The Truth About Project Labor Agreements

The title says it all and we completely agree!

The editorial board at The Wall Street Journal has again come out against wasteful and discriminatory government-mandated PLAs.  Here are the highlights from the editorial (“Project Labor Revolt: The states ban union political bid-rigging. Obama demurs,” 7/19/11):

One benefit of the squeeze on state and local budgets is that politicians are finally having to confront their sweetheart deals with labor unions. The latest reform movement is moving against project labor agreements, or PLAs, that limit bids on construction projects to contractors that agree to union representation.

Only about 13% of construction workers belong to unions, and PLAs are a union invention to use their political muscle to organize more companies. Proponents argue that PLAs ensure the speed and quality of construction plans. But PLAs are one of the reasons that Boston’s Big Dig was estimated at $2.8 billion but eventually cost $22 billion. Studies show that projects under PLA contracts on average cost 12% to 18% more than projects awarded by open, competitive bidding. Taxpayers pick up much of this tab.

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In response to this evidence, states have been pulling away from PLAs. Louisiana passed a law this month that prohibits state entities from mandating the use of PLAs. Tennessee, Arizona and Idaho passed similar legislation earlier this year, and Iowa’s Governor Terry Branstad, in one of his first acts after inauguration, signed an executive order ending a state PLA requirement. Legislatures in Maine and Michigan recently passed bills along these lines that governors are expected to sign. These states are joining Utah, Montana, Missouri and Arkansas, which enacted bans in recent years.

The new wave of Republican state officials is leading this reform, but the public seems to support the effort even in Democratic-leaning areas. Seven localities in California have passed ballot initiatives to end mandated PLAs in the last decade, including five since 2009. This includes places like Chula Vista, where President Obama received 61% of the vote. As Andy Conlin of Associated Business and Contractors notes, wherever PLAs are subject to popular referendum, they’re rejected.

You may not be surprised to learn that the Obama Administration is not part of this reform trend. In February 2009 Mr. Obama issued Executive Order 13502, which lifted President Bush’s ban on PLAs and explicitly “encourages” them in federal construction projects worth more than $25 million. As the 2012 election nears, the Administration will be tempted to extend the order to include projects that receive any federal funds.

That would raise construction costs across the country, and at all levels of government, because so many public works projects are jointly funded by states and the feds. It would also mean fewer construction jobs overall, though higher pay for those unionized workers lucky enough to get one.

PLAs are a form of political bid-rigging that robs taxpayers even in good economic times. Amid today’s limited fiscal resources, PLAs steal money from the likes of education and law enforcement to reward politically-connected companies and their unions. They deserve to be outlawed.

Here at TheTruthAboutPLAs.com, we couldn’t agree more.

This editorial touches on a couple of key points. In addition to detailing how PLAs increase construction costs and discriminate against the 87 percent of the construction workforce that chooses not to join a labor organization, it outlines what has become a national trend in the last 12 months. In state after state and community after community, Americans are standing up to demand the best construction at the best price for their hard-earned tax dollars. These demands are showing up at the ballot box in places like Chula Vista and San Diego County in California, where voters overwhelmingly approved ballot initiatives banning government-mandated PLAs on local projects. In places like Iowa, Maine and soon Michigan, taxpayers’ desire for fair and open competition is being expressed through their governors and state legislators. Regardless of the method, sensible taxpayers are taking important steps to guarantee value on public construction projects.

The Wall Street Journal also reminds us that the threat of Section 7 of Executive Order 13502 looms large as the 2012 presidential election approaches. Regular readers remember that Section 7 of the order requires: “The Director of OMB, in consultation with the Secretary of Labor and with other officials as appropriate, shall provide the President within 180 days of this order, recommendations about whether broader use of project labor agreements, with respect to both construction projects undertaken under Federal contracts and construction projects receiving Federal financial assistance.”

While we have clearly passed the 180-day deadline set by the order, there is still reason to believe that the Obama administration could take action on Section 7 in the next 18 months. It is clear that bid protests, other legal impediments and public pressure have kept the Obama administration from implementing as many government-mandated PLAs as they expected and section 7 of Executive Order 13502 allows the administration to provide a tasty handout just in time for Big Labor to support President Obama’s re-election campaign. We saw this same cycle occur at the state level where embattled incumbent governors in Iowa, Illinois and Massachusetts either issued executive orders encouraging state agencies to require PLAs or used other methods to encourage the use of government-mandated PLAs on high profile construction projects with the obvious intent of currying favor with the construction union bosses.

Corruption: This is how Big Labor Leverages Government-Mandated Project Labor Agreements

Back to the editorial, this is an outstanding read and really breaks down how government-mandated PLAs are bad for taxpayers and the construction industry workforce still struggling to come back from more than 15 percent unemployment.