Connecticut: A Cautionary Tale
There was an outstanding op-ed published in Forbes magazine in early August that warrants highlighting.
In an opinion piece titled, “How Did Rich Connecticut Morph into One of America’s Worst Performing Economies?” economist Jim Powell describes how Connecticut, despite its numerous advantages in geography and individual income levels, lags behind most of the rest of the country in nearly every macroeconomic indicator.
Powell cites several economic statistics, including the state’s national ranking in economic growth and the number of small business start-ups, to make a compelling case that Connecticut needs a course correction.
Mid-way through his piece, Powell also notes the state’s history of wasteful and discriminatory project labor agreement (PLA) mandates:
Politicians have made Connecticut’s state and local governments more costly by promoting unionized construction companies for public projects. Governor Malloy has backed “project labor agreements” to help do that. The Hartford Board of Education has required that bidders agree to “perform all project work with union labor.” A 2007 study by economists Paul Bachman and Jonathan Haughton showed that project labor agreements increased public school construction costs between 9 percent and 15 percent. Remember that the next time you pay a property tax bill.
Even officials from the Connecticut Department of Transportation recognize PLA mandates restrict competition and increase costs:
Kevin Nursick, spokesman for the state Department of Transportation, said it wouldn’t be in the state’s best interest to require union labor on the big highway and bridge projects.
“Our (bidding) process is intended to produce the best product at the lowest possible price for taxpayers,” he said. “Thus, we believe that (requests for proposal) should be unencumbered by any provisions which could limit the pool of prospective respondents.”
This is a must-read for anyone looking to learn more about how not to run a state. Connecticut could be a leader, but instead is a case study in the negative impact of bad public policy.
Here at TheTruthAboutPLAs.com, we find government-mandated PLAs are often a symptom of larger, systemic government problems. PLA mandates are most common where political money and the desire to sustain political machines trump good policy and value for taxpayers.
On the other hand, states where PLA mandates are uncommon or prohibited by state law are often the best places for business. According to Chief Executive magazine, eight of the 10 best states for business do not have regular PLA activity. Meanwhile, all 10 of the worst states for business, as rated by the same publication, either are now or have been hotbeds for government-mandated PLA activity.
Government-mandated PLAs deprive taxpayers of the accountability they deserve on public construction projects. If you live in a state where PLA mandates are common, there is a good chance your elected officials are spending more time worrying about currying favor with construction union bosses than protecting taxpayers and the vast majority of the construction workforce. More troubling, it is likely that construction union bosses aren’t the only special interest group your politicians are trying to please.
And that is how a state like Connecticut ends up at the bottom of the economic totem pole.