PLA Laws in the States: Some Say NO to Project Labor Agreements, Others CAVE to Union Pressure

0 May 8, 2009  State & Local Construction, Uncategorized

While the federal government is tripping over itself to give handouts to Big Labor by encouraging government-mandated project labor agreements (PLAs) on federal construction projects exceeding $25 million, several states have enacted legislation or issued executive orders rejecting wasteful and anti-competitive PLAs.  Since 1995, five states now prohibit government-mandated PLAs on public construction projects.  Leaders in Missouri, Arkansas, Utah, Montana and Minnesota understand that PLA schemes waste taxpayer dollars and prevent skilled and qualified nonunion employees from working in their own communities. commends these state leaders for doing all that they can to guarantee that taxpayers get the best possible construction product at the best possible price.

Meanwhile, leaders in several other states have bowed to Big Labor’s demands.  Despite the fact that union-friendly PLAs increase construction costs by as much as 20 percent and essentially eliminate more than 84 percent of the U.S. construction workforce from building projects funded by their own tax dollars, lawmakers in New Jersey, New York, Washington and Illinois have enacted legislation and issued executive orders encouraging and even requiring PLAs on public construction projects in their states.

Update: Learn more about federal and state legislative and executive PLA activity here.

State actions to require or encourage PLAs on state public construction is a a sign of wasteful government and fiscal irresponsibility. When a state government has a pro-PLA policy in place, it is clear that they don’t have fiscal discipline in other areas too. 

Talk about bad timing. The current economic crisis hit state governments especially hard.  The non-partisan Center on Budget and Policy Prioritiesprojects that as many as 47 states will experience budget deficits in the 2010 fiscal year.  While the five states that prohibit PLAs on public construction will likely face a combined budget deficit of under $7 billion dollars, the combined deficit for New Jersey, New York, Washington and Illinois is likely to reach an astronomical $28.2 billion – over 20 percent of the states’ total general funds during FY09!  This is not a coincidence.

Update: Learn how states and localities can protect against federal PLA mandates or encouragement due to Section 7 of Executive Order 13502.

States and local communities should take proactive measures to combat the expansion of federal PLAs resulting from Section 7 of Executive Order 13502.  Passing state laws or executive orders prohibiting government-mandated PLAs on state and state-assisted projects could protect their investment in construction projects from costly federal mandates for local, state and private construction funded by federal dollars.

In addition, states need to discourage the federal government from expanding federal PLA preferences via Section 7 of Executive Order 13502. If expanded, states and communities need to be aware that accepting federal assistance for construction projects with attached strings that favor Big Labor could bust strained budgets.

Can states and local communities swallow the 18 percent PLA premium? Can they afford to build four schools, hospitals, bridges and courthouses for the price of five?

A PLA mandate on federally-assisted projects will also cost jobs. The impact of higher labor costs on finite budgets translates into fewer construction projects. Less building means less jobs in an industry that has a national unemployment rate hovering above 20 percent.

In addition, local and state governments must understand that PLAs give preference to out-of-state union members ahead of local and qualified nonunion employees.  PLA projects in areas with low union density and market share often fall victim to this boneheaded policy, as local nonunion employees will continue to rely on unemployment and other state services and not pay into the local tax base while out-of-state union members dispatched through union hiring halls take their jobs and opportunities to make a living.

Finally, it is discriminatory and shortsighted public policy for states and communities to tell skilled nonunion labor they can’t work on these projects unless they agree to pay union dues and forfeit employer contributions to union benefit and pension plans for the life of a PLA project – typical real world consequences of PLAs on nonunion labor and key reasons why nonunion contractors rarely bid on PLA projects.

The public, elected officials, media and construction workforce must realize there is a lot at stake with the expansion of Executive Order 13502 via Section 7.

Consider passing laws or measures that protect your community from costly and discriminatory PLA mandates.

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