While the Giants and the Patriots prepared for their Super Bowl match-up, Indiana’s state government took steps to guarantee Hoosiers the opportunity to work without having to pay dues to a labor union. On Wednesday, Gov. Mitch Daniels signed legislation to make Indiana the 23rd right-to-work state.

The enactment of Indiana’s right-to-work law may be the most significant general labor law reform adopted since the 2010 election. This law gives workers an opportunity to decide whether to join a labor organization, even if their workplace is organized, without having that decision made for them by union bosses.

Courtesy of the National Right to Work Foundation

From our perspective at TheTruthAboutPLAs, this is a very positive development. It will position Indiana to attract investment and this will help create much needed jobs. This is particularly true in the manufacturing and service sectors of Indiana’s economy. There is no doubt it will lead to additional construction jobs, too.

Unfortunately, the right-to-work law does not eliminate the threat of government-mandated project labor agreements (PLAs) in the Hoosier state. As we have explained before, PLA mandates can still occur in right-to-work states, although the PLA cannot require workers to pay full union dues. The PLA can still require contractors to recognize a labor union as the sole representative of all workers on the job, hire some or all of their workers from a union hiring hall, pay into union pension and benefit programs, and follow inefficient union work rules. The right-to-work law removes an important component of PLAs, which is to force workers to join a union as and/or pay union dues as a condition of employment, but the other provisions are burdensome enough that contractors utilizing union labor from local unions participating in PLAs are at a significant competitive advantage over their merit shop counterparts.

Indiana is no stranger to PLA activity. Super Bowl attendees will enjoy the game from Lucas Oil Stadium, a facility constructed under a wasteful and discriminatory PLA mandate. As a result, it was virtually impossible for nonunion construction workers to build this project. This kept 70 percent of Indiana’s construction workforce – those who chose not to join a labor union – from building this project, which was funded in part by their own tax dollars. Out of state license plates from construction union members flooded the area, demonstrating how a PLA does not guarantee local hire.

Additionally, the stadium project was $75 million over budget, despite burning through a $50 million contingency fund.

Lucas Oil Stadium Mid-Construction, Courtesy of Wikipedia

This is just another example of how PLA mandates not only hurt the construction workers and their families, who are deprived of the opportunity to compete for projects, but also average taxpayers.

In an interesting bit of irony, rumors are swirling around Indianapolis that some union members and ‘Occupy’ protesters are planning to protest the right-to-work law at the Super Bowl on Sunday. If protests do happen, we are sure the protesters will say they are standing up for the middle class. Someone should ask them how excluding 72 percent of Indiana’s construction workforce from building the stadium grows the middle class.

What level of protection will Virginia’s right-to-work law offer to the state’s nonunion construction workers?

Virginia taxpayers, public officials, businesses and construction workers deserve answers and public officials haven’t offered much clarity.

TheTruthAboutPLAs.com has monitored this project closely since the Metropolitan Washington Airports Authority (MWAA) passed an April 6, 2011, resolution requiring prime contractors to agree to a PLA similar to the agreement voluntarily entered into by the Phase 1 prime contractor, Dulles Transit Partners.

About the Silver Line
The Silver Line is a $6 billion project involving the construction of 23 miles of new Metro track.  

Phase 1 of the Silver Line is under construction and runs from the Orange Line’s existing West Falls Church station through Tysons Corner to Reston. It is expected to open late next year, but contractors and MWAA officials have said it could be delayed and is as much as $150 million over budget.

Phase 2 of the Silver Line will run from Wiehle Avenue in Reston to just past Dulles International Airport in Loudoun County. 

According to the original funding agreement, Phase 2 is financed by MWAA (4.1 percent), Loudoun County (4.8 percent), Fairfax County (16.1 percent) and the Commonwealth of Virginia ($275 million). Toll revenue generated from the MWAA-owned and operated Dulles Toll Road will fund the remainder of Phase 2.

MWAA says estimated revenue needed to fund Phase 2 construction will be similar to the toll schedule published in the July 2009 Wilbur Smith Associates traffic and toll revenue report commissioned by MWAA, which predicts Dulles Toll Road motorists will pay $16.75 each way in 2047 (see table 6-3 on p. 124). An updated study is expected to be completed in the next few months.

Broad Opposition to the Phase 2 PLA Mandate
Opposition to MWAA’s PLA mandate include the Loudoun County Board of Supervisors; Fairfax County Board of Supervisors; local, state and elected officials; The Washington Post editorial board; The Washington Examiner editorial board; Fairfax Chamber of Commerce; Dulles Regional Chamber of Commerce; Purcellville Business and Professional Association; a coalition of 13 of Northern Virginia’s leading business groups and associations; Women Construction Owners and Executives; and former Virginia Governor and U.S. Senator George Allen, who is running for the U.S. Senate in Virginia (see summary of entities opposing the Phase 2 PLA mandate here and here).

They know a PLA mandate will ensure discrimination against Virginia’s nonunion construction workforce (96 percent of Virginia’s construction workforce does not belong to a union) and reduce competition from qualified prime contractors opposed to PLA mandates.

An April 21 letter from ABC Virginia to MWAA explained how reduced competition and costly pro-union rules and fees within the proposed Phase 2 PLA circulated by MWAA earlier this year will increase Phase 2 bid costs by hundreds of millions of dollars and discriminate against Virginia’s construction workforce.

 
Unanticipated costs are problematic because financial stakeholders balked at Phase 2’s rising expenses, which ballooned to $3.825 billion – an increase of more than $1.8 billion (53 percent) compared to Phase 2’s initial $2.5 billion budget. This summer, U.S. Department of Transportation Secretary Ray LaHood was called in to negotiate an agreement between MWAA and state and local stakeholders to reduce costs and get the project back on track.

Is the Silver Line Back on Track?
On Nov.16, 2011, MWAA signed Resolution No. 11-33 approving a new Memorandum of Agreement (MOA) between the project’s financial stakeholders modifying the Phase 2 scope, financing structure and budget. It trims the Phase 2 costs from $3.825 billion to an estimated $2.8 billion, although these are only rough estimates at this stage in the project.

The MOA says the Commonwealth of Virginia agreed to contribute an additional $150 million, provided the funds are appropriated by the General Assembly and allocated by the Commonwealth Transportation Board in 2012.

The MOA places Loudoun County in charge of financing and building parking garages included in the original Phase 2 project plan. Likewise, Fairfax County must build two garages and a new Route 28 Metro station. These cost shifts from the original Phase 2 plan will be subsidized by federal Transportation Infrastructure Finance and Innovation Act (TIFIA) loans the localities can apply for in the coming months. 

Loudoun County and Fairfax County recently agreed to the MOA, which gives them 90 days to opt out of the project after Phase 2 preliminary engineering, financing and cost estimates are released in early 2012. 

In short, Phase 2 will face many financial hurdles in the coming months, although the project is in better shape now that costs have been trimmed and the local stakeholders have been given a larger role in planning the project.

The Facts About the Phase 2 PLA Mandate
Section 3.9 of the MOA refers to a “separate agreement on the matter of Project Labor Agreements for Phase 2” reached by MWAA and the Commonwealth of Virginia. While the PLA agreement (known as the PLA MOU) clarifies a PLA will not be mandated on Phase 2 subcontractors, it will not discriminate against nonunion contractors, and it will comply with Virginia’s Right to Work and contracting laws, Section 3 clearly states the prime contractor is subject to a PLA mandate: 

“(3) no prime contractor working or seeking to work on Phase 2 shall be required, in order to secure or maintain a phase 2 prime contract, to become a party to any labor agreement other than the Phase 2 PLA; and” [emphasis added] 

However, there remains great confusion about whether Phase 2 prime contractors are subject to a PLA mandate. 

The confusion may be fueled in part because it is unclear if the Commonwealth of Virginia understands the PLA MOU. Thelma Drake, director of the Virginia Department of Rail and Public Transportation, signed the PLA MOU along with Commonwealth Secretary of Transportation Sean Connaughton. She said this about the Phase 2 PLA: 

“The PLA is not mandatory,” Drake says. “You cannot require your prime to sign a PLA.” 

For example, an article in Leesburg Today reported the PLA was optional and the controversy was resolved: 

As part of the MOA, the state government also will be contributing more money, as has been pushed by many local leaders, up to $150 million, now [sic] controversy over MWAA’s plan to require a Project Labor Agreement has been resolved. The project plan, as originally created, had a requirement for labor workers to be used for the entirety of the second phase of the project. In Phase 1, the option is left to the individual contractor, something some leaders pushed for in the second phase. 

In an agreement worked out directly between the state and the MWAA, the use of union contractors will be optional. “Neither will be discriminated against and will allow for all to participate in the bidding on the project,” York said, noting it was similar to the approach used in Phase 1. 

The Loudoun Times reported the MOU “remove[d] the use of mandatory project labor agreements,” and “Virginia Gov. Bob McDonnell also agreed to give $150 million to help finance the rail extension as long as mandatory project labor agreements were eliminated.”

The truth is that it is a PLA mandate. A prime contractor must sign a union PLA in order to win Phase 2 construction contracts as a prime contractor.

A Nov. 16 Washington Times article, “Dulles Metrorail Phase 2 is right to work,” examines the impact of MWAA’s PLA mandate and PLA MOU with respect to Virginia’s right-to-work law:

Still, union-friendly labor agreements are a thorny issue in states such as Virginia that have right-to-work laws, under which workers cannot be required to join a union as a condition of employment. 

“This agreement ensures that Virginia’s right-to-work laws will apply to every aspect of Phase 2,” said Secretary of Transportation Sean Connaughton. “It also will ensure that no one — contractors or subcontractors — will be forced to take on unions. It will also subject [Phase 2] to Virginia law. So we think it’s a major step forward from Phase 1.”

While Virginia believes the MOU offers prime contractors a measure of protection against forced unionism, Virginia has still given the green light for MWAA to mandate a PLA. This is problematic.

The public doesn’t know the final terms and conditions of the PLA now and may not know these terms until Virginia and local financial stakeholders have committed funding to the project. By then it may be too late to ensure Virginia taxpayers, workers and contractors maximize their investment in this project. 

Right to Work and PLAs
The truth is that the PLA MOU and Virginia’s right-to-work law do not eliminate all of the anti-competitive and costly provisions of the draft Phase 2 PLA identified by ABC Virginia’s April 21 letter to MWAA. Virginia’s right-to-work law grants all employees the right to refrain from being a full union member and to pay either no or reduced union dues. Second, if the PLA requires all employees to be hired through an exclusive union hiring hall, the hiring hall may not discriminate between union and nonunion workers. However, typical union hiring hall rules give preferential treatment to out-of-work union members from all over the country ahead of qualified nonunion workers from Virginia seeking jobs on Phase 2. Officials don’t understand how this process works and allows unions to police themselves. It is rife with discrimination. 

In addition, despite a right-to-work law, the PLA may still force contractors to pay into union slush funds used to harm merit shop contractors, force contractors and employees to follow archaic and inefficient union work rules, require contractors to only use union apprentices, and force unwanted union representation on employees for the life of the project.

The biggest concern most contractors have about PLA mandates is how these agreements typically require contractors to pay into underfunded multi-employer pension plans, exposing their businesses to significant financial liability (e.g., the Sheet Metal Workers National Pension fund is in critical status, according to the U.S. Department of Labor) and preventing workers from receiving retirement benefits rightfully earned. Employees will never benefit from fringe benefit contributions employers make to union pension and benefit plans unless the employee joins a union and meets vesting requirements. In order to ensure employees accumulate benefits they can eventually keep, contractors pay into their own existing benefit plans, artificially inflating their labor costs and making their bid uncompetitive against union firms free from double benefit costs. (This 2009 report by Dr. McGowan explains the anti-competitive and costly impact of pension contribution mandates in PLAs.)  

Learn more about PLAs and right-to-work laws at TheTruthAboutPLAs.com blog post, Understanding PLAs in Right to Work States.

In short, Virginia’s right-to-work law does not make this government-mandated PLA any less offensive, nor will it increase competition.
 
Reduced Competition Will Increase Costs
Unfortunately, when faced with a government-mandated PLA, nonunion contractors and their existing workforces are presented with a false choice of agreeing to the union-favoring PLA in order to win a contract and perform work on Phase 2, or not pursuing work at all.

A reduction of two or three bidders because of MWAA’s PLA mandate could increase costs by hundreds of millions of dollars, depending on the final Phase 2 construction costs.

With strong evidence demonstrating that reduced competition increases bid costs, why would MWAA mandate an anti-competitive scheme that undermines the spirit of Virginia’s right-to-work law and has the potential to needlessly increase bid costs?

The answer, of course, is politics. 

Politics and Corruption at MWAA
Unions overwhelmingly give campaign contributions to Democrats, which is a key reason why MWAA members appointed by Democrats or affiliated with the party supported MWAA’s PLA mandate. The public officials who appointed them know they will eventually benefit from union political contributions resulting from union job creation through this PLA. It is not surprising that MWAA board members with union ties orchestrated MWAA’s PLA mandate.

The Washington Examiner reported that Virginia GOP delegates Tim Hugo, Barbara Comstock and Thomas Greason sent a letter requesting that Virginia Attorney General Ken Cuccinelli (R) investigate the Phase 2 PLA mandate and possible ethics violation of MWAA board member Dennis Martire because he advocated for the Phase 2 PLA mandate that financially benefits his employer, the Laborers International Union of North America (LiUNA), (“Virginia lawmaker calls for probe of Dulles Rail labor pact,” 5/28).

Martire, appointed by Virginia Gov. Tim Kaine (D), is chairman of MWAA’s Planning and Construction Committee. He also is employed as the vice president and Mid-Atlantic regional manager of LiUNA with an annual salary of $266,000, plus a generous benefit and pension package totaling $336,270, according to the most recent financial disclosure filings by LiUNA.

According to the Virginia Public Access Project, the Laborers Mid-Atlantic Regional Organizing Coalition has donated $419,050 to candidates and political action committees since 2007 — overwhelmingly to Democratic candidates. Creigh Deeds, unsuccessful candidate for governor, scooped up $250,000. Moving Virginia Forward, Tim Kaine’s PAC, garnered $55,000. LiUNA kicked in another $200,000 to the Democratic Party of Virginia in 2008. Martire was appointed by Gov. Kaine (D), in July 2009.

Martire’s employer, LiUNA, and its local affiliates (such as LiUNA Local 657, which bused in protestors to disrupt the April 18, 2011, press conference held by U.S. Rep. Frank Wolf and other local politicians to address concerns about Phase 2 of the project) will receive a significant financial windfall from the Phase 2 PLA that could easily exceed millions of dollars. 

The PLA mandate will likely require the prime contractor to hire primarily union labor dispatched from LiUNA hiring halls (and union members performing labor in other trades from their respective union hiring halls) and force contractors to contribute into union slush funds and pension and benefit plans.

Martire’s MWAAA bio lists him as “a former Trustee to the National Heavy and Highway Alliance” (the same group that drafted the proposed Phase 2 PLA and the Phase 1 PLA voluntarily signed by DTP). Martire is also chairman of the Mid-Atlantic Laborers’ Employers Cooperation and Education Trust (LECET), which is a union fund contractors/employees are forced to pay into under the current LiUNA collective bargaining agreement that contractors would have to follow under the PLA.

The wage and benefit schedule contained in the current LiUNA collective bargaining agreement for LIUNA Local 657 and Local 11 (the LiUNA locals with jurisdiction over this project) highlight the benefit rates and plans contractors must pay into on behalf of their laborer employees if they are party to this agreement. Appendix A (page 20) lists the following hourly contributions contractors are required to pay to union funds by contractors (after collecting the hourly deductions from each laborer’s paycheck):

Pension: $1.99
Health and Welfare: $3.01
Training: $0.25
LECET: $0.10
CCC Industry Fund: $0.08
Total:  $5.43 per hour

When Martire pushed for the PLA to apply to Phase 2 prime contractors and subcontractors earlier this year, this excel worksheet estimated the following financial windfall LiUNA and various LiUNA-affiliated funds will receive from a Phase 2 PLA mandate:

Pension: $21.544 million
Health and Welfare: $32.587 million
Training: $2.706 million
LECET: $1.082 million
CCC Industry Fund: $833,113.22
Dues: $8.081 million
Contractors Pay to CILM: $937,500 max.

This calculation doesn’t factor in benefits other unions besides LiUNA will receive as a result of the PLA mandate.

The amount of jobs created for union members and money flowing into union funds likely will be less because the recently executed PLA MOU states the PLA does not apply to subcontractors. However, MWAA will require the prime contractor to self-perform a significant amount of Phase 2 work, meaning a large portion of the Phase 2 project would be subject to a PLA. Spokespeople for DTP said they have self-performed 65 percent of Phase 1. 

(Note: Merit shop subcontractors were exempted from signing the Phase 1 PLA agreement and MWAA has reported 60 percent of Phase 1 contracts have been awarded to nonunion shops that did not sign the Phase 2 PLA. This means the strong or poor performance of Phase 1 construction cannot be attributed to the voluntary PLA.) 

In short, the total number of Phase 2 construction jobs created for union members and money paid to union funds is unknown until the project is completed, but they will certainly benefit from this PLA mandate.

While Martire’s conflict of interest is obvious, others have raised questions about a possible conflict of interest by MWAA board member Michael Curto, who was appointed by Maryland Gov. Martin O’Malley (D) in January 2011. MWAA board members recently elected Curto as their 2012 chair. Curto’s employer, Patton Boggs, has received between $1.25 million and $1.44 million per year since 2005 from Martire’s employer, LiUNA, according to recent union financial disclosure reports filed with the U.S. Department of Labor. Curto’s bio says he is a member of the firm’s Management Committee and head of the firm’s ERISA and Employee Benefits practice, representing corporate, nonprofit and government sponsors of pension and welfare benefit plans, including the type of union Taft-Hartley pension plans contractors would be forced to pay into under this PLA.

Curto introduced the PLA resolution, and Martire and Curto advocated for the resolution at the April, 6 2011, MWAA board meeting. Curto and Martire sit on the MWAA committees in charge of implementing the Phase 2 PLA, which is to be authorized by MWAA’s CEO and director. Both Curto and Martire voted for the resolution on April 6, 2011, when it passed 11-2. Both spoke to other MWAA board members and staff in support of this measure outside of MWAA meetings.

Martire authored this paper encouraging the use of government-mandated PLAs.

Despite all of these direct and indirect conflicts of interest, MWAA continues to defend Martire’s advocacy of a government-mandated PLA and denies he violated MWAA’s code of ethical responsibilities.

As the evidence demonstrates, at the very least, Martire should have excused himself from engaging in this decision, as this self-dealing undermines the public trust given to MWAA. MWAA should reveal to the public documents exonerating Martire and Curto from any wrongdoing.

Recent efforts to reform the MWAA board and an ongoing U.S. Department of Transportation Office of Inspector General audit of MWAA may prevent future ethical conflicts, but the damage is already done.

Taxpayers Benefit From Free and Open Competition
Taxpayers win with open competition free from anti-competitive and costly PLA mandates. Just look at taxpayer-funded projects free from government-mandated PLAs like the Wilson Bridge, the post- 9/11 renovations to the Pentagon, the Air Force memorial and many other high-profile projects in Virginia and the Washington, D.C. metro area.

The Commonwealth of Virginia, Loudoun County and Fairfax County would benefit from knowing the final terms and conditions of the Phase 2 PLA and its impact on competition and cost before agreeing to fund this project. Phase 2 of the Silver Line already has the potential to be Virginia’s Big Dig. Why not take the appropriate measures to protect taxpayers, create jobs for Virginians, increase competition, reduce costs and eradicate corruption at MWAA by ditching this dreadful PLA mandate policy?

This is a huge development for taxpayers in Louisiana.  This bill guarantees that free enterprise – not Big Labor handouts – will determine how public construction contracts are awarded in the Pelican state.  This also will ensure that the 98 percent of the private construction workforce that chooses not to join a labor organization has the opportunity to compete for projects funded with their own tax dollars.

This bill also renews the state’s commitment to its Right to Work law.  The Right to Work law guarantees that workers are not forced to pay union dues as a condition of accepting a job in Louisiana.  This preserves a worker’s choice on whether to pay union dues.  PLAs violate the spirit of Right to Work laws because they force small businesses and their workers to do everything Big Labor wants – except pay union dues – in order to work on a public project when a PLA is required.

Even in a Right to Work state like Louisiana, PLAs still require employers to recognize the signatory unions as the sole representative of their workers.  This deprives workers of their right to a federally supervised secret ballot election on unionization in their workplace.  Additionally, employers would still likely to be required to hire all or most of their workers from union hiring halls at the expense of their current workers, pay union wages and into union benefit programs and follow inefficient and outdated union work rules.  The result would be fewer opportunities for Louisiana workers and increased costs for taxpayers.

Finally, this is yet another rebuke of President Obama’s pro-PLA Executive Order 13502, which encourages federal agencies to require PLAs on federal projects costing more than $25 million.  Since President Obama issued his order, leaders in more than 20 states have considered banning PLA mandates on public projects.  Five states have now adopted bans, with Michigan and Maine poised to do so within days.  The American people are sending a clear signal to Washington through their state leaders.  Taxpayers want value, not Big Labor handouts, for their construction dollars.

States that have banned government-mandated PLAs to some degree on

state and local construction projects:

Here are the highlights from the May 25 Washington Examiner piece, “Project Labor Agreements Could be Used to Undermine Right to Work Laws and Force Double Payment of Benefits.”

“Louisiana’s Right-to-Work Law allows employees within the state the right to join a union as well as the right to refrain from joining a union,” John Walters, the Director of Governmental Relations for the Louisiana Chapter of ABC said.

“Workers typically are permitted to choose whether to join a union through a federally supervised private ballot election,” he explained. “PLAs require unions to be the exclusive bargaining representative for workers during the life of the project. The decision to elect union representation is made by the employer rather than the employees. PLAs are called pre-hire agreements because they can be negotiated before the contractor hires any workers or employees vote on union representation.”

Union membership declined nationally from 17.5 percent of construction workers in 2000 to 15.6 percent in 2008, and then to 14.5 percent in 2009, the most recent figures from the Bureau of Labor Statistics show. This disparity between union and non-union workers is particularly acute in Louisiana where almost 96 percent of the construction workforce operates beyond orbit of organized labor, industry records show.

“PLAs are a sop to Big Labor,” Vinnie Vernuccio, a labor counsel with the Competitive Enterprise Institute (CEI) observed. “They unfairly discriminate against ‘merit shop’ – non union – contracting firms. Workers are also put at a disadvantage because they are forced to use the union or pay into the union fund mandated by the PLA.”

PLAs could also be used to coerce non-union employers who already provide their own benefits to pay into union benefit plans, Vernuccio points out.

“This can entail paying into underfunded union pension funds, which can impose huge liabilities on companies,” he said. “PLAs may also require contractors to employ workers from union hiring halls, acquire apprentices from union apprentice programs and require employees to pay union dues.”

In effect, this means private companies would be “double-paying” for worker benefits,” notes Walters, the government relations ABC official.

“If a non-union company signs a PLA for a particular project, they are required to pay for their workers’ health and welfare benefits to union trust funds even though the company is already providing these benefits to the workers individually,” he said. “To make matters worse, workers never see any of the benefits contributed on their behalf to the union trust fund unless they leave their non-union employer, join a union and remain with that union until vested.”

As we have mentioned on this blog before, government-mandated PLAs are legal in Right to Work states.  In fact, one of the highest profile PLA-related issues in the US involves the Phase 2 Metro rail expansion to Dulles International Airport in Virginia, which is a Right to Work state.

This threat of PLA activity is why it is vital for lawmakers in Right to Work states to protect their pro-business climate by enacting legislation banning government-mandated PLAs.

In Louisiana, we urge legislators to stand up for their state’s construction industry and the 98 percent of the state’s public construction workforce that chooses not to join a labor union by supporting S.B. 76.

In Indiana, the Democrats initially left town over proposed Right-to-Work legislation, which would have allowed private sector workers to avoid paying union dues as a condition of their employment. This would have given thousands of Hoosiers the opportunity to choose whether to join a union, instead of having that choice made for them. Union membership would no longer be required of individuals hired by unionized employers.

This may seem like a relatively common sense change to many, particularly when you consider the way Right-to-Work states have economically outpaced their counterparts over the last 20 years. Nevertheless, Right-to-Work laws deprive Big Labor of the dues money that they would otherwise collect if all employees were forced to pay union dues and as a result, Right-to-Work legislation is Big Labor’s proverbial “Public Enemy Number 1.” When it looked like the Indiana House of Representatives was poised to pass their Right-to-Work bill, the Democrats did what lawmakers from their side of the aisle seem to do best – fled to another state.

After the House Democrats split for Illinois, the Republicans took the Right-to-Work bill off the table. Unfortunately, the Democrats were emboldened and produced a list of 10 other bills that the House majority and Governor Mitch Daniels (R) would need to promise not consider for the remainder of session before the Democrats would return to Indianapolis. One of these bills is H.B. 1216, which would prohibit the use of wasteful and discriminatory project labor agreements (PLAs) on public projects in Indiana.

Here at TheTruthAboutPLAs.com, we have gone out of our way not to comment on the issues surrounding the public employee unions in Wisconsin. While our sister blog, Halt the Assault, has been vocal in its concern for expense public sector unions impose on taxpayers and the power they exert on lawmakers, we have tried to stay focused on PLAs and similar Big Labor schemes. Unfortunately, we would be remiss if we didn’t comment on the abdication of responsibility that is taking place in Indianapolis right now, as it is depriving taxpayers of the opportunity to get the best construction at the best price on public projects.

The Democrats in the Indiana House of Representatives are entering the fourth week of their walkout. For the last 28 days, this chamber of the Indiana General Assembly has failed to do the people’s business. Instead, representatives are doing Big Labor’s wishes.

As President Obama reminded Republicans and America during the 2009 health care debate, “He won.”  In other words, elections have consequences. In Indiana, Democrats at the state level were routed in the last election. Prior to the 2010 election, Democrats held a four seat majority. In November, Hoosiers gave the Republicans a 20-seat majority and sent a message that business as usual is no longer acceptable in their state capital.

Taking your ball and leaving town is not a responsible legislative tactic. The House Democrats MUST return to Indianapolis and do the work they were elected to do.

And here at TheTruthAboutPLAs.com, we thank the Indiana Republicans for standing up for taxpayers and the 72 percent of Indiana’s private construction workforce that chooses not to join a labor organization.  We urge them to stand strong and force the Democrats to do their job.

Also, check out ABC of Indiana Chapter President J.R. Gaylor’s column from the Indy Star for more information on the legislation to ban wasteful and discriminatory PLAs on taxpayer funded work in Indiana.

The Cedar Rapids Gazette asked the former governor about the PLA issue on the campaign trail.  Here is an excerpt from their coverage (“Branstad Pledges to Undo Two Executive Orders,” 7/12):

Former Gov. Terry Branstad on Monday pledged that, if he is elected to a fifth term as governor in November, he would reverse two executive orders dealing with voting rights for felons and project labor agreements issued by Democrats who followed him to Terrace Hill.

[snip]

Branstad also promised to reverse an executive order signed earlier this year by current Gov. Chet Culver that directed state agencies to consider using project labor agreements on construction projects exceeding $25 million, calling the move a “back-door” attempt to enact prevailing-wage provisions that stalled in the legislative process.

Branstad made his comments during stops in three western Iowa towns during a “Truth in Budgeting” tour he and State Auditor David Vaudt launched on Monday.

“We’re heading in the wrong direction at a very fast pace,” Vaudt told nearly 30 people invited to a former railroad depot for the Republican state budget briefing. He warned the state budget is “approaching a budget cliff” in fiscal 2012 due spending levels that exceed state revenues and too much reliance on one-time money for ongoing expenses that can only be halted by the “reality-based leadership” Branstad is offering.

Here at TheTruthAboutPLAs.com, we commend former Governor Brandstad for standing up for the taxpayers of Iowa.

Read our earlier posts for more information on Gov. Culver’s attempts to funnel construction work to his political allies and the public record of poor performance that PLAs have in Iowa.

Construction industry officials insist it will have the opposite effect and severely impact right-to-work states such as Louisiana, where union labor is hard to come by.

Nationally, 85 percent of the construction work force is nonunion. In Louisiana, that figure climbs to 96 percent, according to ABC. If the federal government starts to impose PLAs on projects requiring union involvement, it could freeze Louisiana contractors out of the running for the flood of work expected to come online next year, said Ben Brubeck, ABC director of labor and federal procurement.

“Louisiana may not have enough union workers to do the work, so out-of-state union members might get bused in and get preference over nonunion, in-state workers,” Brubeck said.

The ABC’s New Orleans chapter receives at least one call a week from out-of-state contractors looking for work.

“Their economies are worse than ours so far as the construction industry, and they’re desperate for the work we’re seeing here,” Latino-Geier said.

PLAs also might scare off contractors from bidding for federal projects if they have never dealt with labor unions before, said Ken Naquin, CEO of Louisiana Associated General Contractors.

“With the amount of federal work the city of New Orleans is seeing come to fruition with schools, the Corps of Engineers, more street and sewer work, if those federal funds have PLAs tied to them, it will change the landscape of the contracting community in New Orleans and Louisiana,” Naquin said. “Contractors that have historically been open shop will have to negotiate wages and benefits with unions. It’s a whole new ball game.”

TheTruthAboutPLAs would like to know how discriminatory and costly PLAs will impact your community. Send us your story.

The focus of the bid protest is a government-mandated project labor agreement (PLA) on the U.S. Department of Labor’s Job Corps Center in Manchester, N.H. 

Delivering on President Obama’s promise to boost the labor movement, the administration has announced a $35 million federal construction project in New Hampshire that requires union representation for the workers and forces nonunion employees to pay dues and contribute to a union pension fund.

Mr. Obama issued an executive order in the first weeks of his presidency that would make the requirement, known as a “project labor agreement” or PLA, the norm for all government contracts on large-scale construction jobs. The order is under review and a final rule is not expected for months, but that did not stop the Labor Department from rushing to use a PLA to build its new Job Corps Center in Manchester, N.H.

The reporter covers points of contention in a typical PLA debate.

Critics say imposing the union-friendly rules on the New Hampshire job – the first federal construction contract with such stipulations since President Clinton was in office – will drive up costs, delay the project and force most of the workers to pay union dues and pension contributions for which they likely will never receive benefits.

Big Labor’s PLA advocates respond with this haggard and bogus argument.

Union officials argue that PLAs, which incorporate collective bargaining agreements into the contract, ensure the construction companies hire highly skilled workers and pay them fair wages.

“Rather than all the money going to the contractor profit, a fair share goes into the worker’s paycheck,” said Greg Denier, communications director for Change to Win, a coalition of unions that includes the Laborers’ International Union of North America.

This argument in favor of PLAs is a poor one, especially because there is already a prevailing wage law, independent of PLAs, that requires employees to be paid a “fair wage” on federal construction projects.  “Prevailing wages” are almost always the union wage and benefit rate and 32 states and D.C. have prevailing wage laws that are similar to the federal prevailing wage law known as the Davis-Bacon Act.

Then Brett McMahon of ABC Member Miller&Long Concrete points out a major objection to PLAs by non-union contractors and non-union employees.

“In order to go to work, you have to pay for it,” Mr. McMahon said. 

On a PLA project, workers have to pay dues to a union in order to work on a project paid for by their own tax dollars (New Hampshire is not a Right-to-Work State, FYI). 

In addition, as TheTruthAboutPLAs.com has covered many times before in this blog (here), in rare instances where non-union workers and their employers participate in PLA projects, all employer contributions to union-managed pension and benefit funds on behalf of non-union employees are forfeited to the union plans unless employees join a union and become vested. It is a windfall for Big Labor because they don’t have to pay benefits to those contributors and non-union workers receive no benefit.

How is requiring a non-union worker to pay dues to a union with no benefits unless they join union for the life of a taxpayer funded construction project sound public policy?

Here are the highlights:

The personal cost to the non-union worker is significant, which is why non-union construction firms often don’t bother to bid on construction projects that use PLAs. Even if construction firms do bid on PLA projects, why should non-union workers who win business under a PLA have to pay union dues just to work on these projects which are paid for by their own tax dollars? That is simply unfair.

And in this Right to Work state, it is contrary to what our citizens firmly believe.

Recent data from the Bureau of Labor Statistics shows that only 15.6 percent of America’s private construction workforce belongs to a union. That means that PLAs discriminate against 84.6 percent of construction workers who could be working on federal construction projects if not for the heavy-handed, union-only PLAs.

Non-union workers who might work on PLA federal construction projects will be forced to pay into the union pension funds. A recent study released by Diana Furchtgott-Roth, senior fellow at the Hudson Institute and a former Chief Economist at the U.S. Department of Labor, found that union pension plans perform much more poorly than non-union retirement plans. This might well be why unions are so eager for new pension contributions from those who will never benefit – to cover for these failing plans.

Participants in federal and state-approved non-union apprenticeship programs cannot work on a job covered by a PLA, so young workers are left out in the cold – by presidential decree. This means craft professionals enrolled in all apprenticeship programs other than those offered by the union are excluded from work in their hometowns on federal construction projects paid for with tax dollars.

The construction industry as a whole has been hit hard by this current economic downturn. We need to put people back to work. Union-only PLA rules will keep non-union workers out of work. This is simply harmful public policy for everyone including those here in Virginia looking for construction jobs.

And at a time of deep recession when we are looking to the construction industry to help us dig out of the current climate, the cost of construction projects will rise under union-only PLAs.  Many studies show that PLAs increase the cost of construction 10-20 percent when compared to non-union controlled construction costs. These increased costs mean that taxpayers would feel the pain.

So the billions of dollars Congress and the President are pouring into so called “shovel ready” construction projects (roads, bridges, etc.) will cost us up to 20% more than they should.  Our taxes are once again wasted.

PLAs are not successful at keeping a construction project on time or on budget. Most people have heard about Boston’s “Big Dig,” which was built with a union-only PLA. Though projected to cost $2.2 billion, this project ended up costing more than $14 billion. This is just one example.  In addition, union workers are permitted to strike, which can add additional costs to a construction projects. Non-union firms don’t strike.

Mr. Thompson’s Virginia-centric perspective is especially important, as Virginia is one of 22 Right to Work states, in which the payment of union dues cannot be a condition of employment.  All of these states have low union densities, especially in the construction industry.  In some Right to Work states, like Arkansas and North Carolina, only 1-2 percent of the construction industry workforce is unionized.  As a result, 98 percent of workers in these states could be excluded from federal construction work if PLAs are required.  In Right to Work states, PLAs guarantees increased construction costs due to very limited competition and very few local residents will have the opportunity to work on project in their own communities.

Read Mr. Thompson’s full piece after the jump.

http://baconsrebellion.com/2009/09/16/forced-union-payments-on-tax-paid-projects/

Forced Union Payments on Tax Paid Projects

In an Executive Order few have heard about, President Obama is trying to eliminate union competition for federal construction projects.

This egregious order encourages Project Labor Agreements (PLAs) on federal construction projects costing $25 million or more. PLAs are collective bargaining agreements between contractors, their subcontractors and labor unions. Under a PLA, contractors must either use union workers or non-union workers who are forced to make contributions to union pension funds and other union programs – from which they will never benefit. These are blatantly discriminatory rules against non-union shops.

The personal cost to the non-union worker is significant, which is why non-union construction firms often don’t bother to bid on construction projects that use PLAs. Even if construction firms do bid on PLA projects, why should non-union workers who win business under a PLA have to pay union dues just to work on these projects which are paid for by their own tax dollars? That is simply unfair.

And in this Right to Work state, it is contrary to what our citizens firmly believe.

Recent data from the Bureau of Labor Statistics shows that only 15.6 percent of America’s private construction workforce belongs to a union. That means that PLAs discriminate against 84.6 percent of construction workers who could be working on federal construction projects if not for the heavy-handed, union-only PLAs.

Non-union workers who might work on PLA federal construction projects will be forced to pay into the union pension funds. A recent study released by Diana Furchtgott-Roth, senior fellow at the Hudson Institute and a former Chief Economist at the U.S. Department of Labor, found that union pension plans perform much more poorly than non-union retirement plans. This might well be why unions are so eager for new pension contributions from those who will never benefit – to cover for these failing plans.

Participants in federal and state-approved non-union apprenticeship programs cannot work on a job covered by a PLA, so young workers are left out in the cold – by presidential decree. This means craft professionals enrolled in all apprenticeship programs other than those offered by the union are excluded from work in their hometowns on federal construction projects paid for with tax dollars.

The construction industry as a whole has been hit hard by this current economic downturn. We need to put people back to work. Union-only PLA rules will keep non-union workers out of work. This is simply harmful public policy for everyone including those here in Virginia looking for construction jobs.

And at a time of deep recession when we are looking to the construction industry to help us dig out of the current climate, the cost of construction projects will rise under union-only PLAs.  Many studies show that PLAs increase the cost of construction 10-20 percent when compared to non-union controlled construction costs. These increased costs mean that taxpayers would feel the pain.

So the billions of dollars Congress and the President are pouring into so called “shovel ready” construction projects (roads, bridges, etc) will cost us up to 20% more than they should.  Our taxes are once again wasted.

PLAs are not successful at keeping a construction project on time or on budget. Most people have heard about Boston’s “Big Dig,” which was built with a union-only PLA. Though projected to cost $2.2 billion, this project ended up costing more than $14 billion. This is just one example.  In addition, union workers are permitted to strike, which can add additional costs to a construction projects Non-union firms don’t strike.

The reason the unions need this PLA rule is to boost their membership. President Obama seems committed to helping unions increase their membership from the current low levels. He still hopes to take away the secret ballot from workers when voting on whether to unionize. That battle is yet to come, right after health care is decided.

The PLA Executive Order may soon become a reality.  The comment period on the order has been extended to September 23 by the Federal Acquisition Regulatory Council.  It will be interesting to see how this turns out.  Tens of thousands of men and women could be adversely impacted when this Executive Order goes into effect.  Here in Virginia it is clear that this new rule will hurt our economy.

Public policy simply should not favor unions in a way that discriminates against non-union workers.  A level playing field is always best for the country and for our state.

PLAs can occur in right to work states, though they are less common. The Southern Nevada Metropolitan Water District project and the Iowa Events Center project are perhaps the most prominent examples of government-mandated PLAs in right to work state.

A right to work state is simply a state which has passed a law prohibiting employees from being forced to pay dues to any labor organization. Such laws are specifically authorized by Section 14 of the National Labor Relations Act and 22 states have passed such laws.

National Right to Work Map Courtesy of http://www.nrtwc.org/

A right to work law does not outlaw unions, and it does not outlaw collective bargaining agreements. There are many unionized employers operating in right to work states. Although the right to work law prevents unionized employers from forcing their employees to pay dues to the union, employees of a union contractor in both right to work and non-right to work states are still required to work under terms and conditions exclusively negotiated by unions under PLAs.

Under such conditions, a union-favoring PLA mandate has not been held to violate state right to work laws, so long as the contract does not require anyone to join a union or pay full union dues.  (However, some court challenges have held that employees in right to work states may be required to pay representational fees to unions, sometimes called agency shop fees, but not full dues.) The PLA contract can still comply with law and require employees to work under a union contract. That is why we refer to PLAs as “union-only” in most instances; not because anyone has to pay dues or “join” the union, although that mandate is often the case in non-right to work states.

In non-right to work states, union-only PLA agreements can go further in that they can require employees not only to work under a union contract but also can require those employees to pay full union dues to a labor union while working on the project.  Construction unions benefit from nonunion workers that are forced to pay union dues in order to work on a construction jobsite subject to a PLA. This arrangement is obviously more onerous and coercive than in a right to work state, but in both cases, the PLA has the practical impact of being  “union-only,” because employees are forced to work under union terms and conditions of employment.

A lesson to be learned from this brief explanation about PLAs and right to work laws is that if you are a contractor and conduct business in a right to work state, you should still be concerned about government-mandated PLAs.  If written correctly, they will not violate state law. You will likely see more of them due to the changing political environment in Washington, D.C., and around the states as the political influence of Big Labor grows.

Likewise, you should be concerned that President Obama’s Executive Order 13502 will result in an increase in government-mandated PLAs on federal and federally funded construction projects in right to work states where PLAs are scarce.

Since right to work states typically have a low density of union construction workers (see data from www.unionstats.com), PLAs could lead to out of state union contractors and their union employees taking work away from your company and your local employees unless you agree to be bound the inefficient and costly terms and conditions in a PLA (like paying into union pension plans, following union hiring procedures and following inefficient union work rules).

So don’t stick your head in the sand and pretend that PLAs aren’t a problem and you are protected by state right to work laws. It is time to be proactive and get politically engaged because PLAs will limit free and open competition for construction contracts in your market and are guaranteed to impact your company’s bottom line.

Communicate your opposition to union-only PLAs to elected officials on ABC’s grassroots website and participate in the regulatoy process for Executive Order 13502 here.

You can learn more about right to work laws here.