A new study supports a key argument frequently made by nonunion employers and employees against government-mandated project labor agreements (PLAs): PLAs deny health and retirement benefits earned by nonunion employees working on PLA construction projects.
An October 2009 report by Dr. John R. McGowan, “The Discriminatory Impact of Union Fringe Benefit Requirements on Nonunion Workers Under Government-Mandated Project Labor Agreements,” finds that employees of nonunion contractors that work on projects subject to government-mandated PLAs suffer a reduction in their take-home pay that is conservatively estimated at 20 percent.
PLAs force employers to pay employee benefits into multi-employer pension plans (MEPPS) run by Big Labor, but employees will never see the benefits of the employer contributions unless they join a union and meet vesting schedules defined by MEPPs.
Employers that offer their own benefits plans often continue to pay for existing programs as well as into union programs mandated by a PLA – referred to in the construction industry as paying double benefits – so their employees continue to receive health care and retirement benefits.
The McGowan report found that nonunion contractors are forced to pay in excess of 25 percent in benefit costs above and beyond existing prevailing wage benefit laws because of a PLA’s MEPP contribution mandate language, which prevents taxpayers from receiving the best possible price from nonunion contractors in the competitive bidding process.
Additionally, the study notes that nonunion contractors will also face increased and unnecessary exposure to pension fund liability if they perform work under PLAs, including possible withdrawal liability when a PLA project is completed.
Here’s an interesting tidbit that relates to the ongoing debate about whether or not President Obama’s Feb. 6 2009 Executive Order 13502, which encourages federal agencies to require PLAs on projects costing more than $25 million, is good public policy.
McGowan found that had President Obama’s pro-PLA Executive Order 13502 been in effect in 2008, additional costs incurred by employers related to wasteful PLA pension requirements likely would have ranged from $230 million to $767 million per year. And McGowan estimates lost wages for nonunion construction workers would range from $184 million to more than $613 million, depending on the assumption made for companies executing contracts through PLAs. In total, McGowan estimates a move to PLAs would have cost nonunion employees and their employers $414 million to more than $1.38 billion annually, had Executive Order 13502 been in effect on federal construction projects in 2008.
With more than $150 billion in federal and federally-assisted construction projects in the American Reinvestment and Recovery Act (ARRA) of 2009 potentially subject to Obama’s government-mandated PLAs, the additional costs incurred by nonunion employees and employers as a result of future PLAs will be in the billions.
Of course, these numbers assume that nonunion employees and employers participate on federal PLA projects. Big Labor’s pro-PLA lobbyists are quick to state that any qualified firm, whether union or nonunion, can bid on a PLA project. While that is technically true, McGowan’s study demonstrates the extreme and often insurmountable monetary disadvantages that PLAs impose on nonunion contractors and employees. Big Labor and their political cronies have rigged the bid process to favor Big Labor.
Is there any doubt how PLAs discourage nonunion contractors and their employees from competing for contracts on PLA projects? Anti-competitive government-mandated PLAs put an end to fair bidding on public works contracts and deny taxpayers the opportunity to get the best possible product at the best possible price.
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