The Truth About Project Labor Agreements

Today the Hartford Courant ran an Op-Ed by ABC Connecticut Chapter President Lelah Campo about the need for Connecticut to ban union-only PLAs on projects that receive funding, assistance, grants and other financial support from Connecticut.

YOUR VIEW: LELAH CAMPO

Open Government Projects to Nonunion Labor

Hartford Courant, May 5, 2009

With Gov. M. Jodi Rell and state legislators struggling to address a big budget deficit for this year and huge projected deficits for the next two years, we are surprised that an item that offers huge cost saving potential is not on the table.

The fiscal debate has included suggestions of tax hikes and compensation concessions by state employees, but one opportunity to close budget gaps should not be overlooked: the elimination of union-only construction.

In many of Connecticut’s cities, project labor agreements are signed between unions and politicians. The sweetheart deals make it all but impossible for nonunion contractors to bid on public construction projects.
Because project labor agreements require that all contractors and subcontractors agree to union representation of all workers, use union hiring halls and conform to restrictive union work rules and job categories, these agreements are expensive. A 2004 study of Connecticut school construction by the Beacon Hill Institute at Suffolk University, which we underwrote, showed that such agreements raised costs by 17.9 percent.

Why are locally signed project labor agreements a problem for state taxpayers? The state funds a large share of municipal construction in Connecticut. Thus, all state taxpayers pay the premium for such deals.

Hartford, for example, announced in January a decade-long, school-construction project with an estimated price tag of $966 million. Under the city’s existing project labor agreement, that figure is nearly 18 percent too high, based on the Beacon Hill study. Given an expected state reimbursement rate of between 75 and 80 percent, Hartford’s building program will sock Connecticut’s taxpayers with a self-inflicted cost overrun as much as a $138 million. (If the elimination of union-only construction in one city would save so much, just imagine the savings that would result from banning project labor agreements throughout the state.)

What do taxpayers get for the added expense of project labor agreements? It’s not superior performance. Plenty of such restricted projects have failed to be completed on time and on budget. The long-troubled renovation of Hartford Public High School is under a project labor agreement.

As for quality, jobs done with or without project labor agreements are governed by the same codes and specifications, with engineers and inspectors providing oversight.

Unions claim that project labor agreements ensure that only local workers are employed. But more than 80 percent of construction employment in Connecticut is nonunion. By restricting competition, project labor agreements exclude eight out of every 10 local workers, which can cause contractors to seek employees from other states.

Construction union bosses say project labor agreements ensure workers fair compensation for their work. Unfortunately, proponents prefer rhetoric to reality. On Connecticut public projects – all companies union and merit-shop alike – must pay the “prevailing wage,” (union scale wages) as well as benefits.

In some ways, nonunion contractors do even better for their workers. For example, paid holidays and paid vacations, which are usually not included in union contracts, are commonplace in Connecticut’s merit shops. Also, nonunion workers aren’t required to pay union dues, much of which is used not to represent members’ interest, but to support lobbying and election-related projects.

A recent poll found that nearly two-thirds of residents prefer spending reductions as the means to balance the state’s books. Couple that desire for fiscal prudence with a serious drop in Connecticut’s construction employment – down 16,400 jobs since its October 2007 peak – and it’s clear that expensive agreements that lock the majority of state pre-qualified contractors out of the bidding process for public building projects can no longer be justified.

Even in a strong economic environment, cozy and costly arrangements between politicians and construction unions aren’t sound public policy. In a period of economic and fiscal woes, project labor agreements make even less sense.

•Lelah Campo is president of the Associated Builders and Contractors of Connecticut located in Rocky Hill.