The Truth About Project Labor Agreements

In a September 9 entry on the Competitive Enterprise Institute’s (CEI) blog openmarkets.org, CEI Editorial Director Ivan Osorio notes the negative impact of PLAs on job creation, especially for local residents and minority contractors.  The post also points out that this problem is likely to become more widespread thanks to President Obama’s Executive Order 13502, which promotes the use of PLAs on federal construction over $25 million.

Here’s an excerpt:

…the solution to underemployment lies in removing obstacles to greater job creation. National Black Chamber of Commerce President Harry Alford went straight to the heart of the matter.  “The solution to underemployment and unemployment are free enterprise and entrepreneurship.” At the local level of Washington, DC, he identified project labor agreements as a major regulatory stumbling block to local residents, including minority residents, gaining access to better jobs. And the problem is likely to get worse, due to President Obama’s rescinding of an Executive Order prohibiting project labor agreements (PLAs) on federal construction projects, a decision Alford said he was “disturbed” by.

Project labor agreements handicap nonunion contractors who wish to bid on federal projects by imposing burdensome requirements on them. Under a PLA, an open shop contractor could be required to employ workers from union hiring halls, acquire apprentices from union apprentice programs, and require employees to pay union dues. As an example, he cited Nationals Park, which, was built under a PLA. Although it is in Southeast DC, “very few people in southeast Washington ”worked on it. As Alford noted, most minority contractors are nonunion.

Mr. Alford is right.  An October 2007 report by the District Economic Empowerment Coalition found that despite a government-mandated PLA requirement that at least 50 percent of journeyman hours on the $611 million Nationals Park project must be performed by DC residents (many of whom are minorities), non-DC residents worked over 70 percent of the journeyman hours!  Additionally, the report found that contractors subject to the Nationals Park PLA failed to hire DC residents at the level required by the PLA and failed to provide the training and apprenticeship opportunities they promised the District.

As we’ve said before, PLAs hurt local residents and serve as an artificial barrier to jobs for minority contractors and their workforces.