The Truth About Project Labor Agreements

An op-ed in The York Dispatch draws parallels between the controversy over open competition legislation in PA and President Obama’s pro-PLA Executive Order 13502 (Think Pa.’s Discriminatory Labor Agreements Are Bad? Check Out Obama’s, 11/12).

Here is an excerpt:

Pennsylvania’s Department of General Services (DGS) has tried to require them [PLAs] on about $800 million worth of prison construction around the commonwealth.

And if you think the Rendell Administration’s infatuation with PLAs is bad public policy, beware of President Obama’s directive that will encourage these arcane rules on federal jobs nationwide.

In February, he signed Executive Order 13502, a mandate with few regulatory steps between his signature and its enactment that will encourage federal agencies to require PLAs on federal jobs worth over $25 million.

Big Labor claims the move will benefit everyone, ensuring that only “local workers” win local jobs. But the fine print essentially limits the definition to just local union workers, a detail of importance when you consider that only 15.6 percent of U.S. construction workers are unionized.

So, in markets where the demand for union labor is greater than the supply, outside union contractors get preference over truly local nonunion ones. And local nonunion workers ignored in the executive order will take an additional hit. By forcing them to pay union dues on any PLA job their company manages to win, the order bullies them into either joining a union or paying to work jobs their taxes already fund.

Additionally, Mr. Perea does an outstanding job breaking down exactly why PLAs are both bad for taxpayers and discriminatory to a degree that is “morally offensive.”

But let’s be clear: PLAs aren’t just bad because they exclude nonunion contractors from bidding competitively, steal money from nonunion employees, award local jobs to out of area contractors or even cost the public more at a time when we’re all pinching pennies. PLAs are morally offensive. The majority of the construction workforce is not unionized and this order is discrimination.

That’s a disproportionate advantage to give to such a small subset, since just 16.3 percent of Pennsylvania’s entire construction workforce belongs to a union. Think about it — under what other circumstances would we allow such a small group to accrue so much power?

Indeed, with so many standing to lose so much, little argument can be made that this executive order is anything but a special interest handout for a group to whom Obama owes a favor.

But this order isn’t just curious because it serves such a small group. It’s also oddly hard to justify.

Unions say that if a project doesn’t require a PLA, there’s risk of a labor dispute wasting taxpayer dollars. But a study by the Beacon Hill Institute earlier this year blows the conclusion that federal jobs need that kind of protection right out of the water. After examining all federal projects under the PLA-prohibiting Bush Administration, it found — get this — not a single documented instance of a dispute that could have been prevented by a PLA.

Still, the order is peculiar for yet another reason — its complete counter-productivity to Obama’s other economy-proofing campaign promise, the stimulus. Designed partly to pump job-creating dollars into state construction industries, the stimulus was the president’s pledge to support all of America’s backbone industries. And yet, one backroom deal threatens to shut out the majority of an entire workforce. It’s Cash For Cronies!

Pennsylvanians might be paying closer attention than Obama thinks. The 24,600 pink slips our construction workers have seen over the past year are, after all, hard to ignore. Or maybe there’s something about watching workers from New York and New Jersey build our schools and prisons that just doesn’t sit right. Either way, we’ve gotten wind of something fishy. And so, while nonunion companies like mine stand to lose much if Executive Order 13502 applies PLAs as broadly as it threatens, I’m hopeful that word will keep spreading — across the state and, eventually, across the country.

This op-ed is another example of people standing up to Big Labor and demanding that politicans give taxpayers the accountability they deserve on public construction projects.  Read the full op-ed after the jump.

Think Pa.’s discriminatory labor agreements are bad? Check out Obama’s
Updated: 11/12/2009 12:41:47 PM EST

Newspapers and readers across Pennsylvania seem to be picking up on the fact that union-favoring project labor agreements (PLAs) aren’t doing local markets any favors.

Recently, Pennsylvania Reps. Stan Saylor and John C. Bear co-authored a warning that placing these special interest requirements on taxpayer-funded Pennsylvania construction projects only serves to award jobs to out-of-area Big Labor contractors who do the work at an 18 percent cost premium (“Discriminatory PLAs must end; taxpayers deserve better,” Oct. 28, 2009).

In case you missed it, PLAs are costly and discriminatory contracts requiring that construction jobs go only to contractors and subcontractors who agree to abide by inefficient union work rules and contribute to union pension plans. Their nonunion employees, by the way, never see the benefits of these contributions — unless, of course, they join a union.

Pennsylvania’s Department of General Services (DGS) has tried to require them on about $800 million worth of prison construction around the commonwealth.

And if you think the Rendell Administration’s infatuation with PLAs is bad public policy, beware of President Obama’s directive that will encourage these arcane rules on federal jobs nationwide.

In February, he signed Executive Order 13502, a mandate with few regulatory steps between his signature and its enactment that will encourage federal agencies to require PLAs on federal jobs worth over $25 million.

Big Labor claims the move will benefit everyone, ensuring that only “local workers” win local jobs. But the fine print essentially limits the definition to just local union workers, a detail of importance when you consider that only 15.6 percent of U.S. construction workers are unionized.

So, in markets where the demand for union labor is greater than the supply, outside union contractors get preference over truly local nonunion ones. And local nonunion workers ignored in the executive order will take an additional hit. By forcing them to pay union dues on any PLA job their company manages to win, the order bullies them into either joining a union or paying to work jobs their taxes already fund.

But let’s be clear: PLAs aren’t just bad because they exclude nonunion contractors from bidding competitively, steal money from nonunion employees, award local jobs to out of area contractors or even cost the public more at a time when we’re all pinching pennies. PLAs are morally offensive. The majority of the construction workforce is not unionized and this order is discrimination.

That’s a disproportionate advantage to give to such a small subset, since just 16.3 percent of Pennsylvania’s entire construction workforce belongs to a union. Think about it — under what other circumstances would we allow such a small group to accrue so much power?

Indeed, with so many standing to lose so much, little argument can be made that this executive order is anything but a special interest handout for a group to whom Obama owes a favor.

But this order isn’t just curious because it serves such a small group. It’s also oddly hard to justify.

Unions say that if a project doesn’t require a PLA, there’s risk of a labor dispute wasting taxpayer dollars. But a study by the Beacon Hill Institute earlier this year blows the conclusion that federal jobs need that kind of protection right out of the water. After examining all federal projects under the PLA-prohibiting Bush Administration, it found — get this — not a single documented instance of a dispute that could have been prevented by a PLA.

Still, the order is peculiar for yet another reason — its complete counter-productivity to Obama’s other economy-proofing campaign promise, the stimulus. Designed partly to pump job-creating dollars into state construction industries, the stimulus was the president’s pledge to support all of America’s backbone industries. And yet, one backroom deal threatens to shut out the majority of an entire workforce. It’s Cash For Cronies!

Pennsylvanians might be paying closer attention than Obama thinks. The 24,600 pink slips our construction workers have seen over the past year are, after all, hard to ignore. Or maybe there’s something about watching workers from New York and New Jersey build our schools and prisons that just doesn’t sit right. Either way, we’ve gotten wind of something fishy. And so, while nonunion companies like mine stand to lose much if Executive Order 13502 applies PLAs as broadly as it threatens, I’m hopeful that word will keep spreading — across the state and, eventually, across the country.

Gustavo I. Perea is presi dent and CEO of Adams-Bickel Associates, Inc., and a member of the Associated Builders and Contractors.