CHIPS and Science Act Is on Its Way to President’s Desk with Labor Provisions

Allen Smith, J.D. By Allen Smith, J.D. July 28, 2022
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The White House

[Editor's note: President Joe Biden signed the CHIPS and Science Act of 2022 into law on Aug. 9.]​

The Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act of 2022, passed by the Senate and House of Representatives, not only has provisions to boost domestic production of computer chips but also contains worker training funds and prevailing wage requirements for employers in the semiconductor industry. The bill passed the Senate July 27 and the House July 28. We've gathered articles on the news from SHRM Online and other outlets.

Training Funds and Prevailing Wage Requirements Remain

The bill advanced in the Senate with approximately $400 million allocated annually over five years, starting in 2023, to the Defense Department for microelectronic research and development. Some of those funds would be dedicated to workforce training. Another $200 million would go to a separate workforce and education fund. The House version would have allocated significantly more—close to $4 billion—over five years for apprenticeship programs.

The Senate bill included some requirements to pay local prevailing wages on construction projects receiving grants to aid semiconductor development.

(Bloomberg)

Training Next Generation of Scientists

President Joe Biden said on July 26 that the bill will allow the U.S. "to train our next generation of scientists, engineers and tech entrepreneurs, and it will assist us in retooling the community of small, medium and large businesses that create our leading-edge weapons systems." He also said, "It was a top priority for me to ensure that incentives for semiconductors have a Davis-Bacon prevailing wage requirement. And these semiconductor projects—there are billions of dollars and thousands of construction jobs in each of these sites."

(The White House)

DOL Has Proposed Changing Definition of 'Prevailing Wage'

Earlier this year, the U.S. Department of Labor (DOL) proposed returning the definition of "prevailing wage" under the Davis-Bacon Act to one last used nearly 40 years ago, dismissing arguments made when the definition was changed during the Reagan administration that the old definition contributed to inflation.

(SHRM Online)

Biden Praises Bill's Passage

The bill "is exactly what we need to be doing to grow our economy right now," Biden said in a statement after the vote. "I look forward to signing this bill into law." The CHIPS and Science Act includes more than $52 billion for U.S. companies producing computer chips, as well as billions more in tax credits to encourage investment in chip manufacturing. Prior to the bill's passage, House Republican Leader Kevin McCarthy, R-Calif., urged representatives to "reject this deeply flawed bill" and "start from scratch." The bill has been years in the making.

(CNBC)

Manufacturing Comeback in the US?

The bill is expected to make it easier for chipmakers to employ American workers and build their products stateside. Over the last few decades, semiconductor plants have shipped jobs overseas, primarily to China, to reduce costs. "For decades, some 'experts' said we needed to give up on manufacturing in America. I never believed that. Manufacturing jobs are back," Biden said in a statement. "Thanks to this bill, we are going to have even more of them."

(The Verge)

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