The Truth About Project Labor Agreements

The radio airwaves and blogosphere are filled with concerned individuals exposing the truth about Big Labor’s scheme to monopolize federal construction work at the expense of hardworking taxpayers.

Dick Lombardo, President and CEO of Associated Builders and Contractors (ABC) member Harkins Builders, discusses President Obama’s executive order encouraging the use of project labor agreements (PLAs) on federal construction projects costing more than $25 million with the Liberty Pundits on the May 19 edition of their podcast.

The full podcast is available here.

The Liberty Pundits also blogged about their interview with Dick and the Obama order (Obama’s EO 13502, PLAs and Union Handouts (Again), 5/19).  Here are the highlights from their post:

I’ll admit my gut instinct was that this forced unionization was piling on. I assumed that the percentage of unionization was quite high in this type of work – large construction projects. But I was wrong. Only 14.5% of the construction industry is unionized. That means that over 85% of the available talent is either being frozen out of these contracts or being forced to join the union, if only for that project. That means union dues. That means paying into union pension funds without the longevity to vest. That means more union donations to dems running for office, more bussed-in town hall attendees, and more bullhorns and cute signs at MoveOn.org rallies. Oh joy.

Further, the EO gets cute and then ominous all in one short section: Sec. 5. This order does not require an executive agency to use a project labor agreement on any construction project, nor does it preclude the use of a project labor agreement in circumstances not covered by this order, including leasehold arrangements and projects receiving Federal financial assistance. This order also does not require contractors or subcontractors to enter into a project labor agreement with any particular labor organization.

Does not “require” a PLA? How easy will it be for a pro-union executive agency to state, “This bid was not chosen because of the uncertainties associated with the proposal, i.e., without a PLA there is too much risk of cost increases and work stoppage.” It will so common, I suggest Rahm will have rubber stamps made of the several lines.

[snip]

Yet the reality is that published studies have found significant cost increases when PLAs are used: An October 2009 report by Dr. John R. McGowan of St. Louis University found that had Order 13502 applied to federal contracts in 2008, additional costs incurred by employers related to wasteful PLA pension requirements likely would have ranged from $230 million to $767 million. Lost wages for nonunion construction workers would have ranged from $184 million to more than $613 million. In total, McGowan estimates that the Obama order encouraging PLAs would have cost nonunion workers and their employers $414 million to more than $1.38 billion in 2008. These calculations would be similar in 2010 and beyond.

But let’s be fair. Here’s another study that is less critical of PLAs: Because they are negotiated pre-bid and specifically tailored to the needs of particular projects, PLAs give project owners, building contractors and trade unions a unique opportunity to anticipate and avoid potential problems that might otherwise arise and possibly impede project progress. They maximize project stability, efficiency and productivity and minimize the risks and inconvenience to the public that often accompany public works projects. This is why Project Labor Agreements have long been used in the private and federal sectors, and more recently by state, county and municipal agencies.

Ah, but do you see the assumption? ”Trade unions.”

This study goes on: On a typical construction project operating without the benefit of a PLA, there can be fifteen or more different collective bargaining agreements covering work being performed by various crafts. As many as fifteen separate union contracts are not generally coordinated in any meaningful way and this leads to certain inefficiencies — inefficiencies that can be addressed by a PLA.

Yes, assume the presence of trade unions, and perhaps a PLA makes sense. Yes, assume that 14.5% of the workforce should drive the labor practices of the remaining 85.5%, then perhaps PLAs make sense.

But. The. Assumption. Sucks.

Dick Lombardo and the Liberty Pundits aren’t the only ones discussing PLAs on the radio this week.  Carole Bionda, VP of ABC member Nova Group of Napa, CA and author of an outstanding editorial published in the May 15 edition of The Daily Caller, called into the “Central Wisconsin’s Morning News” program on WSAU-AM/FM in Wausau, WI earlier today to talk PLAs.

Carole does an outstanding job breaking down why PLAs are bad for workers and taxpayers alike.

The interview is available here.