The Truth About Project Labor Agreements

The Wall Street Journal editorial board blasted anti-competitive and costly government-mandated project labor agreements (PLAs) on New Jersey and federally funded Hurricane Sandy reconstruction projects (Sandy’s Union Windfall: Obama steers relief money to Big Labor. Where’s Gov. Christie, 2/14/13). It’s a must read:

President Obama found an ally in Governor Chris Christie during Hurricane Sandy, but New Jersey taxpayers should hope they’ll go their separate ways on the clean-up. The President wants to direct federal tax money to unions in a way that will raise costs and spread the money thin.

The Army Corps of Engineers recently sought comments from the construction industry on using a so-called project labor agreement, or PLA, for Hurricane Sandy beach clean-up from Barnegat Inlet to Little Egg Inlet worth between $25 million and $100 million. The Army Corps will decide whether to require a PLA, which would establish a collective-bargaining agreement for any contractor who wants to bid on the project. Watch for unions singing in the rain.

In 2009, Mr. Obama signed an executive order encouraging federal agencies to mandate project labor agreements (on a case-by-case basis) for federal projects over $25 million. The agreements often require contractors to hire workers at union hiring halls (forcing non-union workers to join the union), pay into union benefit plans and force non-union employers to abide by union work rules.

Unions love the agreements because they scare away competitors who don’t want to operate under such mandates. In New Jersey, a mere 24.5% of the construction industry is unionized, and the use of PLAs is a scheme for unions to gain market share.

Unions claim that PLAs help bring projects in on time, but the real effect is to raise costs. According to an October 2010 report by the New Jersey Department of Labor and Workforce Development, school construction using project labor agreements took longer on average (100 weeks instead of 78 weeks) and cost 30.5% more per square foot than non-PLA projects.

A study by the Boston-based Beacon Hill Institute at Suffolk University showed PLAs increased construction costs by 12% to 18% on state projects compared to similar projects that didn’t engage in union favoritism. And that was for states that have prevailing wage laws that set floors for wage and benefit rates in construction.

With so much Sandy clean-up money on the line, New Jersey labor unions are also pushing to use PLAs for more state projects over $5 million. The Democratic-controlled state Assembly passed a bill Thursday that would expand the government’s ability to mandate PLAs for previously exempt public works and wastewater projects—exactly the kinds of work likely to come up as part of hurricane reconstruction. The state Senate passed it last month.

It’s worth noting the chief cosponsor of the legislation, S2425, is New Jersey Sen. President Stephen M. Sweeney. While not cutting sweetheart laws for his political supporters as a legislator, he makes $207,000 a year as a paid organizer for the International Association of Ironworkers (BSOIW), a union whose members typically benefit from PLA mandates on public construction projects. New Jersey Ironworkers’ local unions, in particular, would profit from legislative expansion of government-mandated PLAs onto more Hurricane Sandy reconstruction projects because they often perform significant work on bridges, highways and other heavy infrastructure projects excluded under the current New Jersey law promoting PLAs. Absent a PLA, this work could be assigned to contractors signatory to other competing trade unions, or qualified nonunion contractors and their employees through a normal competitive bidding process.

Considering the way Big Labor welcomed nonunion crews who tried to help with Sandy relief work, it is not surprising they pushed their allies in Trenton to advance pro-PLA legislation.

The WSJ editorial concludes:

Mr. Christie has long criticized project labor agreements, which he said during his 2009 campaign were one of the main things he wanted to fix about New Jersey. He called them “special interest labor union giveaways that increase spending and taxes” while driving up the cost of public construction. Governor, how about a veto?

Once again, a WSJ editorial has graciously provided an important service to taxpayers, lawmakers and the construction community by telling The Truth About Project Labor Agreements.

Concerned constituents should write Gov. Christie on twitter (@GovChristie) and encourage him to veto Sen. Sweeney’s bill, S2425.  It’s time for the entire construction industry and all politicians to create the conditions to rebuild New Jersey safely, ethically and at the best possible price and value for taxpayers. Let’s keep Hurricane Sandy reconstruction competitive.

More Information

TheTruthAboutPLAs.com reported about the USACE PLA survey here; the threat of the passage of S2425 through the New Jersey legislature here; the unlikely coalition of union and nonunion contracting groups opposed to S2425 here; the appearance of an ABC member contractor on Fox News discussing PLA mandates on NJ construction projects here (see video below); Gov. Christie’s campaign pledge to end government-mandated PLAs here; and President Obama’s Feb. 6, 2009, pro-PLA Executive Order 13502, more times than we can count:

Previous WSJ editorials opposing government mandated PLAs:

• Crony Contracts. Want federal business? Better be a union shop.  4/14/10, blog post
• California Union Rebuke: Voters rebel against project labor deals that raise costs, 6/14/10, blog post
• Project Labor Revolt: The states ban union political bid-rigging. Obama demurs, 7/19/11, blog post
• Shovelling for Labor: California tries to raise the cost of construction projects,” 10/5/11, blog post

Learn more about the New Jersey politics behind the passage of S2425 here:

• PolitickerNJ.com, Sources: Sweeney leans on Oliver to get his version of PLA bill done in the Assembly, 2/11/13
• NJBiz.com, Industry cool to Sweeney bill revising labor agreements, 2/4/13
• RedState.com,  Valentine’s Day Massacre? NJ Dems Take Aim At Gun Owners & Non-Union Construction Workers, 2/12/13
• Asbury Park Press, Uneasy times for Dems facing Christie juggernaut, 1/16/13
• NJ.com, N.J. Senate passes bill regarding hiring contractors in wake of Hurricane Sandy, 1/14/13

Learn more about government-mandated PLAs here:

Media members can contact us here for more information.