Op-Ed: Labor Agreements Raise Construction Costs

0 August 28, 2010  State & Local Construction, Uncategorized

In a guest op-ed published by the Rochester Democrat and Chronicle (“Labor Agreements Raise Construction Costs,” 8/28/10), Marci Miller of the Empire State Chapter of Associated Builders and Contractors has some thoughts on the impact of wasteful and discriminatory project labor agreements (PLAs) on local construction projects.

Here are the highlights:

Despite some claims to the contrary, these requirements are nothing more than handouts to one politically-connected special interest group — Big Labor. PLAs and the unnecessarily burdensome apprenticeship requirements are designed to ensure that only union labor has the opportunity to work on construction projects.

When public officials place these requirements on projects, they essentially preclude the 75 percent of local construction workers that choose not to join a labor organization from competing for projects funded by their own tax dollars.

Unfortunately, for local taxpayers, the discrimination inherent in these types of agreements is not the end of the story. Numerous third-party studies show that PLAs have a record of increasing construction costs by approximately 18 percent when required on public construction projects.

A 2006 study conducted by the Beacon Hill Institute at Suffolk University found that PLAs add an estimated $27 per square foot to the bid cost of construction (in 2004 prices), representing an almost 20 percent increase in costs over the average non-PLA project.

At a time when local families, and also state and local government, are grappling with significant budget deficits and crippling unemployment, now is the worst possible time to reward special interest groups at the expense of hardworking taxpayers.

By opening the door to all contractors, they can help keep the competition up and the project costs down by insisting that every worthy company has a fair shot.

We agree.

By the way, the Beacon Hill Institute study referenced in the article is available here.  Of the 117 schools examined by the researchers, 19 municipalities entered into PLAs for school projects. The researchers took into account differences in both the type of schools (elementary, junior and high schools) and the size (controlling for square footage). The majority of school districts that chose not to enter into such agreements saved between $2.7 million for a 100,000-square-foot building and $8.1 million for a 300,000-square-foot structure.

With local budgets stretched to their limits nationwide, now is the worst possible time for local officials to waste taxpayer dollars on Big Labor handouts.  We urge Rochester officials to say no to PLAs.

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