Government officials often argue that the increased costs and discriminatory and anti-competitive nature of union-favoring government-mandated project labor agreements (PLAs) are “bitter pills worth swallowing” for Big Labor’s promise not to strike, picket and engage in other forms of labor unrest on jobsites that could impact the on-time, on-budget delivery of a construction project.
That flawed logic makes little sense for three key reasons:
- Adopting a PLA creates a monopoly for union contractors and rewards the extortionary tactics of Big Labor bosses.
- Nonunion employees don’t strike and they compose over 85 percent of the U.S. construction industry. There should not be a labor shortage if union members strike. Why capitulate to the demands of Big Labor if there is a reliable and quality alternative?
- It’s a myth that PLAs prevent strikes as there are numerous examples of strikes on public and private projects subject to a PLA.
Concerning the third point, just yesterday, the media reported that a union strike is impacting PLA projects in Illinois (“Construction strike now affects tollway work,” 7/16/10).
A two-week-old construction workers strike that has halted the resurfacing of Chicago-area expressways and streets is now forcing the Illinois Tollway to suspend its major projects, despite a written agreement prohibiting work stoppages, officials said today.
The problem is that the construction companies they work for cannot obtain the materials and equipment they need because union drivers are honoring the picket lines of striking laborers outside asphalt plants and concrete-mix facilities, officials said.
As a result, officials at the Illinois State Toll Highway Authority have suspended the removal of concrete on pavement-patching jobs because of difficulty receiving materials to complete the work.
The toll authority has a multi-project labor agreement that prohibits strikes, work slowdowns or stoppages and lockouts by employers.
And this isn’t the first time PLAs have failed to prevent labor unrest and work stoppages on a PLA project in the Chicago area.
In June of 2006, the company developing the $850-million Trump International Hotel and Tower in downtown Chicago sued three labor organizations for breaching the terms of a PLA after union members walked off the project during a strike (401 North Wabash Venture LLC v. Chicago and Cook County Building and Construction Trades Council, N.D. Ill., No. 06-CV-3077, 6/5/06).
The development company eventually settled the suit against the Chicago and Cook County Building and Construction Trades Council, the Construction and General Laborers’ District Council of Chicago and Vicinity and Laborers’ International Union Local 6.
Joseph Gagliardo, managing partner of the firm Laner, Muchin, Dombrow, Becker, Levin and Tominberg Ltd., represented 401 North Wabash in the action and told the media that the unfortunate lesson emerging from this strike and suit has to do with the real value of project agreements with Chicago unions.
“The whole purpose of the project labor agreement is to prevent interruption and prevent delay and have labor peace,” he said. “So the question this strike raises is–and I don’t know the answer to it–what impact will this strike have on the willingness of other building owners to engage in a project labor agreement?”
I think we know the answer to that question.
The failure of PLAs to contain strikes is not limited to Chicago.
In 1999, union carpenters on the union-only San Francisco Airport expansion project struck over wages even though their union had signed a PLA. The union electricians, plumbers, and painters also went on strike in support of the union carpenters. The cost of the strike was $1 million dollars. The project, which was already a month behind schedule, lost even more time.
But the current Chicago strike has revealed that Big Labor is willing to take extortion to a new level.
The media is reporting that labor unions engaged in the current strike that has shut down numerous projects across Chicago have managed to leverage the strike into future monopolies for Big Labor by getting project owners and school districts to agree to sign PLAs on current and future construction projects in exchange for the unions to get back to work (“District 203, unions broker deal for Naperville Central work to continue,” 7/8/10 and “Agreement gets Coal City High School back on track,” 7/13/10).
Chicago-area taxpayers will be picking up the tab for higher construction costs on current school projects as the strike forced school districts to pay workers additional overtime in order to make up for time lost due to the strike and get the project built by the beginning of the school year.
So why are the Chicago unions striking anyways? Here is an explanation (“Local 150, District 203 agree to resume construction,” 7/13):
On July 1, some 8,500 members of Local 150 joined members of the Labors’ District Council of Chicago and Vicinity on picket lines in nine Chicago-area counties, including Kane, Kendall, DuPage and Will counties. Both unions’ three-year contracts expired May 31.
Local 150 is asking for a 5 percent total compensation package increase each year for three years to cover increased costs for the union’s self-funded insurance pension programs. It has not asked for an increase in hourly wages, Local 150 spokesman Ed Maher said. The Mid-America Regional Bargaining Association (MARBA), which represents the employers, is offering a 1 percent compensation increase for each year of the first two years and a 1.25 percent increase for the third year.
Laborers’ District Council Business Manager James Connolly said employers are using the poor economy as leverage to attempt to cripple its benefits and wages. In a memo, MARBA chairman Tom Nordeen told members that the strike would be devastating to the economy.
He stressed that the 20 to 40 percent unemployment rate among the trades should, “bring a sense of reality and some shared sacrifice to the table.”
Connolly acknowledges the tough economic times workers are facing, saying, “The increases that we are asking for are merely to keep our pension and health care packages properly funded without having to slash our wages. We all know that these are unprecedented economic times, and because of this, we have stood united for all of our futures’ success.”
Reporters and union members should request the pension plan actuarial statements to see how badly their multi-employer pension plans (MEPPs) are underfunded.
Data from Moody’s Global Corporate Finance September 10, 2009 report, “Growing Multiemployer Pension Funding Shortfall is an Increasing Credit Concern,” found that MEPPs are in serious financial trouble.
Using 2007 numbers as a starting point, Moody’s estimates that 2008 underfundings for construction MEPPs ballooned to $72.484 billion or a 54 percent funded level. In other words for every dollar that these construction MEPPs owe, they hold only 54 cents of invested assets. The MEPPs are likely in much worse shape after the stock market crash, great recession and booming construciton industry unemployment.