Prepared Remarks of Secretary Shaun Donovan at the Building and Construction Trades 14th Annual National Legislative Conference

Washington Hilton Towers
Tuesday, April 5, 2011

Thank you, Mark -- for that introduction, and for your friendship and leadership on behalf of America's working men and women.

And I want to say a special word of thanks to all of the Members of Congress you have speaking at this conference this year -- Congressmen Weiner and Gonzalez, Congresswoman Kaptur, Congressmen Cleaver and McCotter. It's great to be with so many leaders who understand that workers have a right to organize and control their own economic destiny.

And I'm proud to represent an Administration that agrees completely.

And so, I'm thrilled to be with all of you today -- with so many members of the building and construction trades. Whether you are electricians or masons, painters or bricklayers, roofers or ironworkers, each and every member of this audience knows what an honest day's work means.

A New Era of Partnership with Organized Labor

Today, I want to discuss with you the Obama Administration's commitment to building a strong Middle Class -- and the essential role we see unions playing in building that foundation.

And let's be clear:

In the last century, it was unions that helped create America's vibrant Middle Class, who, as President Obama said, "made the 20th century the American century" -- who, as Vice President Biden said at this convention last year, are "the soul of a community's lifeline to jobs."

It was unions that built the backbone of our economy -- and unions who not only believed we could do better but proved it.

It was unions who believed that everyone deserved dignity in the workplace and a living wage -- that opportunity was not the right of the wealthy or the privileged, but of every single person who was willing to work for it.

It was unions who fought for employee rights, for higher standards, greater equality and security in work and retirement -- and helped us build the homes that are the very foundation of stability in our communities.

And today, we need you more than ever. Last week, we learned our economy added 230,000 private sector jobs last month -- and 1.8 million in the last thirteen months. And the unemployment rate has now fallen a full point in four months. The last time that happened was 1984.

But despite this good news, we still have plenty of work to do. And we need look no further than the discouraging numbers we've seen the last couple weeks on home sales and our construction sector. 

Nobody has felt the pinch of this recession--or its lingering effects--more than our construction industry.

For housing and construction alike, the most important thing we can do is to get the economy back on track and to continue creating jobs.

That was the focus of the Recovery Act, which with your help has renovated over 410,000 homesand is responsible for as many as 3.7 million jobs--and nearly a quarter-million clean energy jobs--to date.

It was the focus of President Obama's Bipartisan Tax Deal, which will produce another 1.5 million or more jobs this year and is providing targeted incentives for America's homebuilders that promote growth, recovery, and innovation.

And it is the singular focus of the President's Fiscal Year 2012 budget, which we need to win the future.

And we need unions to do that.

If we are going to out-build our competitors around the world by building a world-class infrastructurethat spurs economic growth, we need unions.

If we are going to out-innovate our competitors around the world by greening and retrofitting our homes and ending our dangerous dependence on foreign oil, we need unions.

And if we are going to out-educate our competitors around the world, and train Americans for the jobs of the 21st century, we are going to need unions.

If we are going to win the future, it's time we recognized that unions are central to the economy of the future. It's that simple.

Out-Building the Rest of the World with Recovery Dollars

Of course, out-building the rest of the world starts with re-building America's Middle Class. That process was jumpstarted by President Obama's Recovery Act.

Over the past two years, I have attended groundbreakings in communities across the country and seen for myself how work funded with HUD dollars is employing thousands of people to meet America's housing needs -- greening HUD's housing stock, reviving stalled affordable housing projects and stabilizing neighborhoods wracked by foreclosures.

With the help of so many of those represented in this room today, through the Recovery Act, we are on track to green 245,000 homes with a range of energy improvements -- another 35,000 will receive deep green retrofits that will save up to 40 percent in energy costs.

These investments are not only building homes to green standards -- just as importantly, they are helping prepare a new generation of professionals, the mechanics, plumbers, architects, energy auditors, and factory workers we need to design, install, and maintain the next wave of green technologies.

Critical to these efforts is our ability to enforce prevailing wage requirements.

When President Obama was inaugurated, most construction and maintenance work performed using HUD dollars was already subject to prevailing wage requirements.

But the Recovery Act gave these efforts a real boost. Of the $13.6 billion HUD received under the Recovery Act, more than $10 billion of that funding for 11 HUD programs was subject to Davis-Bacon requirements.

With Recovery Act funding, HUD's Davis Bacon workload increased by 75 percent.

With all this new funding subject to Davis Bacon, it's absolutely critical that every contractor has the information they need to do the right thing by their employees.

That's why we've just updated our Contractor's Guide to support employer compliance and ensure that every contractor who does business with HUD understands how they can uphold their responsibilities.

And let's be clear:

If they don't, we're going to hold them accountable.

As HUD Secretary, I take seriously my responsibility to enforce the law when it comes to wages, wage restitution and underreporting of earnings.

That's why we are committed to doing a better job of monitoring prevailing wage compliance -- in headquarters, in the field and by ensuring that our 5,000 local partners on the ground, including Indian tribes, share that commitment.

And these efforts are bearing fruit. During fiscal year 2010, nearly 4,100 workers who had been underpaid receivedmore than $3.5 million in wage restitution -- an increase of more than 20 percent since 2008.

For me, getting this right is not only a responsibility -- it's a priority.

Out-Building Our Competitors: Rebuilding Public Housing

With the Recovery Act, not only has HUD had the biggest Davis Bacon workload in its history, we also proved that green affordable housing construction and rehabilitation can be a powerful engine for job creation.

In fact, one independent report found that the $4 billion in public housing capital funds HUD provided to over 3,000 public housing authorities throughout the nation through the Recovery Acthas created over 100,000 jobs.

Of course, the Recovery Act was a one-time investment. 

And as big of a difference as it's made, our public housing system still faces between $20 and $30 billion in capital needs.

The good news is that we estimate there is $25 billion of private capital sitting on the sidelines, waiting to be invested in these properties.

Here's the problem: we can't access that capital. Antiquated rules developed nearly a half century ago prevent anyone but the Federal government from financing improvements to public housing.

These rules haven't just stood in the way of building housing. They have also stood in the way of building anything around that housing -- the grocery stores, schools and retail businesses that communities need to thrive...and that are the bread and butter of our nation's construction industry.

That's one big reason that the Obama Administration is proposing in our budget a demonstration to bring private capital to over a quarter-million publicly owned homes. 

We estimate this investment would create 60,000 jobs in the construction sector and another 55,000 jobs indirectly -- good jobs that can't be outsourced.

That is on top of the more than 12,000 construction jobs that would be created by the billion dollars we propose to capitalize the Affordable Housing Trust Fund in our budget. 

In our report to reform our housing finance system we reaffirmed that commitment -- because we need a permanent, dedicated financing mechanism to build new affordable housing in this country. 

And with this demonstration, we can leverage the billions of dollars of private capital we need to preserve the affordable housing stock we already have -- and create thousands more Davis-Bacon-level jobs in the process. 

And I'm asking you to reach out to your Member of Congress to support it. It's time we tore down these barriers to job creation and private investment once and for all.

Out-Educating our Competitors: PLA's and Apprenticeships

Now, as President Obama has said, another way we can win the future is by out-educating our competitors.

And here again: we need unions to make that possible.

That's one reason the Obama Administration has been vigorously promoting project labor agreements with housing authorities, redevelopment agencies and city governments around the country.

In December, the Boston Housing Authority signed a PLA with the Boston Building & Construction Trades Council. With $63 million in HUD Recovery Act funds, the housing authority will green 13 public housing developments -- saving $56 million in energy costs over the next 20 years and providing hundreds of jobs for local union workers, public housing residents and small and minority-owned businesses.

Boston reminds us that not only do PLAs establish a framework for cooperation and help ensure projects are completed on time with high quality workmanship -- they're also an important vehicle for providing the job training, employment, and contract opportunities low-income workers need.

We see that clearly in our Section 3 program, which ensures local projects create opportunities for low-income residents in the neighborhood.

After President Obama came into office, we increased Section 3 reporting by 55 percent.

The latest data shows that because of contracts with Section 3 businesses--which included $430 million of construction work--30,000 Americans were hired during this recession -- more than half of whom were low-income residents who received the training and the skills they need to succeed.

PLAs can also help promote apprenticeship programs to public housing and Housing Choice Voucher residents -- which is particularly important, given that not everyone has the expertise necessary to perform so-called "journey-level" construction.

That's why HUD is promoting the expanded use of apprenticeship programs, which have historically provided highly competent, safe and comprehensive occupational training needed to produce workers of exceptional caliber.

At the Tacoma Housing Authority's Salishan Hope VI project, you can see how a strong commitment to Section 3 and apprenticeships is making a difference. 

With a pre-apprenticeship program guided by an Oversight Committee for Resident Hiring, the housing authority is redeveloping over 1,200 homes.

Over 200 public housing, assisted housing and other low-income residents have been trained and 149 others have been hired to work with the various building trades -- nearly a third of whom are residents of the Salishan public housing community.

But we're not stopping with our own grants. HUD already has local hiring preferences embedded into our programs -- but many agencies we work with do not. In fact, some are specifically prohibited from doing local hiring -- which can result in projects being held up. 

That's why our Deputy Secretary Ron Sims, who was the King County Executive in Washington State for a dozen years before coming to HUD, has been working with sister federal agencies to find a solution.

As a result, we have created a pilot program with the Federal Highway Administration that allows communities to apply HUD contracting requirements on federal-aid highway projects -- making it easier for communities to build the infrastructure they need, at the same time they create jobs for the people in those communities.

Out-Innovating Our Competitors: Greening Our Communities

Lastly, the President has said winning the future depends on out-innovating our competitors. For HUD and for our building and construction trades, that means continuing to green our housing stock. 

But we'll never green America's built environment with Recovery grants alone. Real change requires a market transformation with leadership, solutions and capital from the private sector.

Later this month, HUD will be selecting lenders to offer a product called FHA PowerSaver -- the first federal financing program focused on single-family home retrofits.

PowerSaver will allow homeowners to borrow up to $25,000 to make energy efficiency and renewable energy improvements to their homes -- stimulating demand for jobs and for contractors to do this important work. 

But 15 million households live in multifamily apartments.

That's why, late last year, I announced the Green Refinance Plus program, through which FHA will provide additional insurance coverage and Fannie Mae will offer more flexible loan underwriting to generate additional loan proceeds to make green improvements. 

Through Green Refi Plus, owners of older affordable housing properties will be the first to go green in connection with refinancing their mortgages at today's historically low interest rates -- and they'll be employing your members to do it.

Both PowerSaver and Green Refinance Plus will take advantage of the data we gather on performance by tracking energy saved, bills reduced and value created.

It's only through proving that these investments pay for themselves and provide real benefits to families that we can catalyze change on the scale that is truly transformational -- driven not just by the public sector but more importantly through massive private investment.

Of course, real sustainability isn't just about the kind of buildings we build -- but also where we build them.

Today, for every dollar the average household earns, they spend 52 cents on housing and transportation combined. They have become American families' two single biggest expenses. At the same time, moving products on our roads costs 5 times as much wasted fuel and time as it did 25 years ago.

This is a huge issue -- not only for Middle Class families, but also for our Teamsters, who bring the construction materials to multi-family and commercial construction sites.

That's why last fall, with our partners at DOT, HUD awarded nearly $170 million in planning grants to ensure regions and communities across the country have more housing and transportation choices, more energy independence, and will be more economically competitive. 

In a community like Austin, Texas, you can see the difference these funds are making. HUD awarded $3.7 million to help the city link a long-term regional transportation plan to 37 mixed-income communities near transit and job centers -- tying new workforce housing to a planned trucking and rail transportation hub near the airport that will employ 2,000 people.

The city estimates that HUD's grant will help create at least 7,000 permanent jobs and thousands more in the construction sector, generating an additional $1.1 billion of economic growth over the next five years and saving the taxpayer $1.25 billion. 

Communities planned this way have less congestion and a competitive edge in attracting jobs and private investment.

We hear a lot of talk about "fiscal responsibility" today. Well, solving 3 or 4 problems at the local level with a single investment -- that's fiscal responsibility.

We have asked for another $150 million to continue funding these kinds of projects in our FY12 budget -- and we need your support to get it.

Winning the Future Begins at Home

All of these investments and initiative are essential to winning the future. But we can't win the future if we don't rebuild our Middle Class.

Rebuilding the Middle Class is what health care reform was about -- putting an end to insurance companies jacking up your premiums at will and instead giving you more choices and more control over you economic destiny.

Rebuilding the Middle Class is what Wall Street Reform was all about -- putting an end to the bad behavior that sent our economy into the worst tailspin since the Great Depression and giving families the strongest consumer protections in history.

Rebuilding the Middle Class is what the Recovery Act was about -- cutting taxes for 95 percent of working families, helping American factories re-open and re-invent and putting 3.7 million people back to work building homes, roads and rails we need to compete in the 21st century.

In effort after effort--rebuilding our national infrastructure, rescuing our nation's auto industry--time and again President Obama has put his faith in the American worker.

He knows what I know:

That no one ever made a dime betting against you.

The job's not over by a long shot. Just as we didn't get into this crisis overnight -- we won't get out of it overnight either.

But we will get out of it.

I know because I've seen what the American worker is capable of.

I've seen it in Houston's Kennedy Place Redevelopment.

In the Forest Square development in Cincinnati and Benedict Park Place in Denver.

I've seen it in Anchorage Alaska, in Kansas City and in countless communities across the country I've been to over the last two years where Americans are rebuilding not only our homes, but our economy -- brick by brick...block by block.

That is what your members are doing -- and believe me when I say:

That work is just beginning. Thank you -- for everything you do to keep America strong.

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