The Truth About Project Labor Agreements

It is no secret the Democratic National Convention Committee’s (DNCC) decision to hold its convention in Charlotte, N.C.—a Right-to-Work state with the lowest union density of any in the country (2.9 percent) and an even smaller unionized construction industry workforce (1.2 percent)—has strained the cozy relationship between Big Labor and the Democrat Party.

In the construction community, the DNCC’s attempt to appease construction trade union bosses by requiring any DNC-related construction to be covered by a project labor agreement (PLA)—which forces contractors to follow union collective bargaining agreements and employ only unionized tradespeople—has been largely overshadowed by the fact that President Obama’s formal nomination acceptance speech tomorrow at Bank of America Stadium, home of the NFL’s Charlotte Panthers, was built entirely with merit shop contractors and tradespeople and without a PLA.

Bank of America Stadium Built Without a PLA. Photo by AP.

Surprisingly, the setting for this highly staged event is at odds with one of President Obama’s key labor-friendly policies harming the construction industry.

President Obama’s Feb. 6, 2009, pro-PLA Executive Order 13502 encourages federal agencies, on a case-by-case basis, to mandate PLAs on federal construction projects exceeding $25 million in total cost.  Widely criticized as a scheme to steer taxpayer-funded construction contracts to Obama’s unionized political supporters, the White House defended this special interest handout as a tool to ensure the economy and efficiency of federal contracting on large-scale construction projects.

However, research shows large-scale federal construction projects built during the presidency of George W. Bush, when government-mandated PLAs were prohibited on hundreds of billions of dollars of federal and federally assisted projects via Executive Orders 13202 and 13208, did not suffer problems due to the absence of government-mandated PLAs.

Likewise, while not a federal construction project, the Bank of America Stadium is certainly a complicated and large-scale project. Yet it was built on time, on budget and safely without the need for an anti-competitive PLA.

In short, government-mandated PLAs are nothing but forms of government protectionism for Big Labor at the expense of the majority of the construction workforce (86 percent of the U.S. construction workforce is nonunion). Studies also have found PLA mandates needlessly increase construction costs between 12 percent and 18 percent compared to similar non-PLA projects.

Last week we covered how the 2012 GOP platform rightfully called for an end to government-mandated PLAs.

In contrast, the 2012 DNC platform ratified this week in Charlotte makes no direct mention of government-mandated PLAs.

While the platform contains some labor-friendly principles starting on page 41, is this omission a sign that Democrats acknowledge pushing PLAs on government-funded construction projects is bad public policy and bad politics?

Update: DNC officials announced this morning President Obama’s acceptance speech will be moved from the Bank of America stadium to the Time Warner arena due to the threat of severe weather. The estimated $250 million venue, home to the NBA’s Charlotte Bobcats, opened in 2005 and was also built without a PLA. It is the site of other DNC convention activity.

As this article points out, the move will create a logistical challenge for the DNC. Some have openly speculated the move has little to do with weather and is really because of fears of “empty chairs” at the stadium. It also allows President Obama to avoid putting his ongoing battle with Bank of America and big banks in the national spotlight again.