How Project Labor Agreements Elevate Costs to Taxpayers

When considering the labor movement in the United States, there is a huge distinction between government unions and private sector unions. Government unions elect their own bosses, they operate within agencies that collect taxes instead of having to make a profit by enticing consumers to buy their products, and they operate the machinery of government which means their more zealous members have the ability to intimidate their political opponents. Private sector unions have none of these advantages. They negotiate with managers hired by CEOs who report to shareholders. They negotiate with companies that will go out of business if they over-compensate their workers. And with rare exceptions, workers in private companies are not approving our business permit applications, inspecting our workplaces, or auditing our tax returns.

So where does this put construction unions who compete for government contracts?

This question matters a lot to reformers, because private sector unions, properly regulated, not only have a vital role to play in American society, but their members have the potential to lobby effectively against many of the special interests who are killing American jobs. Unfortunately, one of the biggest obstacles to political collaboration between construction unions and groups representing business interests is the use of Project Labor Agreements.

The majestic Pat Tillman Memorial Bridge, opened in 2010, seen from Hoover Dam.

Far too few necessary civil engineering projects are completed nowadays.

Like many political issues, the details of project labor agreements aren’t generally known to the average voter. Here is the Wikipedia definition (condensed) of a project labor agreement:

“A Project Labor Agreement is a pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project. Before any workers are hired on the project, construction unions have bargaining rights to determine the wage rates and benefits of all employees working on the particular project and to agree to the provisions of the agreement. The terms of the agreement apply to all contractors and subcontractors who successfully bid on the project, and supersedes any existing collective bargaining agreements.  PLAs typically require that employees hired for the project are referred through union hiring halls, that nonunion workers pay union dues for the length of the project, and that the contractor follow union rules on pensions, work conditions and dispute resolution.”

Unions tout the benefits of project labor agreements as guaranteeing greater quality workmanship from a better trained workforce, along with guaranteeing more jobs for local workers. But they produce no evidence to support either of these claims.

Here are the main objections typically raised to PLAs by representatives of non-union construction firms:

1 – They force construction firms to hire people who aren’t their own employees to operate their equipment.

2 – Even if the union permits them to use their own employees to do the work, they have to pay into the union’s retirement fund, even though they are already paying into their own employees’ retirement fund.

3 – If a non-union construction firm works on a project under a PLA, making contributions to the union’s retirement pension fund, and that pension fund goes broke and requires additional funding, to the extent they paid into that fund, the non-union construction firm must also pay a share of the amount required to bailout the fund.

Because PLAs discourage non-union construction companies from bidding for jobs, the lack of competition inevitably raises the price of the construction. But the reason unions try to lock out non-union companies from competing for public works projects isn’t because the non-union firms pay their workers less. Prevailing wage agreements – which can be completely independent of PLAs – prevent that. The reason unionized firms drive costs up in projects is because of their work rules, which prohibit skilled workers from doing anything that is outside of their skill set, even if it is far more convenient for them to do so.

To make this clear, take a look at this list of the various construction trades. This is a partial list. It isn’t unusual for a construction project to require workers from over twenty different unions, each of which is negotiating for the maximum amount of work for their members.

The added cost of PLAs to taxpayers is not merely from less competition for jobs and inefficient union work rules. Often in order to force local agencies to accept PLAs, unions file lawsuits based on alleged violations of CEQA or other environmental laws. This so-called “greenmail” delays projects and incurs legal fees. Construction unions ought to be fighting environmentalist restrictions on construction, to help all workers and help the economy, instead of using them as a negotiating weapon.

The problems with PLAs are well known to many policymakers, but while construction unions can’t elect their company’s management team, they can definitely fund campaigns to elect politicians who will vote for PLAs, and they do. Kevin Dayton, a frequent contributor to UnionWatch, has written several reports on how construction unions pressure local elected officials to approve PLAs.

It’s unclear how construction unions might be willing to compromise on PLAs and consent to open competition for public works projects. But if they did, the prospects for cooperation are tantalizing. Because as it is, California’s investment in civil infrastructure is behind both in terms of maintenance and in terms of potentially spectacular upgrades. If construction unions were to join with business and community activists to oppose the extreme environmentalist forces that make infrastructure development cost-prohibitive, it could create more construction jobs than they’d ever dreamed of, building amenities that would lower the cost of living and improve the quality of life for everyone.

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Ed Ring is the executive director of the California Policy Center.

REFERENCES

Project Labor Agreement, Wikipedia

What is a Project Labor Agreement and how does it affect workers?, National Right to Work

Get the Truth, The Truth About PLAs

Project Labor Agreement Basics, The Truth About PLAs

Say NO to Project Labor Agreement Mandates, Associated Builders and Contractors