Big Labor’s Job Targeting & Market Recovery Schemes: They Can’t Compete, So They Cheat

11 April 4, 2011  Federal Construction, Uncategorized

Merit shop contractors and their skilled employees have a lot to worry about in today’s marketplace with the construction industry’s 20 percent unemployment rate, a slow economy, cut-throat competition, and reduced bank lending to businesses interested in purchasing construction services to grow their business and create jobs.

Surviving these tough market conditions is even more difficult thanks to anti-competitive and costly project labor agreements (PLAs) mandated by local, state and federal governments.  These PLA schemes are sweetheart deals for Big Labor, having the practical effect of handing unionized contractors and union tradespeople an unfair and unjustified advantage over merit shop businesses and employees in the competitive bid process for public works contracts.

President Obama’s Executive Order 13502, which encourages federal agencies to require PLAs on federal construction projects exceeding $25 million in total cost, was widely criticized as a payback to Big Labor for their continued political support.

There is a cost to taxpayers for such favoritism. Studies have found that reduced competition and workplace inefficiencies resulting from PLAs typically slap taxpayers with an additional 12 percent to 18 percent in construction costs, even when construction employee wage and benefit rates are held constant by government-determined rates mandated by the federal Davis-Bacon Act and similar state laws.

And the negative impact of PLA scams on communities is complemented by other Big Labor schemes — called job targeting or market recovery programs — designed to increase union market share, create union jobs, boost union membership and attack the principles of fair and open competition. 

What are union job targeting/market recovery programs ?

As documented succinctly by the Cement Masons and Plasterers Union Local 528 (pdf), job targeting schemes, also known as market recovery programs, collect fees from the dues of union members for the purpose of providing subsidies to union contractors on projects where they face competition from merit shop contractors.  Like PLAs, the subsidies are designed to give union contractors an unfair bidding advantage on projects.

The money collected from union workers is pooled into a Market Recovery Fund controlled by union bosses.  Typically, a union contractor reaches an agreement with the union bosses of the union they are signatory to that says that the Market Recovery Fund will subsidize the contractor $X for a specific job to underbid a merit shop competitor.  If the union-signatory contractor is successful and wins the job, the contractor receives job targeting money from the union, funded by past deductions from union workers’ wages, in exchange for using union labor and paying union rates.

Job targeting/market recovery programs have been used by almost all building trade unions. These programs often target specific contractors in a construction market and try to drive them out of business or out of a construction market forever by making it impossible for them to win a construction contract.

How is job targeting/market recovery hurting competition?

“My company has lost numerous contracts and millions of dollars in private and public works contracts because the local IBEW union and it’s signatory union contractors have used these job targeting schemes to underbid me on almost every public and private job in the area,” said an electrical contractor from the Midwest, who asked not to be named for fear of inviting additional attention from the unions. “I’ve had to lay off almost fifty percent of my existing workforce in the last 12 months because we can’t get work. Yes the economy is tough, but we have positioned ourselves to win these contracts if not for these job targeting schemes.” 

“The families of my current and former employees are really suffering because of this racket. It really needs to be outlawed.”

“Imagine the outrage from lawmakers and the media if my business and my competitors colluded and pooled resources with the intent of driving union contractors out of the market?” said an HVAC contractor from Tennessee, who also asked to remain anonymous. “Union contractors can’t compete against me in a fair and free market, so they cheat.”

“There is no reason on earth why unions should be able to use job targeting programs – which are nothing short of using kickbacks from a slush fund – to give them an unfair advantage over their competition,” said Jim Elmer, ABC 2009 chairman and president of James W. Elmer Construction Co., Spokane, Wash. “The bottom line is that job targeting hurts U.S. workers, taxpayers and the economy, and it’s a practice that should be stopped.”

If you think job targeting isn’t happening in your community or isn’t a widespread problem, think again.

An April 2009 study published by George Mason University’s John M. Olin Institute for Employment Practice and Policy found that construction industry unions spent more than $1 billion between fiscal year 2000 and 2007 in job targeting schemes.

In addition to this staggering number, according to this summary, the study also found that:

  • Job targeting programs needlessly increase public construction costs.
  • Job targeting programs give unions and their subsidy recipients an unfair advantage in the bidding process.
  • Job targeting programs are often unknowingly funded by taxpayers.

Here is a presentation on key data from the study.

Is job targeting/market recovery legal?

Job targeting has long been criticized as unfair competition, and has been found to violate the Davis-Bacon Act, under some circumstances (when there is evidence that funding source for the program have been derived, in part, from wages paid to union members under the Davis-Bacon Act).

Remarkably, market recovery/job targeting has also been found to be a protected union activity, under other circumstances, by the National Labor Relations Board (NLRB). There are several pending legal cases which raise issues under state prevailing wage laws and antitrust laws.

What to do if you have been harmed by job targeting/market recovery programs.

After documenting job targeting programs that violate the law, contractors victimized by illegal job targeting programs often file a complaint with the NLRB or the U.S. Department of Labor with the assistance of an attorney specializing in labor issues.

They start by gathering evidence that a local union is engaged in job targeting/market recovery programs through internet research and interviewing local union and merit shop contractors and employees.

The Labor Management Reporting and Disclosure Act (LMRDA) requires unions to disclose job targeting expenditures on financial reports (known as LM-2s) filed with the U.S. Department of Labor’s Office of Labor Management Standards (OLMS).  The public can review these disclosure forms at the OLMS Public Disclosure Page and find contractors that have received job targeting money during the reporting year from a specific union or multiple unions.

Unfortunately, the forms do not require unions to disclose which jobs were subject to job targeting schemes in previous reporting years and the public won’t be able to tell which contractors received job targeting money in the current reporting year (and on specific jobs).

Next, contractors collect evidence that funds for the program have been derived, in part, from wages paid to union members under the Davis-Bacon Act.

Finally, contractors collect evidence that funds from the program are being paid to employers.

After filing complaints, some contractors have won judgements against unions and contractors party to these schemes, while other contractors complain that the NLRB and the Department of Labor don’t enforce their own laws.

Contractors dissuaded from expensive legal proceedings often raise awareness about job targeting with with local lawmakers, the media and local associations representing the construction industry.

Some states have passed measures to disclose or ban the practice of job targeting/market recovery funds on public works projects but these programs can be  poorly enforced, as is the case under the current Administration and the NLRB.

In the private construction market, contractors have educated customers about this practice and have successfully asked them to prohibit contractors from receiving and paying into job targeting funds on their projects because it distorts the competitive market and will eventually increase construction costs for all private construction owners. 

The free market meddling of job targeting/market recovery programs is another tactic similar to government-mandated PLAs that Big Labor utilizes to distort the free market and ensure that public works contracts are won by unionized contractors at the expense of taxpayers and qualified merit shop contractors and their skilled employees.

The anti-competitive and costly practice can be curtailed through legal, political and public relations strategies but it is a tough fight and one worth having.

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11 Responses to Big Labor’s Job Targeting & Market Recovery Schemes: They Can’t Compete, So They Cheat

Big Labor’s Job Targeting & Market Recovery Schemes: They Can’t Compete, So … – The Truth About PLAs | HVAC Contractors Orlando Florida April 4, 2011 at 1:20 pm

[…] Big Labor’s Job Targeting & Market Recovery Schemes: They Can’t Compete, So …The Truth About PLAs“Imagine the outrage from lawmakers and the media if my business and my competitors colluded and pooled resources with the intent of driving union contractors out of the market?” said an HVAC contractor from Tennessee, who also asked to remain … […]

Big Labor’s Job Targeting & Market Recovery Schemes: They Can’t Compete, So They Cheat April 4, 2011 at 3:30 pm

[…] total cost, was widely criticized as a payback to Big Labor for their continued political support.…Tagged as: Big Labor, Davis-Bacon Act, Executive order, federal construction projects, merit shop […]

frank o'brien August 5, 2012 at 2:42 pm

Spoken like typical scab assholes.I’m sure you
pay your employees an honest wage for their
skill level and abilities and cover their benefits.And
I’m definitely sure that you pad your bankroll while
doling out the least that you can get away with and
will fire anyone who questions your ethical practices.Now,I don’t know you,I’ve worked at
several non-union HVAC shops before joining
the union and the owners were good,honest
bosses and not rabid anti-union assholes,like you
and your spewers of lies and untruths.A little
information for you toads,PLA’s are not meant to
lock out non-union contractors from the process.
As long as they agree to pay their employees the going wage rate for the project and abide by the rules then what’s the problem?I know,it comes down to your wallet and not being able to pay your workers their slave wages…tough shit.

Andy Conlin August 6, 2012 at 11:01 am

Except that PLA mandates on public projects are specifically designed to give union contractors a leg up against their nonunion competition. On public construction projects, all construction workers should have the opportunity to compete for project funded by their own tax dollars – not just those with a union card.

Eric Coffelt January 30, 2013 at 11:40 am

Interesting article, I work for Local 528, Im glad to what we are doing to raise the quality of life for workers, and help good contractors procure work is working. Your article of course left out many things, let me fill in the gaps. First, our market recovery program was voted on by our membership (a benifit not all workers get without threat of being fired), and approved quite signifigantly by them. Secondly, this was a messure that was taken as a result of some”Merit” contractors that were taking advantage of their workers. Some of the things we have seen include, exploiting illegal workers (not paying overtime, or not paying prevailing wage required by law, then threatening workers with deportation if they complained ect.) Setting up fake pesion plans, (telling workers they have a pension plan, when the owner was stealing the money for himself). Not providing safety equipment mandated by law. Im sure that You and the ABC does not encourage this type of activity by “Merit” contractors, but I can assure you that it does happen. Something that we all should be concerned with, is that these practices give the entire community a black eye, We should all be concerned with these Prevailing Wage violations. Its OUR money! There are laws that are being broken, with OUR tax money! It should be going to the workers. I hear much talk about “Merit” contractors but precious little about the workers that are constantly taken advantage of, what of them?
I take offense to your accusations of “cheating” and added expense to tax payers (which I described above, is totally FALSE). Our contractors and members both get a lot out of our market recovery plan. We welcome the opportunity to talk with any contractor about our market recovery program and show them how we can help make their company and our community a better place. Our community is stronger when we lift up people around us.

Ben Brubeck January 31, 2013 at 1:24 pm


Thanks for your response. I’m glad to hear this program was approved by members. Many union members are unaware of this subsidy program and are shocked when they learn the details.

I don’t condone the antics of BAD union AND nonunion contractors. As you know as a union organizer for your union, there are bad apples in every bunch. But this policy is hurting good contractors…contractors and their employees you might someday want to organize.

It’s obvious from the quotes by the contractor in this piece his employees are harmed by job targeting schemes. So is his company.

The community you claim to care about is not getting stronger from this practice. It is only benefitting your interests, which is troubling.

This practice does increase costs in the long-term as nonunion competitors are driven out of a market. It certainly discrminates against nonunion firms and employees.

brynn217 May 29, 2013 at 11:28 am

Well, you all do have it wrong and do not look at the big picture…

Davis/Bacon Wages are usually BELOW Union Scale… When a Davis-Bacon Job is bid, the rate on that date is frozen in place until competition of the job, which could be 5 years. During that 5 years the Union rates go up. We have had jobs here that the Davis-Bacon rate was $16 an hr while the Union Rate was $30 an hr at the start of some jobs… how are Unions supposed to compete? The Targeting of Jobs are used to help EVEN the playing field, not make it unfair…. however a large Target is usually a max of $6-$9 an hr…

Even on jobs where the rates are the same, Unions can’t compete because the Non-Union competition are cheating… they cheat 90% of the time, mostly by not paying or telling their employees that they are on scale job. We have reported such activity when it can be proven.

And I do not know of any Target program that uses Tax Payer money. They actually use money from my check, and my brother’s checks…. They use the money collected from members to pay out hours worked on jobs selected to be Targeted at the beginning of the job to the contractor awarded the job. Every Union votes on these funds and approves them.

Billy Madison April 4, 2015 at 6:05 pm

I can’t believe how ignorant these union employees are who have posted comments on here, do they not realize how much of their hard earned money is going the union bosses accounts? They never realize it because it is done through payroll deductions, but the reality is the union bosses are taking THEIR wages, and the union bosses are earning a lot more than rank and file union workers who are the true victims here, however they are victims of there own ignorance.

Tim October 13, 2015 at 8:58 pm

Why are merit contractor organized and their employees not. do you think they are working against unions or their employees? The distance between the have and the have nots gets larger everyday. Name one benifit that nonunion has brought to the work place? Think about it, every benfit that people recieve at work today was fought for by the unions. i f the unions go away say good by to the middle class.and hello low wages and no benifits,safety,long hours. We need to work together to keep this country strong just like our forefather did.Union fight for the rights of workers, all workers.

Scott October 28, 2015 at 11:29 pm

Hey Ben, the community is being served by having its local workers being paid a living wage, and benefits. The community is being served by building ,and growing a union local for this and the next generation. Someplace where local high school,and college graduates can join and get a career that they can raise a family respectfully.

chris February 15, 2017 at 3:36 pm

The tax payers would be paying more it it was not for unions because nonunion companies only pay $9.00/hour so although these workers are breaking their backs trying to provide for their family they will have to depend on the welfare system.

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