Blue-Collar Blues

Entrepreneur, May, 2000 by Stephen Barlas

Proposed tax credit promises to fill the labor gap for small manufacturing companies.

In recent years, headlines about labor shortages have focused on software engineers and computer technicians, and little attention has been paid to the shortage of high-skilled, blue-collar trades-people, the backbone of small suppliers to manufacturing industries.

But that's about to change. Rep. Jim Talent (R-MO) is working to raise the visibility of the issue and provide a solution--by sponsoring the Skilled Workforce Enhancement Act (H.R. 1824). In February, the first set of hearings was held in the House Small Business Committee chaired by Talent. "Our unemployment rate is the lowest [it's been] in 30 years--just 4 percent--and we are enjoying a healthy economy," Talent says. "However, it seems prosperity is coming at a very high price. We aren't attracting enough qualified and trained employees to our manufacturing trades, and that could very well end the prosperity we are experiencing today."

The bill aims to help companies like the Bachman Machine Company Inc., a 130-employee metalworking company in St. Louis. William Bachman Sr., who retired as president a few years ago, says the metalworking industry has 30,000 unfilled jobs due to the lack of qualified applicants.

The majority of metalworking training programs take four years to complete and cost more than $200,000 per apprentice. Finding candidates for those training programs has proved difficult.

Talent's bill targets small businesses that would benefit from claiming a $15,000 per-worker, per-year training tax credit, and it also covers heating, ventilating, air conditioning, refrigeration, plumbing, pipe fitting, roofing contracting, and other highly skilled trades.

Congress seems almost certain to pass a tax cut bill this year--meaning there might be a larger bill to which the Talent bill could be appended. Sen. Mike DeWine (R-OH) sponsors the bill on the other side of Capitol Hill, in addition to one Independent, 21 Democratic and 34 Republican co-sponsors.

The bill would be a revenue-loser for the U.S. Treasury, but its advocates insist it will pay for itself. "While $15,000 may sound like a lot of money, apprentices will repay the government through taxes within three years of graduation," says Bachman. "The Joint Tax Committee may score this proposal fairly high, but to save the manufacturing infrastructure of this country from extinction, we must give small businesses this tool." For info, visit www.house.gov; go to "Small Business Committee."

Stephen Barlas is a freelance business reporter who covers the Washington beat for 15 magazines.