don't even pay $15,000 a year in federal taxes, so a credit does them little good.

Besides, I hate the idea of looking to the federal government to solve our problems. If this bill ever passed, it would lead to even more government bureaucrats looking over our shoulders and telling us how to run our businesses.

I am disappointed by the hypocrisy that takes place in the business world. Take a survey of business owners and I'm sure you'd find more than 90 percent of them dead set against increasing welfare and unemployment benefits - and I would be among them. I hate to see my tax dollars shelled out to able-bodied citizens who are too addled or lazy to work.

However, I feel the same way about handouts to businesses that are unable to compete in their markets due to economic ignorance or other self-induced shortcomings. And that's what these tax credits are all about.

Union Vs. Nonunion

I have heard that one reason H.R. 1824 isn't going anywhere is a political squabble, between union and nonunion interests, over which apprenticeship programs would be eligible for the tax credits. The unions naturally want their programs to be the only ones recognized.

As a long-time union contractor, I can see things from their perspective. The fact of the matter is the United Association and other construction trade unions have long led the way with industry training.

I have a bone to pick with the UA from the standpoint that it doesn't do much training applicable to the residential service sector, but the apprentices who graduate from its programs at least know their way around a pipe wrench. I'm not aware of any significant training taking place in my area by nonunion programs, and that holds true in most parts of the country.

One reason is nonunion contractors don't want to pay the money required to fund top-notch training programs. Union programs generally are more successful because they have a funding mechanism in place based on a cents-per-man-hour contribution into a training fund. These funds are written into a labor agreement and thus carry the force of law.

Nonunion apprenticeship programs almost always rely on voluntary contributions, and contractors don't want to spend money to train employees who might go to work for competitors once they get trained. So, contractors want the government to underwrite training instead.

The Customer Pays In The End

This is a shortsighted point of view, and it leads to yet another fallacy about H.R. 1824. This bill wants to reimburse contractors for the cost of training. Yet, in a well-conceived business, training costs do not come out of the owner's pocket. Ultimately, customers pay the cost of training, and that's how it should be. Training expenses should get passed along in the selling price of PHC services.

Most contractors fail to do so because they don't have a clue how to calculate their costs of doing business. Even when they do have an inkling, they are afraid to do so because it might require them to start selling their services for more than the "going rate" in their markets. Instead, they find it easier to beg for a government handout.

The shortage of skilled journeymen and service technicians is the most serious problem facing our industry, but the situation is not going to improve until contractors resolve to boost pay scales and benefits to the point where they can attract talented young people to the industry. The average nonunion plumber in this country earns less than $35,000 a year, with lousy benefits to match. That's at about half of where compensation needs to be in order to turn things around.

Start paying pipe trade workers what they're worth and you'll find more of them attracted to our industry. Then we could dispense such foolishness as H.R. 1824 and turn our attention to kicking the government out of our lives rather than seducing them into bed with us.