By Brian J. Schoolman, Safran Law Offices
Barring something entirely unexpected, on January 20, 2021, Joe Biden will be inaugurated as the 46th President of the United States, and our country will engage in another peaceful transition of power between administrations. Three weeks earlier, the 117th United States Congress will convene, with the Democrats holding a narrow majority in the House, and the Republicans holding a similarly narrow majority in the Senate. Depending on what happens in the two Senate run-off elections in Georgia, the balance of power may remain split on January 20th, or the Democrats may hold governing power in both houses when Kamala Harris is sworn in as Vice President.
What is clear in mid-December is that change is coming between the current administration and the next one. Regardless of whether one is a fan or a critic of President Trump, it is hard to deny that his governing style, and thus the style of his administration, was fitful, uneven, and often lacking in consistency of either message or policy. On several fronts, this had direct impacts upon policies affecting the construction industry.
The biggest impact on construction for the Trump Administration involved trade policy, and specifically tariffs. The President’s aggressive approach to dealing with China, the European Union, and neighboring Canada and Mexico led to significant impacts on the costs of steel and other raw and manufactured materials. The trade wars also impacted the flow of goods and materials, and made it more difficult to rely upon just-in-time deliveries for a variety of construction materials. President-Elect Biden has stated that he will review current tariffs, but he has not committed to eliminating them, especially in the short term. As a result, contractors and subcontractors should probably expect little change in 2021 regarding the costs of goods.
The other significant policy issue where the Trump Administration made serious impacts on construction is immigration. Today, the flow of legal immigrants into the U.S. is slower than in previous years, resulting in a further tightening of the labor market. Undocumented workers have been impacted by increased enforcement actions, while employers have grown to fear unannounced ICE raids. The Biden Administration is likely to take a more permissive approach, especially on legal immigration, which may eventually improve access to labor for employers.
On regulations, the next administration is probably going to add or strengthen a variety of policies. To date, there has been no announcement of a nominee for Secretary of Labor, but if the Obama Administration is used as an example, a President Biden would likely seek to expand worker protections such as overtime for exempt employees, the “joint employment” doctrine, and crackdowns against misclassification of workers as independent contractors. Biden’s platform also promised efforts to support unions, and protect worker rights.
Enforcement of laws and regulations will also probably increase in the next four years. The Trump Administration took a remarkably lenient approach to tax, labor, safety, and environmental enforcement. Businesses should expect that behavior which avoided the attention of federal enforcement agencies for the last four years may not survive close scrutiny going forward. In particular, enforcement of pollution, wage, and safety laws is expected to get much more aggressive. Business lawyers will do their construction clients a favor by preparing them in advance for the coming crackdown.
The last policy area which will see dramatic change is on the COVID-19 pandemic. Despite the efforts of scientists and bureaucrats at the Centers for Disease Control, the Food and Drug Administration, OSHA, and elsewhere, the Trump Administration took an incredibly hands-off approach to safety measures to prevent and slow the spread of the disease in industrial and construction settings. Rather, the country had a patchwork of state and local policies, such that contractors might be traveling in and out of “stay-at-home” jurisdictions on a regular basis. The Biden Administration is already gearing up for aggressive measures to mitigate the pandemic, including a 100-day mask mandate, a massive logistical effort to distribute and administer the various vaccines which are on the brink of approval, and utilizing the Defense Production Act to increase availability of personal protective equipment. To the extent the federal government can establish a consistent and effective COVID-19 policy to stem the tide of the pandemic, the national economy has a chance to rocket up by the end of 2021.
Unlike the executive branch, congressional action is likely to remain limited for the next two years, even if the Democrats win the races in Georgia. The Democratic majority in the House will be the slimmest in nearly a century, and if they win in Georgia, there will be a 50-50 split with ties broken by Vice President-Elect Harris. However, to pass anything will require either the elimination of the legislative filibuster, or the buy-in of at least 10 Republican Senators. Either way, there is no reason to expect transformative progressive policies in the near future. Probably the best outcome we can hope for is one or more COVID-related stimulus packages, combined with moderate infrastructure and tax legislation. All of that, however, again depends on our national ability to work together to defeat the pandemic.
The defeat of President Trump and the election of Joe Biden was a cataclysmic political event, and will result in dramatic changes for our country. However, as far as the day-to-day political impact is concerned, very little will be significantly different for contractors. COVID-19 is an existential threat to our economy and our industry, and has to be solved to get us out of the current rut. Moderate gridlock in Congress is likely to continue. The best we can easily hope for is predictable and competent governance out of Washington for the next four years. We shall see if those hopes are fulfilled.
About the Author
Brian J. Schoolman is an attorney with Safran Law Offices in Raleigh, North Carolina. Safran Law Offices has focused on the construction industry for nearly 40 years, and has proudly represented subcontractors throughout our history. For more information, email Brian at bschoolman@safranlaw.com or visit www.safranlaw.com.
