The Truth About Project Labor Agreements

Gov. Rick Snyder (R) has signed Michigan S.B. 165, which will prohibit the use of wasteful and discriminatory government-mandated project labor agreements (PLAs) on state, local, university and state assisted construction in Michigan.

This will have serious implications in places like Ann Arbor, Detroit, Macomb County and Michigan State University, where past PLA requirements have excluded merit shop contractors and the 80 percent of the construction workforce that chooses not to join a labor union from competing for projects funded by their own tax dollars.

This is a huge win for the construction industry in a state battered by a decade worth of crippling unemployment.  While Michigan was one of the first states to enter The Great Recession, actions like prohibiting government-mandated PLAs on state funded work show that Michigan lawmakers refuse to be the last ones out.

In fact, this Act is already paying dividends for taxpayers.  Local officials were forced to remove a PLA requirement from the bid specifications on upcoming construction of the Clio Service Station in central Michigan.

Michigan is the 7th state to ban government-mandated PLAs this year and the 11th to do so overall.  Taxpayers in communities from sea to shining sea are saying no to the waste inherent in government-mandated PLAs.

This is also one more repudiation of President Obama’s Executive Order 13502, which encourages federal agencies to require PLAs on federal construction over $25 million.

States to ban government-mandated PLAs:

Here is ABC of Michigan’s press release:

Governor Signs Open Competition Bill Ensuring Labor Neutrality in Public Construction

Today Governor Rick Snyder signed into law landmark legislation prohibiting the use of union-only labor agreements on state and local governmental construction projects. The Fair and Open Competition in Governmental Construction Act will result in governmental neutrality with regard to labor affiliation ensuring that no qualified worker or contractor can be denied equal opportunity or the ability to work on public contracts based on their labor status, says Associated Builders and Contractors of Michigan (ABC).

“In today’s economy, the state cannot afford to pay for what amounts to special interest kickbacks to favored political groups,” stresses Chris Fisher, President of ABC of Michigan. “The end to anti-competitive picking of winners and losers means the beginning of a new era of fiscal accountability on construction projects paid for by public tax dollars. We applaud Governor Snyder for standing up for equal opportunity for all workers and fiscal accountability on behalf of all taxpayers.”

The new act means that the state, local governments, schools and universities can no longer enter into controversial contract terms that mandate the use of so-called Project Labor Agreements (PLAs). Under PLAs, only firms and workers that agree to abide by collective bargaining agreements are allowed to perform work on a public construction project, effectively excluding about 75 percent of the possible qualified pool in Michigan, according to the US Bureau of Labor Statistics. The decreased competition diverts projects to a small pool of unionized companies resulting in less competition that can drive up the cost of public projects, often as much as 20 percent. The legislation will prohibit such practices and ensure a level playing field for public contracting.

“PLAs limit competition by exclusively awarding construction work to contractors that subject themselves and their employees to the terms of union collective bargaining agreements in order to work on a government-funded construction project” explained Fisher. “Instead of deals that either mandate or forbid union agreements, all workers and contractors, union and nonunion alike, should be treated equally, and all taxpayers deserve the accountability that results from competitive bidding that is open to all qualified contractors.”

ABC of Michigan, a statewide trade association representing the commercial construction industry, is dedicated to quality, open competition, equal opportunity and accountability in publicly funded construction projects.

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UPDATE:

Gov. Snyder’s office issued a press release after signing S.B. 165 and several others bills.  Here’s what the governor had to say about PLAs:

“This legislation is important because it gives everyone equal opportunity to compete for jobs,” Snyder said. “Governments need to make decisions based on competitive bidding and value for taxpayer money. Union and non-union companies and their work forces are all valued and will continue to be able to partner on projects.”

The AP also picked up this story and it has been added to MLive.com.