The Truth About Project Labor Agreements

Do you want to save the federal government up to $2.6 billion a year?

Do you want to eliminate the influence of special interests and corruption in federal contracting?

Do you want to create employment opportunities for all skilled and qualified professionals in the construction industry?

Do you want the federal government to deliver to taxpayers the best possible construction product at the best possible price?

If so, text “YouCut4” to 68398 or vote online for YouCut proposal #4 today.

During the next week, TheTruthAboutPLAs.com readers can cast their vote to prohibit government-mandated project labor agreements (PLAs) on federal construction projects via a new website called YouCut.

Vote for Option 4 and ban government-mandated PLAs on federal construction projects today.

The YouCut website, launched May 12 by House Republican Whip Eric Cantor (Va.), features a weekly ballot of proposals that would scale back congressional spending.  YouCut invites anyone to vote for solutions that eliminate government waste. Each week, the public votes on ideas to be brought to the House floor, where Republicans will call for an up-or-down vote on the spending cut.

Congresswoman Mary Fallin (R-Okla.-5) submitted this idea to the YouCut program because, “lawmakers have a fiduciary responsibility to ensure government projects are constructed in the most cost effective manner possible. With the federal government facing record deficits and the construction industry already suffering from more than 20 percent unemployment, this is a solution that will eliminate waste and create employment opportunities for skilled and qualified workers.”

President Obama’s Executive Order 13502 encourages federal agencies to mandate wasteful and discriminatory PLAs on federal construction projects exceeding $25 million.  PLAs are special interest schemes that hit taxpayers in the wallet and reek of political favoritism.

An April 14 Wall Street Journal editorial, “Crony Contracts,” blasts the Obama administration’s costly gift to Big Labor saying:

“Only 15% of the nation’s construction workers are unionized, so from now on the other 85% will have to forgo federal work for having exercised their right to not join a union. This is a raw display of political favoritism, and at the expense of an industry experiencing 27% unemployment … It’s also a rotten deal for taxpayers.”

PLAs are designed to funnel lucrative federal construction contracts to unionized contractors and Big Labor bosses that send campaign contributions to politicians who promote these schemes.

Here are some important reasons why you should vote today to ban government-mandated PLAs on YouCut.

Wasteful PLAs harm taxpayers and the construction industry.

PLAs force contractors to follow archaic and inefficient union work rules that increase the cost of construction and make it difficult for nonunion contractors and their employees to compete against union contractors on a level playing field.

PLAs require contractors to exclusively hire union labor, which effectively limits the pool of available bidders on federal projects to union contractors and union employees.

According to the most recent data from the U.S. Department of Labor’s Bureau of Labor Statistics, in 2009 only 14.5 percent of America’s private construction workforce belonged to a union. That means PLAs discourage more than 8 out 10 U.S. construction employees from building projects paid for by their tax dollars.

Studies demonstrate that PLAs result in a lack of competition, increased costs and inefficiencies caused by union work rules that inflate the cost of construction between 10 percent and 20 percent when compared to similar projects without PLAs.

According to a September 2009 study by The Beacon Hill Institute (BHI), PLAs significantly increase construction costs on federal projects without adding benefits for taxpayers. The study found that if President Obama’s Executive Order 13502 were in effect in 2008, federal construction costs would have increased as much as $2.6 billion because of PLAs. Americans can expect greater levels of waste in FY 2010 and 2011 construction spending due to increased infrastructure investments contained in the American Reinvestment and Recovery Act.

Employees who don’t belong to a union don’t benefit from PLAs.

An October 2009 report by Dr. John R. McGowan, “The Discriminatory Impact of Union Fringe Benefit Requirements on Nonunion Workers Under Government-Mandated Project Labor Agreements,” finds that employees of nonunion contractors forced to work under government-mandated PLAs suffer a reduction in their take-home pay that is conservatively estimated at 20 percent.

PLAs force employers to pay employee benefits into union-managed funds, but employees do not see the benefits of the employer contributions unless they join a union and become vested in these plans.

Employers that offer their own benefits, including health and pension plans, often continue to pay for both existing programs and union programs under a PLA.

The McGowan report found that nonunion contractors are forced to pay in excess of 25 percent in benefits costs above and beyond existing prevailing wage laws as a result of this “double payment” attached to PLAs.  These added costs make it impossible for nonunion contractors to compete and results in increased construction costs.

McGowan found that had President Obama’s pro-PLA Executive Order 13502 applied to federal contracts in 2008, additional costs incurred by employers related to wasteful PLA pension requirements likely would have ranged from $230 million to $767 million per year.

Lost wages for nonunion construction workers would have ranged from $184 million to more than $613 million, depending on the assumptions made for companies executing contracts via PLAs. In total, the move to PLAs would have cost nonunion workers and their employers $414 million to more than $1.38 billion annually.

Solutions to Waste and Cronyism in Federal Construction Contracting

Lawmakers and taxpayers can restore accountability and fiscal discipline in federal construction contracting by passing The Government Neutrality in Contracting Act (S.90/H.R. 983).

Taxpayers must urge Congress to restore fairness and accountability in federal construction contracting today by texting “YouCut4” to 68398 or by voting online for proposal #4: “Prohibit Mandated Project Labor Union Agreements That Increase Government Construction.”