How Unions Artificially Inflate Costs for Infrastructure

Inquiring minds are watching an excellent video on The Kudlow Report between Larry Kudlow and David Harkin.

Harkin is the author of a study on US infrastructure and a professor at the University of North Carolina Charlotte.

Partial Transcript

Kudlow: President Obama wants to spend another $50 billion on repairs to our infrastructure. Do we really need it? That would be on top of the over $100 billion for the nonshovel ready projects back in the 2009 stimulus. Remember that? There’s a new study that says we may not need it. Our roads and bridges are not crumbling and are much better than they were 20 years ago. How about that good news? David Harkin is the lead author of that study. David, thank you for coming on. I read the reports. Throughout the country in real terms adjusted for inflation, state control, highway spending has increased by 60%. 177% in nominal terms. 60% in real terms. They had good results.

Harkin: We were quite surprised when we looked at the numbers. The highway system has gotten better on all seven measures we looked at. Accidents rates are down. Even the pavements have been improved particularly for the interstate system. Even congestion is down too. This isn’t, I think, generally common knowledge. Most people think the infrastructure is crumbling or falling apart. We found just the opposite.

Kudlow: Why is Washington then, so manic and obsessive about pouring more and more infrastructure money? Why?

Harkin: Well, the fundamental problem here is that the states control how that money will be spent. Some of it comes from the federal government and some of it from the states. So the feeling in the states and in Washington is that we just need more and more and more. But in fact the numbers don’t support that. The numbers suggest that we’re making progress and that’s very good news for the public. So, in terms of where the issue should go here we ought to look very carefully at whether these requests are really needed.

Kudlow: David, here’s one of my big beefs. This is highway money and bridge money. Davis-Bacon, the prevailing union wick, once you use federal dollars and it’s true for these big union states like New York, New Jersey and California, Once do you that you have to pay the Davis-Bacon prevailing union wage rate which is at least a third higher than if you did it privately. That’s my biggest beef about spending all this money.

Harkin: In our study we showed the cost for doing this work are much higher in a few states compared with the rest of the country like California, New Jersey, New York are very high cost states relative to the other states. To go back to the earlier question regarding whether this is just a problem of the interstate system or whether the civil engineering report is correct, you know, let’s remember the civil engineering report looks at only one year and is based on opinions from local experts. But it doesn’t look back in time to see whether we made progress. David Harkin thank you ever so much. congratulations on your study which blows the lid off all this infrastructure money proposal coming out of Washington.

End Transcript

Davis-Bacon Background

I have discussed Davis-Bacon on many occasions. Inquiring minds interested in a background on the original purpose of the act should read My Thoughts on the Davis-Bacon Act.

… while the sponsors and supporters of the Act also intended it to disadvantage immigrant workers of other races, these thinly veiled references make it clear that the Act was primarily intended to discriminate against blacks.

The Davis-Bacon Act as amended, requires that each contract over $2,000 to which the United States or the District of Columbia is a party for the construction, alteration, or repair of public buildings or public works shall contain a clause setting forth the minimum wages to be paid to various classes of laborers and mechanics employed under the contract. Under the provisions of the Act, contractors or their subcontractors are to pay workers employed directly upon the site of the work no less than the locally prevailing wages and fringe benefits paid on projects of a similar character. The Davis-Bacon Act directs the Secretary of Labor to determine such local prevailing wage rates.

There are 117 classifications of jobs for which some set of bureaucrats must determine “prevailing wages”.  Here is a partial list:

ASBE = International Association of Heat and Frost Insulators and Asbestos Workers
BOIL = International Brotherhood of Boiler Makers, Iron Shipbuilders, Blacksmiths, Forgers and Helpers
BRXX = International Union of Bricklayers, and Allied Craftsmen
(bricklayers, cement masons, stone masons, tile, marble and terrazzo workers)
CARP = United Brotherhood of Carpenters and Joiners of America
ELEC = International Brotherhood of Electrical Workers
(electricians, communication systems installers, and other low voltage specialty workers)
ELEV = International Union of Elevator Constructors
ENGI = International Union of Operating Engineers
(operators of various types of power equipment)
IRON = International Association of Bridge, Structural and Ornamental Iron Workers
LABO = Laborers’ International Union of North America
PAIN = International Brotherhood of Painters and Allied Trades
(painters, drywall finishers, glaziers, soft floor layers)
PLUM = Operative Plasterers’ and Cement Masons’ International Association of the United States and Canada
PLAS = United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada
ROOF = United Union of Roofers, Waterproofers and Allied Workers
SHEE = Sheet Metal Workers International Association
TEAM = International Brotherhood of Teamsters

Even FDR Understood the Problem

Public unions get into bed with management and politicians and work out sweet deals for themselves at taxpayer expense. No one looks out for the taxpayer. Even FDR understood the problem.

Message From FDR

Here are excerpts from a Letter from FDR Regarding Collective Bargaining of Public Unions written August 16, 1937.

All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management.

The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations.

Particularly, I want to emphasize my conviction that militant tactics have no place in the functions of any organization of Government employees.

A strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable.

Time to Scrap Davis-Bacon, End Public Union Collective Bargaining

Before any project can be economically viable, labor costs must be addressed, and that is exactly why we need to scrap Davis-Bacon and all prevailing wage laws. We also need to eliminate collective bargaining of public unions.

Unless and until we do that, we will dramatically overpay for infrastructure projects and taxpayers will pay through the nose for them.

Government should strive to provide the most services at the least cost. Public unions strive to provide the fewest services at the most cost. Is it any wonder cities and states are broke?

About the author: Mike “Mish” Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management. His top-rated global economics blog Mish’s Global Economic Trend Analysis offers insightful commentary every day of the week. He is also a contributing “professor” on Minyanville, a community site focused on economic and financial education. Every Thursday he does a podcast on HoweStreet and on an ad hoc basis he contributes to many other websites, including UnionWatch.

Bipartisan Solutions For California

When Governor Jerry Brown, back in the 1970′s, suggested that California should have its own aerospace program, he was dubbed “Governor Moonbeam,” and the moniker has stuck to this day. That’s too bad, because at the time Gov. Brown made that statement, California had the most robust aerospace infrastructure in the U.S. The nexus of companies in Los Angeles – Northrop, Hughes, Rockwell, TRW, plus the branches of dozens of others – the launch complex at Vandenberg, the vast resources of land in the Mojave including Edwards AFB – made California a natural location to further America’s space efforts.

Today half of the companies noted above have been driven out of California by over-regulation, and instead of talking about mining the asteroids for platinum, Jerry Brown is talking about bullet trains to nowhere. Before you laugh at the Gov. Moonbeam’s original idea, consider California-based entrepreneur Elon Musk, founder of SpaceX. This private aerospace company, which is already supplying launch vehicles to NASA, is now rolling out their “Falcon Heavy,” the largest launch vehicle since the Saturn V moon rocket.

The asteroids will be explored and mined by robotic spacecraft within a few decades. And much of the ingenuity and entrepreneurship, risk capital, and high technology will be coming from California. Imagine if California’s dawning recapture of the lead in aerospace technology, following her existing lead in biotech and info-tech, were encouraged by California’s laws and regulations instead of occurring in spite of them?

There are two steps towards putting California back on track. Both relate to public policy: One, reform California’s government and make it more business friendly, two, set a government project agenda that emphasizes infrastructure over pay and benefits for government workers. These steps will lower the cost of living for all California residents.

It would be an ironic blessing if California’s bloated, dysfunctional state and local governments were to financially implode sooner than anywhere else in the U.S., because it would mean Californians would be the first to come out recovered on the other side. It will be a painful transition, but manageable if investments into projects that lower the cost of living are made at the same time as austerity measures are imposed on government workers and recipients of government entitlements. Here are solutions for California:

(1) Balance State and Local Government Budgets:

(a) Lower the wages of all state and local government workers by 20% of whatever amount they make in excess of $50,000 per year. Lower the wages of all state and local government workers by 50% of whatever amount they make in excess of $100,000 per year. Include in “wages” ALL forms of compensation.

(b) Impose special tax assessments on state and local government pensions in the amount of 50% of all pension payments in excess of $60,000 per year and 75% of all pension payments in excess of $100,000 per year.

(c) Require 75% of all school employees to be teachers in a classroom. Raise average class size to 30 students per classroom by abandoning the failed policy of “mainstreaming” virtually all students, and by separating students into classes based on their academic performance.

(d) Faithfully implement the welfare and entitlement policies already adopted by most other states during the Clinton administration.

(2) Change the Rules in Sacramento:

(a) Implement fundamental curbs on the rights of public sector unions, including:  Grant all public sector workers the right to opt-out of union membership and payment of any union dues including agency fees. Prohibit government payroll departments from collecting union dues. Allow all public sector employees to negotiate their own wages and benefits and not be bound by collective bargaining terms if they wish. Prohibit public sector unions from negotiating over long term benefits, and require all current wage and benefit agreements to expire at the end of the term for the elected officials who approved the agreements. Prohibit public sector unions from engaging in political activity of any kind.

(b) Discontinue the planned “CO2 auctions,” which are nothing more than a way to redistribute money from middle class ratepayers to bankers, phony green entrepreneurs, and public sector payroll departments. Repeal AB32. Crucially, lift the crippling burden of land use regulations that keep the prices of homes and commercial property ridiculously high in California.

(c) Revisit all business-friendly recommendations made by business associations such as the bipartisan California Chamber of Commerce. This would not include compromise positions in support of public sector unions and crony capitalist environmental regulations. This would include banning mandatory project labor agreements or requiring union only contractors on government funded projects.

(3) Use government surpluses to engage in public works, and streamline permitting for private infrastructure investments, that LOWER the cost of living for everyone:

(a) Rebuild California’s aqueducts and develop additional aquifer and surface storage for runoff harvesting. Build desalination plants on the southern California coast. Upgrade existing dams and pumping stations. Permit farmers to contract with California’s urban water districts to sell their water allocations. Create water abundance and make water cheap.

(b) Build new power stations. Whether this is a joint project with Nevada to establish nuclear power stations in the vicinity of Yucca Mountain, or building new natural gas fired power plants, the immediate establishment of an additional 20%+ of generating capacity in California would allow a lowering of utility rates and make California a net exporter of electricity.

(c) Enable development of offshore oil and gas using slant drilling from land. It is no longer necessary to develop offshore drilling rigs to extract energy reserves. There are cost-effective ways to bring this energy onshore without the risk of an oil spill from an offshore platform.

(d) Enable development of natural gas reserves in California.

(e) Enable development of mines and quarries in California.

(f) Build additional pipeline capacity into California to import and export natural gas to and from elsewhere in North America.

(g) Permit development of a liquid natural gas terminal at least 10 miles off the California coast. Get California onto the global LNG grid to import and export natural gas and further diversify sources of energy and income. Create energy abundance and make energy cheap.

(h) Upgrade existing roads, bridges, and freeways. Begin working on “smart lanes” that will facilitate cars driving on autopilot.

(i) Instead of developing a bullet train – something that might be worth experimenting with once everything else on this list is done and Californians have money to burn – upgrade California’s existing freight and passenger rail infrastructure. When practical, integrate passenger and freight service on common rail corridors in large cities where high population densities make passenger rail economically viable. Complete a passenger rail link from Bakersfield to Los Angeles. Increase the speed of intercity passenger rail to 100+ MPH, which can be done on upgraded but already existing track.

Implementing policies designed to lower the cost of living is a perilous undertaking. Because it involves increasing the supply of all basic commodities and services including taxes, housing, energy, water and transportation, it lowers profits and can contribute to a deflationary economy. But by lowering the cost of living, despite the fewer dollars earned by our public sector workers, or by our private sector workers employed by corporations competing in the global economy, the overall standard of living may actually improve.

The solution for California is to develop infrastructure to lower the cost of living at the same time as deregulation is encouraging economic growth. Because California enjoys so many gifts – natural resources of staggering abundance and diversity, and an economy that is the technological leader in the world – the solutions described here, though painful, will ensure California survives and thrives during what are sure to be challenging years ahead.

During the 21st century there are two competing models of economic growth. The path we’re on involves artificially inflating the prices of all basic commodities. Staying on this path will reduce global competition, empower entrenched global elites, and consolidate the power of public sector unions, monopolistic corporations, and global bankers. Economic growth will be slow, and in terms of genuine productivity, it will be an anti-competitive age of control by the few over the many, and a sad utilization of the great technological advances we have seen in recent decades.

The alternative economic model for California is to adopt policies that dismantle monopolies, nurture competition, and encourage new development of land and resources. If costs for basic commodities are lowered instead of raised, capital is released to finance completely new industries, from space commercialization and development to life-extension and other fundamental advances in medicine. This will cause rapid and sustainable economic growth, unprecedented per-capita prosperity, even faster technological advancement, and a renewed golden age.

CEQA Debate Rule No. 1: Do NOT Mention Union “Greenmail”

“Here’s the plan: pretend that unions aren’t exploiting the California Environmental Quality Act (CEQA) as a tool to obtain labor agreements. Maybe no one will notice.”

Supporters and opponents of CEQA reform are straining to avoid this uncomfortable subject as influential Democrats in the California State Senate prepare to introduce an alleged reform of CEQA that would discourage abuses of the law.


Note: the second half of this article includes excerpts from my February 18, 2013 article on www.FlashReport.org entitled Highlighting the Top Union Abuses of the California Environmental Quality Act (CEQA). Thank you to www.FlashReport.org and www.UnionWatch.org for exposing generally unreported labor public policy issues to a wider audience in California and the United States.


This moratorium on referring to union “greenmail” reached absurd levels this week, as a noted journalist in San Diego who is left-leaning but generally recognized as honestly blunt neglected to report the obvious about union CEQA abuse.

An article entitled San Diego Hotels: Labor in Revolt was posted on February 20, 2013 in the “alternative” weekly newspaper San Diego Reader. It sympathetically portrayed the quest of organizers in the San Diego-based UNITE-HERE Local Union No. 30 to unionize the city’s hotel workforce.

Readers learn about various adversarial tactics used by UNITE-HERE Local Union No. 30 to pressure hotel operators to sign union agreements. The article mentions picket lines, boycotts, telling the hotel’s customers not to return, convincing elite universities to stop investing their endowment funds in hotel corporations, using labor laws offensively against employers, and encouraging workers to express themselves in public with chants, drum-beating, and labor songs.

All of these tactics reflect a typical union “corporate campaign.” But after reading the article, I went back and read it again. I couldn’t believe what I was – NOT – reading.

It mentions nothing about the high-profile CEQA actions filed by UNITE-HERE Local Union No. 30 against four proposed hotel projects! Here they are, as reported in www.PhonyUnionTreeHuggers.com:

1. Lane Field in San Diego: UNITE-HERE Local 30 Doesn’t Like a Proposed Hotel

2. San Diego Hotel Union (UNITE-HERE Local 30) Finds Environmental Calamity with San Diego Marriott Hotel & Marina Ballroom Expansion

3. San Diego Convention Center Expansion: Construction Unions and Hotel Unions File 63 Pages Worth of CEQA Complaints

4. Hotel Union Uses CEQA Objections to Try to Block Proposed Fat City Hotel in San Diego

Four cases of CEQA abuse in the context of organizing campaigns! Overlooked and unreported…

An article exposing this practice could attract web readers, sell newspapers, and enhance the professional reputation of the journalist who wrote it. A news vacuum is waiting to be filled.

Soon an enterprising California reporter (or national reporter) will draw attention to labor union CEQA exploitation with an investigative article. In recent years, the New York Times did this with a June 18, 2009 article A Move to Put the Union Label on Solar Power Plants; also, the Los Angeles Times did this with a February 5, 2011 article Labor Coalition’s Tactics on Renewable Energy Projects Are Criticized.

I anticipate this future investigative article will flush out the union greenmail by either providing a broad survey of 20 years of union CEQA abuse or by focusing in-depth on one of the dozens of recent union CEQA document dumps and lawsuits against proposed projects.

Here are the top examples of union “greenmail” in 2012 and in 2013 that are ripe for investigation and exposure.

The #1 Union “Greenmail” CEQA Exploitation Case of 2012: San Diego Convention Center Expansion, Phase 3

The most high-profile union-instigated CEQA action in California in 2012 was targeted at the proposed San Diego Convention Center Expansion, Phase 3, estimated to cost $520 million, or more than $1 billion total if interest on borrowed money through bond sales is included. Unions hired the law firm of Adams Broadwell Joseph & Cardozo to advance the union objections. The saga is summarized on the web site www.SanDiegoConventionCenterScam.com:

It was known for years that the San Diego County Building and Construction Trades Council planned to use CEQA to delay construction of the convention center expansion until it obtained a union monopoly on construction with a Project Labor Agreement. The plans were documented in a March 2011 article It’s Out in the Open: Project Labor Agreement a Costly Possibility for San Diego Convention Center Expansion.

Sure enough, it happened. In several hundred pages of submitted letters and exhibits, the San Diego County Building and Construction Trades Council and UNITE-HERE Local Union No. 30 in San Diego identified numerous problems…See the May 2012 union comments for the draft Environmental Impact report on the San Diego convention center expansion and the September 2012 union comments for the final Environmental Impact Report on the San Diego convention center expansion.

Read an account of the outrageous incidents that occurred at the September 19, 2012 meeting of the United Port of San Diego Board of Port Commissioners, where union leaders and their law firms brazenly pulled a “document dump” in front of the city’s civic leadership: Unions Threaten Environmental Litigation to Block San Diego Convention Center.

Press conference announcing unions dropping CEQA complaints against San Diego Convention Center Expansion Phase 3.

Press conference announcing unions dropping CEQA complaints against San Diego Convention Center Expansion Phase 3.

Yet all these environmental problems disappeared (except for some minor environmental mitigation in three settlement agreements between these unions and the City of San Diego) once contractors were required to sign a project labor agreement with unions as a condition of working on the project and unions won a memorandum of understanding expanding the unionization of the convention center workforce.

Mayor Jerry Sanders (who was about to leave office) held a press conference on November 8, 2012 with the county’s top union official Lorena Gonzalez (who is planning a campaign for a California State Assembly seat) essentially to announce that the union environmental extortion “greenmail” was effective. The unions made “deals” with the City of San Diego and the prime contractor (a joint venture of Clark Construction Group and Hunt Construction Group) for the San Diego Convention Center Expansion, Phase 3.

San Diego Building and Construction Trades Council Project Labor Agreement for San Diego Convention Center Expansion Phase 3

CEQA Works! Unions get a Project Labor Agreement for the San Diego Convention Center Expansion Phase 3 and environmental concerns are resolved.

The California Coastal Commission may soon consider approval of this project, now unimpeded by earlier concerns cited by unions about how the sea-level rise caused by global warming might submerge the convention center expansion.

The #1 Union “Greenmail” CEQA Exploitation Case of 2013 (So Far): Mono County Geothermal Plants

People in Mono County are incredulous about the tremendous opposition of construction trade unions (specifically, California Unions for Reliable Energy (CURE) and Laborers Union Local No. 783) to the Ormat Technologies proposed upgrade of its long-existing Mammoth Pacific I geothermal power plant and its proposed Casa Diablo IV geothermal power plant. Actually, every Californian should be outraged about this new round of union “greenmail.”

The web site www.PhonyUnionTreeHuggers.com explains what has happened so far with the proposed Mammoth Pacific I plant upgrade:

At the October 11, 2012 meeting of the Mono County Planning Commission, a staff member informed the commission about “documents received just today” from the law firms of Lozeau Drury and Adams Broadwell Joseph & Cardozo. In response, one commissioner stated that “last-minute documents can’t be read in two minutes without any background.” The commission approved the project on a 4-0 vote.

On October 19, 2012, California Unions for Reliable Energy (CURE) appealed the Mono County Planning Commission’s decision to approve the Mammoth Pacific I Replacement Project at its October 11, 2012 meeting. CURE was represented by the South San Francisco law firm of Adams Broadwell, Joseph & Cardozo.

Also on October 19, 2012, the Laborers International Union of North America (LIUNA), Local No. 783 (LIUNA) appealed the Mono County Planning Commission’s decision to approve the Mammoth Pacific I Replacement Project at its October 11, 2012 meeting. The union was represented by the Oakland law firm of Lozeau Drury.

On November 13, 2012, the Mono County Board of Supervisors rejected the two union appeals of project approval. Here is the staff report to the Mono County Board of Supervisors on CURE’s appeal.

Local officials knew that Ormat Technologies has been pressured to sign Project Labor Agreements giving unions a monopoly on construction and maintenance. Unions have also harassed the company at the Imperial County Planning Commission, the Imperial County Board of Supervisors, and the California Energy Commission as it seeks approval for geothermal power plants in Imperial County such as Hudson Ranch II.

In fact, the February 28, 2013 meeting agenda of the California Energy Commission includes this item:

California Unions for Reliable Energy v. Energy Resources Conservation and Development Commission [that is, the California Energy Commission], Real Parties in Interest Ormat Nevada, Inc., ORNI 18 LLC, and ORNI 19 LLC (Alameda County Superior Court, RG 12610669)

On December 14, 2012, Laborers Union (LIUNA) Local No. 783 filed a lawsuit (Concerned Bishop Residents v. County of Mono) in Mono County Superior Court claiming that the Mono County Board of Supervisors violated the California Environmental Quality Act (CEQA) when it approved Ormat Technologies‘ replacement project for the Mammoth Pacific Unit 1 geothermal power plant. The lawsuit explains that Laborers Union members “regularly travel to the Mammoth Lakes area of Mono County to enjoy its peaceful repose.”

Enjoying its peaceful repose and diversity and rarity of species of plants and animals.

Enjoying its peaceful repose and diversity and rarity of species of plants and animals.

But the ultimate CEQA strike by unions against geothermal power occurred on January 30, 2013, when the U.S. Bureau of Land Management office in Bishop was crushed by an incredible pile of comments from California Unions for Reliable Energy and Laborers Union Local No. 783 objecting to the draft Environmental Impact Report / Environmental Impact Statement for the Casa Diablo IV project. The amount of paper used for these objections probably required an Environmental Impact Report under CEQA.

The comments and associated exhibits are linked at Unions’ January 30, 2013 Comments Against Geothermal Power Plant Must Have Overheated the Printers!

Kevin Dayton is the President and CEO of Labor Issues Solutions, LLC and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com.

Another Year Brings New Project Labor Agreements for Education Construction

Another year brings another rush of costly union construction monopolies to K-12 school districts and community college districts in California.

Consider that voters in 2012 authorized 115 California educational districts to borrow a grand total of $15,266,651,190 ($15.3 billion) by selling bonds to investors, and you can see why schools are such an alluring target for special interest groups with special friends in elected office. (This amount does not include state matching grants to be funded from the $35.8 billion in bond sales authorized by voters in the mid-2000s.)

As readers of www.UnionWatch.org generally recognize, elected board members of K-12 and community college districts in the state’s major metropolitan areas often have political goals and ideological visions far more ambitious than simply overseeing a district that efficiently builds schools at the best price for taxpayers and students.

Educational districts are therefore typically easy pickings for union officials to lobby for Project Labor Agreements and get control of work without having to earn it.

Here are the latest setbacks for fair and open bid competition on taxpayer-funded educational construction in California:

The school board of the El Monte Union High School District is expected to vote at its March 6, 2013 meeting to require construction contractors to sign a Project Labor Agreement with the Los Angeles-Orange County Building and Construction Trades Council in order to work on projects funded by borrowed money from Measure D, a $148 million bond measure approved by district voters in November 2008. This union deal was originally pushed in 2011 by a school board member seeking election to the California State Assembly; he ultimately dropped out of the race and resigned his board seat. For more information, see After 20 Months of Antics, Board of El Monte Union High School District Poised to Require Contractors to Sign a Project Labor Agreement.

At its February 12, 2013 meeting, the school board of the Lynwood Unified School District voted to require construction contractors to sign a Project Labor Agreement with the Los Angeles-Orange County Building and Construction Trades Council in order to work on projects funded by borrowed money from Measure K, a $93 million bond measure barely approved by 57% of district voters in November 2012. For more information, see Lynwood Unified School District’s Bond-Funded Construction Falls to a Project Labor Agreement.

The board of the Ohlone Community College District(within the cities of Fremont, Newark, and Union City) voted on February 13, 2013 to require construction contractors to sign a Project Labor Agreement with the Building and Construction Trades Council of Alameda County in order to work on 16 projects or categories of projects, totaling $265 million, funded by borrowed money obtained from bond sales authorized by the $349 million Measure G, approved by district voters in November 2010. In the 2000s, the district had managed to build projects under the $150 million Measure A (approved by voters in March 2002) without a union monopoly, but the board is more enlightened now. See Another California Community College District to Give Unions a Monopoly on Bond-Funded Construction: Project Labor Agreement at Ohlone Community College District.

Some people in Solano County expected the Solano College Governing Board to waste money on union schemes and other nonsense.

On February 6, 2013, the Governing Board of the Solano Community College District heard a staff report about requiring construction contractors to sign a Project Labor Agreement with the Napa-Solano Building and Construction Trades Council as a condition of working on projects funded by proceeds from $348 million in bond sales authorized in November 2012 by 63.52% of Solano County voters as Measure Q. Representatives of construction trade associations and the local Central Solano Citizen/Taxpayer Group spoke against the proposal. A vote is expected at a meeting in March. See Governing Board for Solano Community College District in California Hears Debate Over Project Labor Agreement on $348 Million Bond Measure Q.

Why are K-12 school districts and community college districts so bold about imposing these government-mandated union agreements for construction? The problem seemed to begin with the enactment of Proposition 39, a statewide ballot measure approved by 53.4% of voters in November 2000.

That statewide ballot measure reduced the vote percentage needed to pass bond measures authorizing bond sales from 66.67% (two-thirds) to 55 percent under certain conditions. It virtually guaranteed voter authorization of bond sales in the state’s major metropolitan areas and began California’s massive accumulation of debt for educational construction at the state and local levels of government.

The success rate for approval of individual bond measures in November 2012 was 86%, and the success rate for approval of the total dollar amount of proposed bond sales in November 2012 was 92%. It’s evident that voters in a general election will almost always authorize educational districts to borrow money through bond sales. Educational districts don’t need to worry about how they spend the money.

One could argue that the same lack of accountability that leads to government-mandated Project Labor Agreements is also the basis for foolish sales of Capital Appreciation Bonds, the shameless awarding of financial and service contracts to donors to bond campaigns, and the expenditure of hundreds of millions of dollars of borrowed money on iPads (another practice authorized by Proposition 39).

Despite valiant investigative research and reporting from new media electronic publications such as www.CalWatchdog.com, www.VoiceofSanDiego.org, www.CaliforniaWatch.org, and www.UnionWatch.org, few people know about these issues, few people understand these issues, and few people care about these issues. The taxing and spending goes on, and unions and their leadership remain primary beneficiaries.

Kevin Dayton is the President and CEO of Labor Issues Solutions, LLC and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com.

Unions Defy CEQA Reformers with Taunting Resolution

Despite their reputation as effective and extensive abusers of the California Environmental Quality Act (CEQA) to pursue economic objectives unrelated to environmental protection, California union leaders are strategically choosing to be vocal activists against CEQA reform.

Union leaders are obviously quite confident that corporate executives and the news media will hesitate to make them accountable for their practice.

The State Building and Construction Trades Council of California, the San Diego and Imperial Counties Labor Council, AFL-CIO, and the United Food and Commercial Workers Western States Council are an essential part of the “CEQA Works” coalition organized by the California League of Conservation Voters to oppose CEQA reform. I predict these unions will be the major funding source for broadcast advertising from CEQA Works to undermine reform proposals. (Expect advertising to run soon on these radio stations.)

On February 11, 2013, the leadership of the California Labor Federation, AFL-CIO unanimously approved a resolution stating its commitment to “protecting the critical components of CEQA that have made it effective.” It was presented by the State Building and Construction Trades Council of California.

CEQA documents for proposed solar power plants in Fresno County as of August 7, 2012. A majority of these documents related to union CEQA objections.

This resolution consists of buzz words, emotive language, and facts taken out of context. Many of the declarations provoke laughter at close examination: for example, the resolution praises union “alliances with local businesses” even though small local businesses undermine private sector unionism by operating free of union work rules and not participating in multi-employer union-administered fringe benefit programs.

(This provision probably alludes to CEQA challenges to Wal-Mart supported by the United Food and Commercial Workers union. As reported in the UFCW Local Union No. 135 newsletter of October 2012, “…pro-business politicians in the California State Senate proposed gutting CEQA, making it much more difficult for us to stop Walmart and similar big-box retailers from coming to San Diego and other places in California.”)

But the resolution also reveals that unions know the psychology of their opponents. From their experience in union corporate organizing campaigns, union leaders recognize how business executives strive to protect their professional reputations and corporate images. The resolution is a warning to any corporate executive advocating for CEQA reform who might be tempted to explain publicly why unions oppose it.

Few California corporate executives have the gumption or rhetorical skill to openly challenge an organization supporting benevolent, humanistic impulses such as “smart and sustainable development,” “public health, especially in low-income communities,” and “protecting local communities, strengthening alliances with local businesses, and promoting the creation of good jobs.”

And as an additional defense from accusations of hypocrisy, union officials strategically included a direct accusation in the resolution that “many of the attacks on CEQA are coming from the same corporations that seek to roll back regulations that protect workers.”

Who would dare to counterattack by pointing out how unions use those regulations as a strategic tool to coerce businesses into collective bargaining?

And it’s not just corporate executives intimidated by the aggressive union counterthrust. Reporters, editors, and newspaper executives who dare to expose union hypocrisy are vulnerable to accusations about poor journalistic practices and reporting of right-wing innuendo.

I sent out two Tweets to present the other side of the story:

Unions oppose #CEQA reform – delaying projects & activities is an essential part of organizing strategy in California http://www.phonyuniontreehuggers.com 

Union resolution to oppose #CEQA reform: subtly stating CEQA’s relevance to unions without detailing how unions use it http://www.calaborfed.org/index.php/site/page/1959 …

These missives were tiny beacons of common sense and fiscal responsibility jettisoned into a maelstrom of leftist commentary on Twitter, to disappear into irrelevance.

No one affirmed my comments by citing a CEQA lawsuit filed on January 22, 2013 by the new, shadowy “Fresnans for Clean Air (FRESCA)” in Fresno County Superior Court alleging that the Fresno City Council failed to adequately assess the environmental damage caused by contracting out garbage services. No one asked about the status of the CEQA lawsuit filed on December 14, 2012 by the Laborers Union (LIUNA) Local No. 783 and “Concerned Bishop Residents” in Mono County Superior Court alleging that the Mono County Board of Supervisors failed to adequately assess the environmental damage caused by an upgrade of the Mammoth Pacific Unit 1 geothermal power plant.

Unions dumped these CEQA objections at a meeting of the United Port of San Diego Board of Commissioners on September 19, 2012.

No one mentioned the notorious CEQA document dumps in May 2012 and in September 2012 by the San Diego County Building and Construction Trades Council and UNITE HERE Local Union No. 30 against the proposed San Diego Convention Center Expansion Phase 3. In November, the unions announced “settlement agreements” that failed to address almost all of their environmental objections – including rising sea levels resulting from global warming – even as the unions obtained separate labor agreements for construction and hotel and hospitality services.

One of the declarations in the California Labor Federation resolution asserts that “claims of rampant CEQA litigation are wildly exaggerated since there is an average of only 200 CEQA (sic) per year” and that “only 1% or fewer projects subject to CEQA involve litigation of any sort.” While this statistic is deceptive in many ways, it doesn’t indicate how unions slow down projects using CEQA before ever reaching the point where their law firms need to file a lawsuit. There won’t be a union-instigated CEQA lawsuit to block the San Diego Convention Center Expansion Phase 3 – the preliminary activity under CEQA was enough to win the labor agreements.

The typical tactic used by exploiters of CEQA is “document dumps,” where an attorney submits a huge stack of CEQA objections at the last possible moment, sometimes with meek apologies. As a lawyer in California said to me last week, “The unions are at the point now where they don’t even need to submit comments about Environmental Impact Reports. The union law firm sends a public records request asking for the company’s application for a permit, and the company then calls up the law firm to arrange for a Project Labor Agreement.”

The web site www.PhonyUnionTreeHuggers.com was established by the Alliance for a Cleaner Tomorrow (ACT) in 2012 to document labor union involvement in CEQA environmental objections to proposed projects. Entries are based on actual legal documents that are hyperlinked for reference. The web site also includes the following news articles to show that once in a while, the truth leaks out about union CEQA exploitation:

Protests Over Valley Solar Projects Called a Ploy” – Fresno Bee – April 29, 2012

“Labor Coalition’s Tactics on Renewable Energy Projects Are Criticized” – Los Angeles Times – February 5, 2011

“Debate Brews in California Over Unions And Power Projects” – Platt’s Electric Power Daily – October 29, 2009

“A Move to Put the Union Label on Solar Power Plants” – New York Times – June 18, 2009

“Greenmail: Independent Builders Accuse Unions of Coercion” – Central Valley Business Journal – December 2007

“Union Staffing Demands Dim Market for Solar Panels” (Op-Ed) – Los Angeles Business Journal – October 8, 2007

“Unions Wielding Environmental Law to Threaten Foes” – Sacramento Business Journal – January 29, 2006

“Suits in California Delay Wal-Mart Supercenters” – Associated Press – March 20, 2005

“Pressure by Labor Group Alleged” – Sacramento Bee – September 19, 2004

“Struggle Over Power Plants” – Los Angeles Times – September 6, 2004

“Union Group Comes Under Fire at CEC [California Energy Commission] Workshop” – Energy Newsdata’s California Energy Markets – August 20, 2004

“Roseville OKs Labor Agreement for Power Plant” – Sacramento Business Journal – July 22, 2004

“Unions Push Roseville for Power Plant Pact” – Sacramento Business Journal – July 18, 2004

“No Strong-Arming” – Sacramento Business Journal (editorial) – July 18, 2004

“Unions Have Power Over Energy Plants” – Tri-Valley Herald (San Francisco: East Bay) – March 18, 2002

“Power Grab” (Editorial) – Wall Street Journal – February 15, 2001

“Blame Unions for Blackouts” (Op-Ed) – Engineering News-Record – January 29, 2001

“Unions Play Part in Power Crisis” – Bakersfield Californian – December 23, 2000

Kevin Dayton is the President and CEO of Labor Issues Solutions, LLC and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com.

California’s Unionized Construction Workforce: Surprisingly Low Rates…and Dropping

On January 23, 2013, the U.S. Department of Labor’s Bureau of Labor Statistics issued its annual Economic News Release: Union Members Summary. It announced that the overall union membership rate – the percent of wage and salary workers who were members of a union – dropped from 11.8 percent in 2011 to 11.3 percent in 2012. The rate of union workers in the private workforce was 6.6 percent in 2012, while the rate of union workers in the government workforce was 35.9 percent.  In 2012 there were more public employee union members (7.3 million) that private industry union members (7.0 million).

In the United States, 13.2 percent of construction workers belonged to a union in 2012 (with 13.7 percent represented by a union). This percentage has been declining since the late 1960s. It dropped from 14.0 percent in 2011.

A similar decline in union membership and representation is seen in the California construction workforce. In the 1960s, the construction workforce in California was overwhelmingly unionized, with official statistics indicating a unionization rate that exceeded 100% (because of statistical anomalies). But the percentage started dropping precipitously after that, as indicated by the establishment of various chapters of the non-union Associated Builders and Contractors in California in the mid-1970s.

The low percentages of unionization in the California construction industry and their decline through 2012 may be surprising to people who see significant political power for construction unions on the state and local levels of government. Here are statistics for California from 1983 to 2012 and for the San Francisco Bay Area and Los Angeles area from 1986 to 2012. 

California

Year

# of Workers

Union Members

Percentage that are Union Members

Covered by Union Agreement

Percentage Covered by Union Agreement

1983

398,031

156,189

39.2

164,233

41.3

2000

738,760

176,288

23.9

183,577

24.8

2006

1,007,227

175,828

17.5

181,604

18.0

2007

1,082,631

178,624

16.5

184,031

17.0

2008

923,815

186,994

20.2

196,386

21.3

2009

734,894

129,251

17.6

132,541

18.0

2010

707,158

110,716

15.7

116,498

16.5

2011

686,035

115,619

16.9

124,965

18.2

2012

746,875

119,015

15.9

122,449

16.4

Los Angeles-Long Beach-Riverside Metropolitan Area

Year

# of Workers

Union Members

Percentage that are Union Members

Covered by Union Agreement

Percentage Covered by Union Agreement

1986

272,836

64,392

23.6

71,653

26.3

2000

334,521

61,972

18.5

66,668

19.9

2006

499,943

79,090

15.8

81,972

16.4

2007

516,433

71,980

13.9

75,143

14.6

2008

458,099

74,017

16.2

76,700

16.7

2009

383,252

75,975

19.8

78,226

20.4

2010

356,387

56,549

15.9

58,651

16.5

2011

350,176

56,955

16.3

60,349

17.2

2012

342,007

53,826

15.7

55,027

16.1

San Francisco-Oakland-San Jose Metropolitan Area

Year

# of Workers

Union Members

Percentage that are Union Members

Covered by Union Agreement

Percentage Covered by Union Agreement

1986

139,884

72,416

51.8

72,416

51.8

2000

155,118

53,839

34.7

53,839

34.7

2006

205,208

55,579

27.1

55,579

27.1

2007

236,372

51,243

21.7

52,288

22.1

2008

229,711

70,441

30.7

70,441

30.7

2009

158,908

31,685

19.9

32,724

20.6

2010

167,332

19,623

11.7

21,776

13.0

2011

153,608

33,095

21.5

37,044

24.1

2012

179,883

31,373

17.4

32,390

18.0

 
What is stunning about these percentages is the decline in the unionized percentage of the California construction workforce during and after the collapse of the residential construction market from 2007 to 2009.

In the 2000s, residential construction was generally non-union throughout the state, and the virtual stop to residential and commercial construction should have proportionally lifted the percentage of union workers as public works and health care (types of building construction with a stronger union presence) became more dominant in the industry.

In addition, it appears that construction unions were not successful in holding or gaining market share through their political strategy of government-mandated Project Labor Agreements and their litigation strategy of exploiting the California Environmental Quality Act (CEQA) to pressure private developers into Project Labor Agreements. One can only guess at the percentage of unionization if top construction union officials did not promote and practice these strategies.

I expect someone at the University of California Miguel Contreras Labor Program will one day help the unions examine the possible causes of this unexpected trend in the California construction industry. For now, I will guess that difficult economic circumstances starting in late 2007 and early 2008 created a more competitive bidding environment (on both public works and private construction) in which unionized contractors had difficulty competing for and winning bids. Prosperous economic times (such as 2000 and 2006) seem to benefit union representation in the construction industry. At state and local government meetings in 2009, 2010, and 2011, construction union lobbyists routinely reported 25 to 35 percent unemployment rates among their membership.


The best neutral source of information regarding union density is the Union Membership and Coverage Database, available at www.unionstats.com. This is an Internet data resource providing private and public sector labor union membership, coverage, and density estimates compiled from the Current Population Survey (CPS), a monthly household survey, using U.S. Bureau of Labor Statistics methods.

Union statistics in specific metropolitan areas for private construction are found in this category: III. Metropolitan Area: Union Membership, Coverage, Density, and Employment by Metropolitan Area and Sector, 1986-2012. Two regions of California are included in this category: the San Francisco Bay Area and Los Angeles.

Kevin Dayton is the President and CEO of Labor Issues Solutions, LLC and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com.

Calling for Public Sector Union Reform is Not Anti-Union

Last week an article written by UnionWatch contributor Kevin Dayton was republished in its entirety by the State Building and Construction Trades Council. While we are pleased that the SBCTC is sharing our material with their members, we object to their characterization of UnionWatch as an “anti-union website.” We also invite them to consider the greater threats to overall worker prosperity.

UnionWatch is not anti-union. UnionWatch aspires to provide information that will elevate and enlighten the public dialogue on the appropriate role for unions, especially in the public sector, with the goal of helping to foster constructive progress towards more effective and equitable state and federal laws governing unions. Here are some policy options we have explored that might make unions more relevant, accountable to their members, and beneficial to the overall economy:

Voluntary Union Membership and Voluntary Union Representation
No worker should be forced to join a union as a condition of employment, and any worker who wishes to represent themselves in their relationship with their employer should be free to do so.

Politically Neutral Public Sector Unions
Public sector unions should not be permitted to collect dues via payroll deduction, nor should they be permitted to use any portion of member dues for political activities. Government employees should not be electing their own bosses, particularly since the politicians who must manage government workforces are not required to earn a profit in a competitive market, and therefore face far less adverse consequences when they give in to union demands for unsustainable wages and benefits.

Union-Free Public Safety Agencies
Public safety unions require the most stringent reforms of all since their members not only work for the government, but are the first responders who are responsible for saving lives as well as taking lives in the interests of public safety and to enforce our laws. Unions for these classifications of government workers should be banned. Public safety workers can return to having voluntary associations that work for the betterment of their profession and the community, but allowing them to unionize disrupts the sacred and precarious trust that citizens place in first responders.

Competitive Bidding on All Public Works Projects
Public works projects should always be free to select contractors based on business principles of cost and quality. Using a union contractor should never be a condition of using public funds. Unionized contractors should be free to bid on any public works project in fair and open competition with non-union contractors.

Within these reasonable constraints, unions have a valuable role to play in America’s future. The illustrious past that are the legacy of today’s unions include 40 hour work weeks, safe working conditions, and a host of other safeguards and restraints on predatory employers that we now take for granted. Well over fifty years ago, unions won the historic battles that define them, and instead of reinventing themselves to remain a productive player in American society today, too many of them have become adjuncts to monopolies and governments, tools of economic repression of the many for the benefit of a few.

In America unions have gravitated to the sectors where there is minimal accountability because the employer can just raise taxes and borrow money. In the public sector, executives, scientists, attorneys, doctors and judges now belong to unions. This is an absurd inversion of the mission of unions. These people aren’t blue collar workers who toil in dangerous factories, they are highly educated professionals. Public sector workers can’t have it both ways. If they have higher levels of education than the general population, and deserve higher average pay and benefits as a result, then their skills must be highly marketable. They should not need unions to represent them.

The State Building and Construction Trades Council of California may have more in common than they realize with the so-called conservatives and right-wingers who they likely assume oppose them at every turn. Because the reason the SBCTC is pushing high-speed rail is not because it is the best way to invest in California’s economy. They are pushing high-speed rail because it is the ONLY massive public works project that environmentalists don’t oppose.

If private construction unions care about workers, all workers, than they should push for projects that will invest in California’s future to lower the cost of living for everyone. There are an awful lot of exciting ways to invest in California to make life easier for everyone, all workers, all consumers, all ratepayers: Upgrade roads and freeways to accommodate smart cars that drive on auto-pilot, dig new last-mile utility corridors in every city and suburb to get electricity and telecommunications cables underground, build a LNG terminal off the Central California Coast, begin on-shore slant drilling to extract oil and gas from the Monterey Shale Formation, repair and upgrade aqueducts, bridges and dams, build desalination plants off the Southern California Coast, and in general, unlock restrictions on land development in California to make real estate affordable again to ordinary workers.

To do all this, the SBCTC will need to take on the environmentalist lobby, the public sector unions, and the Wall Street Bankers who massively profit from government deficits, government pension excess, and environmentalist charades such as CO2 auctions. The SBCTC faces a stark choice. They can continue to perpetuate an economically stagnant, elitist status-quo where only select union workers make a decent living while ordinary workers struggle. Or they can be truly pro-worker and embrace a new more competitive role for themselves in the 21st century. They can recognize the true threat to worker prosperity – global bankers and environmentalists who want to auction CO2 emissions permits to enrich themselves, allied with public sector unions who will channel their cut of the proceeds into funding their own payrolls. Focusing on this futile nonsense happens at the expense of the far more beneficial infrastructure projects noted above, and it crushes average consumers and ordinary workers.

It is not anti-union to explore ways to right-size and reform unions, nor is it pro-worker to advocate high-speed rail when there are so many better ways to invest in California’s future.

Charter Proposals for California Cities Continue Provoking Union Opposition

California Governor Jerry Brown claimed in his State of the State address that California now has “a solid and enduring budget.” His Finance Department even predicts state budget surpluses.

Despite the jubilation at the state capitol inspired by tax increases and one-party rule, California cities seem skeptical, as shown by their continued efforts to exercise their state constitutional rights to govern their own municipal affairs, free of costly and burdensome state mandates. And unions remain determined to undermine them.

The elected council of the Central Coast city of Arroyo Grande has appointed a committee to determine if it should ask voters to approve a home-rule charter, and union officials are interfering through “stiff opposition.” The elected council of the Central Coast city of Buellton is going to hold a workshop on a proposed charter, as union officials fight the proposal there too.

Meanwhile, on January 22, 2013, the Newport Beach City Council voted 7-0 to exercise its home-rule power as a charter city to establish its own policy concerning government-mandated construction wage rates (so-called “prevailing wages”). See the text of the resolution below.

RESOLUTION NO. 2013-6

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH EXEMPTING LOCALLY FUNDED PUBLIC WORKS PROJECTS FROM PREVAILING WAGE

WHEREAS, the California prevailing wage law requires contractors on public works projects to be paid the general prevailing rate of per diem wages for work of a similar character in the locality in which the work is performed;

WHEREAS, under the California Constitution, Article XI, Section 5, the laws of charter cities supersede state law with respect to municipal affairs of the city;

WHEREAS, the California Supreme Court has held that the wage levels of workers constructing locally funded public works are a municipal affair, and therefore a charter city’s prohibition on the payment of prevailing wage supersede state law; and

WHEREAS, the City of Newport Beach (“City”) is incorporated as a charter city, and thus the City may exempt locally funded public works projects from prevailing wage to conserve the City’s limited resources.

NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows:

SECTION 1: The City of Newport Beach exempts locally funded public works projects from prevailing wage, unless: (1) prevailing wage is compelled by the terms of a federal or state grant or is otherwise funded from a source that requires prevailing wage; (2) the public work is a matter of statewide concern; or (3) the payment of prevailing wage is separately authorized by the City Council, because the project is of a complexity and nature that the public interest would be served by requiring prevailing wage.

SECTION 2: This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting this resolution.

ADOPTED this 22nd day of January, 2013.

The January 22, 2013 staff report to the Newport Beach City Council recommended that it establish its own government-mandated construction wage rate policy:

…the City of Newport Beach, as a charter city, is not required to pay prevailing wage for locally funded public works projects. The City may adopt either an ordinance or a resolution to affirm its municipal autonomy and conserve valuable financial resources by exempting itself from the prevailing wage requirement for locally funded public works contracts. In the absence of an ordinance or resolution, the City may exempt itself from the payment of prevailing wage through the insertion of language into individual contracts (i.e., creation of an “actual conflict” through explicit contract terms). However, to ensure consistency staff recommends the adoption of the attached resolution. The attached resolution provides an exemption for public works projects, unless: (a) prevailing wage is compelled by the terms of a federal or state grant, or other funding source; (b) the public work is a matter of state-wide concern; or (c) the payment of prevailing wage is separately authorized by the City Council due to a project’s complexity or nature that the public interest would be served by requiring prevailing wage” to the third type of project for which the City might wish to pay prevailing wage.

Before the vote, the city attorney pointed out that the state’s definition of “public works” is ridiculously broad and recommended that the city council ensure flexibility and adopt a policy to “opt-in” to state-mandated construction wage rates. Councilman Michael Henn had the courage to state publicly that “prevailing wage” is a unique “anachronism of the construction industry” and noted that most business in America is done without government-mandated prevailing wage rates.

Study Session: Applicability of Prevailing Wage to City Projects

As a prelude to the agenda item, the Newport Beach City Council convened earlier in the day for what the city attorney described as a “fairly long study session” (Discussion Regarding the Applicability of Prevailing Wage to City Projects) to discuss exercising its right as a charter city to establish its own policy concerning government-mandated construction wage rates (so-called “prevailing wages”) on purely municipal construction projects.

A leader of the Los Angeles/Orange County Building and Construction Trades Council [no web site] led off the public comment by showing a professionally-produced video called “Right the First Time” that promotes state prevailing wage laws through anecdotes and interviews with union-backed politicians. It neglects to mention the state’s absurd methods of calculating prevailing wage and defining public works. In addition, the video claims that prevailing wages are set by the free market, even though California Labor Code Section 1773 directs the state to set prevailing wage rates based on the applicable union collective bargaining agreements.

Other speakers represented union-affiliated groups such as Smart Cities Prevail and unionized construction trade organizations such as the Fire Sprinkler Advisory Board of Southern California, the Western Wall & Ceiling Contractors Association, the National Electrical Contractors Association (NECA) – Orange County Chapter, and the Western Steel Council. A few unionized contractors (locked into multi-year collective bargaining agreements) also spoke in defense of state-mandated construction wage rates.

Evening Meeting: Unanimous Approval of the Resolution

At the evening meeting, a collection of union representatives, unionized construction trade associations, and unionized contractors once again asked the city council to keep state-mandated construction wage rates. They again cited the usual union arguments about cheap, unskilled, out-of-town labor by uninsured and unlicensed contractors.

Notice how this letter from the National Electrical Contractors Association (NECA) says that quality construction requires “living wages and benefits,” as if the alternative to state-mandated construction wage rates is the California minimum wage of $8.00 per hour. Actually, state-mandated prevailing wages are typically four to six times higher than “living wage” rates set by local governments. For example, the “living wage” for the City of Irvine (in Orange County, near Newport Beach) is currently $13.13 per hour including benefits. The median wage (not including benefits) for an electrician in Orange County is $27.15, according to the California Economic Development Department. But the state-mandated total straight time “prevailing wage” for an inside wireman electrician in Newport Beach is $54.83 per hour, including fringe benefit payments and payments to “other” trust funds that do not directly benefit the employee.

A staff representative of Smart Cities Prevail (a union-affiliated labor-management cooperation committee) argued against the resolution, claiming the policy could result in economic “uncertainty and insecurity.” A representative of the unionized Fire Sprinkler Advisory Board of Southern California noted that prevailing wage contractors offer quality. A leader of the Los Angeles/Orange County Building and Construction Trades Council encouraged the city council to continue requiring its contractors to abide by the state-mandated wage rates and warned of cheap labor from out of the area. A representative of the National Electrical Contractors Association (NECA) claimed that construction workers are “part-time workers” that work eight months a year and don’t get vacations or sick days. A union contractor said “we can afford it in Newport Beach” and noted many sections of the California Labor Code would be nullified. Also speaking against the policy was a union-oriented consultant formerly involved with labor relations for the Bay Area Chapter of the Sheet Metal & Air Conditioning Contractors National Association (SMACNA).

All that needs to be said in response: In 2012, the City of Newport Beach entered into a $5,880.00 maintenance contract for “abatement of algae around the Grand Canal beaches of Balboa Island” that included the requirement for the contractor to pay state-mandated construction wage rates (prevailing wage). Is it really the business of the state legislature to impose such a requirement on the City of Newport Beach for $6000 in algae clean-up?

News Coverage of Newport Beach City Council Vote:

Newport Triggers Dock-Fee Increases, Cost-Saving Labor Contracts – Orange County Register – January 23, 2013

City Eschews Prevailing Wages: The City Council voted to exempt Newport Beach from a state requirement that compels cities to pay workers prevailing wages – Newport Beach/Corona Del Mar Patch – January 24, 2013.)

Council Closes Book on Dock Fee Increases (In other business…) – Newport Beach/Costa Mesa Daily Pilot – January 23, 2013

For More Information:

Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions? – 3rd Edition

List of California’s 121 Charter Cities

California Supreme Court Affirms State Prevailing Wage Requirements Do Not Apply to Charter Cities – League of California Cities – July 2, 2012

Kevin Dayton is the President and CEO of Labor Issues Solutions, LLC and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com.

Unions Await Fantastic Return on High-Speed Rail Political Investments

It’s a heady time to be a top construction union official in California, as the California High-Speed Rail Authority presumably now holds proposals from as many as five design-build consortiums to build the first segment of the $68 billion project.

If this project moves forward, it will become part of the pantheon of huge American infrastructure projects that unions cite when they brag about the lasting accomplishments of union labor. And unions can also claim an essential role in the politics behind its advancement.

Even before Californians had a chance to vote directly on funding for High-Speed Rail, union-affiliated labor-management cooperation committees made massive campaign contributions to stop statewide ballot initiatives in the mid-2000s that would have given property owners stronger rights against the government’s power of eminent domain, as a result complicating the High-Speed Rail Authority’s land acquisition plans.

For example, the State Building & Construction Trades Council Labor Management Cooperation Trust contributed $1 million in 2006 to the campaign to defeat Proposition 90, a statewide ballot measure to strengthen property rights. And in the spring of 2008, the California Construction Industry Labor-Management Cooperative Trust contributed $250,000 to this No on 98/Yes on 99 campaign committee to oppose another statewide ballot measure to protect property rights.

These two union-affiliated committees are authorized under the obscure Labor-Management Cooperation Act of 1978, a federal law signed by President Jimmy Carter and implemented by the Federal Mediation and Conciliation Service. There are no federal or state regulations specifically addressed toward these trusts, and these trusts do not have any reporting requirements to the U.S. Department of Labor’s Office of Labor-Management Standards. Unions use these trust funds routinely now to fund campaigns for and against state and local ballot measures in California. 

When Proposition 1A was on the November 2008 ballot asking California voters to authorize borrowing $10 billion for the high-speed rail project by selling bonds, unions provided a substantial portion of the campaign funding. Leading the charge was the California Alliance for Jobs, another labor-management cooperation committee authorized under the Labor-Management Cooperation Act of 1978.

As shown in the Operating Engineers Local 3 Northern California Master Agreement (page 42) and the Northern California District Council of Laborers Master Agreement (pages 14, 26), construction companies belonging to various business trade associations must pay an amount to the California Alliance for Jobs trust based on the number of hours worked by each employee represented by the union. These amounts are incorporated into the state-mandated construction wage rates (so-called “prevailing wages”) as part of the “Other” category of payments. This ambiguous category of employer payments was implemented as California Labor Code Section 1773.1(a)(7-9) when Governor Gray Davis signed Senate Bill 868 in 2003.

Through contributions, a $100,000 loan, and in-kind/non-monetary gifts, the California Alliance for Jobs was able to assist the campaign to pass Proposition 1A with $616,500, comprising 23% of the total amount raised by Californians for High Speed Trains – Yes on Proposition 1A – A Coalition of Taxpayer, Business, Environmental and Labor Groups and People from Across California Tired of Being Stuck In Traffic.

The national headquarters and the Northern California and Southern California locals of the Operating Engineers union combined for another $575,000, the Laborers union chipped in $100,000, and the State Building and Construction Trades Council of California gave $75,000. 

Top Ten Contributors to the Main Campaign Committee to Pass Proposition 1A (Includes Loans and Non-Monetary/In-Kind Contributions)

1

California Alliance For Jobs Rebuild California Committee

Union-Affiliated Labor-Management Cooperation Committee

$616,500

2

International Union of Operating Engineers Construction Union

$250,000

3

Operating Engineers Local Union No. 3 (Union & PAC) Construction Union

$250,000

4

Professional Engineers in California Government (PECG) Public Employee Union

$183,493

5

California State Council of Laborers Construction Union

$100,000

6

Parsons Brinckerhoff Americas Inc. Construction Design & Engineering

$76,500

7

AECOM Tech Corporation Construction Design & Engineering

$75,000

8

International Union of Operating Engineers Local No. 12 Construction Union

$75,000

9

Members Voice of the State Building Trades Construction Union

$75,000

10

HNTB Corporation Construction Design & Engineering

$63,000

Union involvement in pushing the high-speed rail wasn’t over with the 2008 election. In 2010 and 2011, when the California High-Speed Rail Authority was stumbling under a confused business plan and skyrocketing cost estimates, the head of the State Building and Construction Trades Council of California and regional building trade unions submitted commentaries to newspapers defending the planned rail program. And as appointees to the Board of Directors of the California High-Speed Rail Authority, the head of the State Building and Construction Trades Council of California and a representative of the Operating Engineers union kept the votes coming to move the project forward.

Now the unions get the rewards. Section 7.11.3 of the Request for Proposal for Design-Build Services for the first segment of the California High-Speed Rail project stated that “Proposers are advised that, subject to FRA [Federal Railroad Administration] approval, the Authority intends to develop a Community Benefits Agreement consistent with the Community Benefits Policy adopted by the CHSRA [California High-Speed Rail Authority] Board at its December 6, 2012 meeting with which the Contractor will be required to comply.”

And Section 10.1 of the Request for Proposal states that “The Authority [that is, the California High-Speed Rail Authority CEO Jeff Morales] will not make a recommendation for award of the Contract [to the California High-Speed Rail Authority Board of Directors] unless the successful selected Proposer has submitted the following…A letter of assent executed by the Proposer agreeing to be bound by the Community Benefits Agreement.”

This “Community Benefit Agreement” is commonly known as a “Project Labor Agreement.” In fact, a “draft” Project Labor Agreement is included as Addendum 8 in the High Speed Rail Authority’s bid documents for the Request for Proposal. (See my comprehensive analysis of the union “Community Benefits Agreement” for the California High-Speed Rail and the subsequent rebuttal from the Building and Construction Trades Department, AFL-CIO national headquarters.)

For construction unions, California’s High-Speed Rail project will yield a fantastic long-term return for their political investment. It remains to be seen if taxpayers see any worthwhile returns on their “investment” in paying for it.

Kevin Dayton is the President and CEO of Labor Issues Solutions, LLC and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com.

Watch Union Official’s Rude Antics at California High-Speed Rail Conference

On January 11, 2013, a video camera recorded a stunning public tirade by Fresno’s top construction union official at a conference about supposed local contracting opportunities for the first segment of California’s High Speed Rail. Below is video footage of the beginning of a panel discussion about Project Labor Agreements, and below that is the ignominious ending of the panel discussion a few minutes later.

The incident exposes the coercive power of special interest groups behind the California High-Speed Rail Authority’s quest to slice the first segments of this rail corridor through the San Joaquin Valley, located in the middle of the planned route between San Francisco and Los Angeles. It also compromises the California High-Speed Rail Authority’s relentless public relations program to portray the high-speed rail to coastal urbanites as a progressive, visionary plan to save the planet.

An effective public relations campaign depends on major news media focusing on idealistic concepts, rather than the coarse ground game related to which people from which places get the jobs to perform the actual construction. But while idealistic concepts for environmental sustainability are promoted by professional activists who work for non-profit environmental and public transit advocacy organizations, building the high-speed rail requires construction trade workers. This injects union officials from the San Joaquin Valley into the coalition to build the rail line. And one of those union officials tarnished the progressive image on January 11.

Background: Why Will Unions Get a Monopoly on Building California’s High-Speed Rail?

Construction trade unions have long planned to use the government as its agent to monopolize the building of high-speed rail, now estimated by the California High-Speed Rail Authority to cost $68.4 billion. It seemed probable (but not guaranteed) that union workers that specialize in heavy industrial infrastructure construction would end up building the rail line itself. However, the stations and other building infrastructure would be prime bidding targets for Northern California’s productive and efficient non-union contractors. And unions do not want another failure similar to their failed plot ten years earlier to win a Project Labor Agreement to build the new University of California campus in Merced.

That plan – backed by Governor Gray Davis – was undermined in 2001 and 2002 by San Joaquin Valley business, political, and community leaders, who worked with some aggressive construction business associations to expose and criticize the scheme. In the end, bidding was done under fair and open competition, and non-union contractors and their non-union employees were prominent in building the new campus.

This time, things are different. Unions provided campaign support to pass Proposition 1A (the “Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century”) in November 2008. The head of the State Building and Construction Trades Council of California was appointed to the High-Speed Rail Authority Board of Directors, along with an official for the Operating Engineers Local Union No. 3, which represents operators of cranes, excavators, and other construction equipment.

So it shouldn’t be a surprise that Section 7.11.3 of the Request for Proposal for Design-Build Services for the first segment of the California High-Speed Rail project states that “Proposers are advised that, subject to FRA [Federal Railroad Administration] approval, the Authority intends to develop a Community Benefits Agreement consistent with the Community Benefits Policy adopted by the CHSRA [California High-Speed Rail Authority] Board at its December 6, 2012 meeting with which the Contractor will be required to comply.” (Note: “Community Benefits Agreement” is a euphemism for “Project Labor Agreement” meant to give the public a nice warm feeling about a union sweetheart deal.)

And Section 10.1 of the Request for Proposal states that  “The Authority [that is, the California High-Speed Rail Authority CEO Jeff Morales] will not make a recommendation for award of the Contract [to the California High-Speed Rail Authority Board of Directors] unless the successful selected Proposer has submitted the following: Escrowed Proposal Documents and corrected any deficiencies identified by the examination of the EPDs, and A letter of assent executed by the Proposer agreeing to be bound by the Community Benefits Agreement.” This indicates a government-mandated Project Labor Agreement.

California High Speed Rail Project Labor Agreement Mandate - Section 10.1

California High Speed Rail Project Labor Agreement Mandate – Section 10.1

In addition, the California High-Speed Rail Authority arranged the bidding process on the first segment of the High-Speed Rail (from Madera through Fresno) so that the five prequalified design-build construction consortiums are obligated to sign a Project Labor Agreement with the State Building and Construction Trades Council of California in order to be competitive. This subtlety is possible because the High-Speed Rail Authority is authorized to select the winning bidder using a somewhat subjective scoring system based on “best value” procurement criteria.

On December 6, 2012, the California High-Speed Rail Authority voted for a policy resolution that established generalized “community benefits” that contractors would have to demonstrate as a result of building the high-speed rail through the Central Valley. Not surprisingly, these same benefits are cited in the union Project Labor Agreement that is now included as a “Community Benefits Agreement” in Addendum 8 of the bid documents for the first segment of the high-speed rail. In order to maximize the score for community benefits, the contractor simply agrees to the Project Labor Agreement, and then everyone will feel good that ‘Needy’ Workers Will Get Jobs on High-Speed Rail.

For technical details about the provisions of this Project Labor Agreement, see my comprehensive, 4000-word Analysis of the Phony Community Benefits and Other Provisions in the Union Project Labor Agreement for the First Segment of California’s High-Speed Rail.

Unexpectedly Defiant Resistance to the Project Labor Agreement Provokes Union Anger

A panel discussion about the draft Project Labor Agreement for the construction of the first segment of the California High-Speed Rail was scheduled for 1:30 p.m. on Friday, January 11, 2012 during the 6th Annual San Joaquin Valley Region Public Contracting / Central Valley High Speed Rail Conference / Expo (Jobs & Contracts) at the Downtown Fresno Radisson Hotel & Convention Center. The panel moderator was Kathleen Ellis Faulkner, a Bakersfield attorney.

Three invited panelists showed up: John Hutson, Secretary-Treasurer of the Fresno, Madera, Kings and Tulare Counties Building and Construction Trades Council (this organization lacks a web site), Eric Christen of the Coalition for Fair Employment in Construction (a Project Labor Agreement opponent), and Nicole Goehring of the Northern California Chapter of Associated Builders and Contractors (another Project Labor Agreement opponent). As you hear in Video #1, organizers of the panel discussion had asked other union officials to participate (some apparently chose instead to sit in the audience).

As shown in Video #1, Hutson was flummoxed to find out he would be defending the unions’ Project Labor Agreement instead of explaining to the construction companies of the Central Valley how they would soon enjoy the benefits of unionization under the Project Labor Agreement if they hoped to work on the High-Speed Rail. He expresses his astonishment that “some little kid” was handing out information from Associated Builders and Contractors about Project Labor Agreements. He then proceeds to tell a colorful story from “when he was a small boy” about farm life.

None of this has anything to do with the terms and conditions of Project Labor Agreements in bid specifications for construction contracts, and Video #2 shows what happened when an effort was made by the moderator to get the panel discussion on track.

Hutson complains that Eric Christen is “edging it on” and “smiling it up.” (Did he mean “egging it on?”) He then says to Christen, in defiance of social norms of respect for other people as promoted by the White House and the U.S. Department of Labor, “I think I recognize you from before your sex change operation.”

The moderator tries to take the microphone away and restore order, but Hutson resists: “get your hands off.” Then he walks away from the table, only to return to spit out some profanity (specific words heard by witnesses but not quite audible on Video #2). He then storms out of the room (and the hotel) with his fellow union officials, leaving the contractors sitting in the room stunned at the personal attacks and derogatory statements launched during the five-minute panel discussion.

A press release jointly issued on January 11, 2013 by the Coalition for Fair Employment in Construction and Associated Builders and Contractors quoted a Fresno-based construction company owner who attended the panel discussion:

I took time away from my workday to be here to discuss this important issue on behalf of my employees that prefer to work in a merit shop environment. The antics displayed today represent the reason why I left the Union many years ago. The taxpayers and voters of California should be deeply concerned about the union favoritism displayed in this agreement.

In November 2008, 52.7% of California voters supported Proposition 1A, called the “Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century.” How many of them assumed that the 21st Century would involve these kinds of union antics?

Kevin Dayton is the President and CEO of Labor Issues Solutions, LLC and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com.

California’s “Prevailing Wage” – Floor Vacuuming at $45.93/Hour

California State Assemblyman Curt Hagman (R-Chino Hills) is introducing a bill to address one of the numerous absurdities in California’s prevailing wage law: the $38-46 per hour wage paid to laborers who clean up construction sites after taxpayer-funded construction is finished.

As revealed in a 2009 state wage enforcement action against a construction company working under a contract in the Antelope Valley Union High School District in Los Angeles County, such work entails “vacuuming, dusting, cleaning and polishing windows, walls and floors.”

Some Californians might consider $12 per hour to be a reasonable wage for this low-skill work, especially when so many school districts are funding massive building programs with borrowed money, thus taking on a staggering amount of debt for future taxpayers. Is it wise fiscal management for school districts to sell Capital Appreciation Bonds with outlandish compound interest payments in order to pay $45 per hour for someone to push a vacuum?

And in fact, the state does recognize a wage rate at about $12 per hour for janitorial work. California Public Utilities Code Sections 465-467 require public utilities to pay prevailing wage rates for labor of a custodial or janitorial nature, and therefore the California Department of Industrial Relations determines wage rates for this kind of work.

How Does California Now Determine Mandated Wage Rates for Construction Cleanup?

But vacuuming up the lingering sawdust at a construction site is considered a construction trade, because such work is classified within the work assignments listed in the applicable collective bargaining agreements of the Laborers Union.

Under Section 1773 of the California Labor Code and Title 8, Subchapter 3 of the California Code of Regulations, the State of California determines “prevailing wage” rates in most cases by obtaining the union collective bargaining agreements for each trade in each geographical region of the state, adding up all of the payments indicated in these agreements, and declaring the total to be the “prevailing wage.”

Wage rates include fringe benefits and employer payments to “other” funds that do not directly benefit the employee. And the same wage for the same work applies to non-union workers.

For Southern California, the Department of Industrial Relations sets the total straight time hourly “prevailing wage” for a journeyman in the Group 1 classification of “Laborer, General Cleanup” at $45.93.

This amount is based on the following payments in the collective bargaining agreement negotiated between the Southern California District Council of Laborers and three contractor associations – Associated General Contractors (AGC) of California, Building Industry Association (BIA) of Southern California, and the Southern California Construction Association:

  • $28.09 in basic wages
  • $6.81 to the union health and welfare program
  • $6.00 to the union pension program
  • $3.90 to the union vacation and holiday program
  • 64 cents to the union apprenticeship program
  • 49 cents for “other” payments that go to a variety of union-managed funds not for the direct benefit of the employee.

For Northern California, the state-mandated total straight time hourly “prevailing wage” rate for a journeyman in the Laborers Group 4 trade classification applies to the following:

Final cleanup on building construction projects prior to occupancy only. Cleaning and washing windows (new construction only), service landscape laborers (such as gardener, horticulture, mowing, trimming, replanting, watering during plant establishment period) on new construction.

The total straight time hourly wage for that classification is $39.02 in the San Francisco Bay Area and $38.02 in other counties of Northern California. These amounts are based on the collective bargaining agreement negotiated between the Northern California District Council of Laborers and Associated General Contractors (AGC) of California.

In San Diego County, the state-mandated total straight time hourly “prevailing wage rate for a journeyman in the Group 1 classification of “Laborer, General Cleanup” for commercial building is $43.27. This amount is based on the collective bargaining agreement negotiated between the Southern California District Council of Laborers for San Diego County and Associated General Contractors – San Diego Chapter.

What Are the Chances of Establishing a Reasonable State-Mandated Wage Rate for Construction Cleanup?

If you were an official or lobbyist for the Laborers Union in California or for the State Building and Construction Trades Council of California, would you give permission to Governor Jerry Brown and the Democrats in the legislature to undercut the high wage rates that your union negotiated with union contractors for “vacuuming, dusting, cleaning and polishing windows, walls and floors?” Of course not!

In negotiating their collective bargaining agreements, construction trade unions actually enjoy a kind of quasi-regulatory authority, because their final agreements are the basis for the state-mandated construction wage rates. They are loath to compromise this power.

In the 2011-12 state legislative session, Assemblywoman Shannon Grove (R-Bakersfield) introduced Assembly Bill 987, a comprehensive and technically-precise bill that would have reformed the state’s calculation of prevailing wages so that state-mandated construction wage rates are reasonably accurate and based on actual local market conditions. The Assembly Labor and Employment Committee rejected the bill on a party-line vote: Republicans in support, Democrats opposed.

Regarding the specific wage rate for construction cleanup, taxpayers could adopt several strategies in addition to Assemblyman Hagman’s legislation in order to prod the California Department of Industrial Relations to determine a reasonably-accurate state-mandated wage rate for “vacuuming, dusting, cleaning and polishing windows, walls and floors.” But unions will resist any challenge to the status quo, unless they exercise their own power to negotiate and accept a special construction cleanup classification – with more common sense wage rates – in their own collective bargaining agreements.

Kevin Dayton is the President and CEO of Labor Issues Solutions, LLC and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com.