The Truth About Project Labor Agreements

According to a Bureau of Labor Statistics (BLS) annual union membership report released today, the 2015 union membership rate (i.e., the percent of wage and salary workers who were members of unions) dipped slightly from 13.9 percent in 2014 to 13.2 percent of the U.S. private construction workforce. In addition, construction unions lost 28,000 members in a year-over-year comparison, despite the fact the construction industry workforce grew with the improving economy.

In the U.S. private construction industry, only 940,000 out of 7.109 million construction industry workers belonged to a union in 2015, BLS reports.

Union membership in the U.S. private construction industry has steadily declined. In 1947, approximately 87 percent of its workforce was unionized. In 2015, just 13.2 percent of the construction industry belonged to a union.

In 2010, the construction industry recorded the fewest number of union members in recent years, when just 801,000 workers (13.1 percent) belonged to a union.

Updated state-specific union membership information for various industries, including the construction industry, is available at www.unionstats.com (see table II) (this excel file contains data from 2015 and this excel file contains data from 2014).

Decline in Construction Union Membership Despite Growth in Construction Economy
The construction industry remains on the tail end of the economic recovery but is improving steadily.  The BLS report indicates the construction industry gained 141,000 jobs in a year-over-year comparison (6,968,000 jobs in 2014 vs. 7,109,000 in 2015).The most recent BLS data pegs the construction industry unemployment rate at 7.5 percent, which is an improvement from 8.3 percent in a year-over-year comparison (and certainly better than the decade-high unemployment rate of 27.1 percent in February 2010).However, economists suspect the construction industry’s real unemployment rate is much greater, as a large population of the construction workforce fled the industry for jobs in other sectors of the economy, or left the workforce entirely during the recession.ABC releases monthly state-by-state construction economics data here.

The Impact of Union Membership Data on Federal Contracting
Will the decrease in construction union membership change the public policy debate surrounding government-mandated project labor agreements (PLAs) and President Obama’s pro-PLA Executive Order 13502?

As they did during President Obama’s first seven years in office, some members of Congress and Obama administration officials beholden to Big Labor’s costly special interest agenda will attempt to use PLA mandates and preferences on federal contracts to prop up construction union membership numbers by steering federal construction contracts to unionized firms and create jobs exclusively for union members.

On April 13, 2010, the Federal Acquisition Regulatory (FAR) Council issued a final rule (pdf), effective May 13, 2010, implementing President Obama’s Feb. 6, 2009, pro-PLA Executive Order 13502 into federal procurement regulations. It encourages federal agencies, on a project-by-project basis, to mandate PLAs on federal construction projects exceeding $25 million in total value. The order also permits (but does not require) private, local and state recipients of federal assistance to mandate PLAs—a practice prohibited from 2001 to 2009 by President George W. Bush’s Executive Orders 13202 and 13208.

The negative impact of President Obama’s union-friendly policy on the merit shop contracting community has been muted by effective legal, legislative and public relations campaigns executed by Associated Builders and Contractors and a coalition of industry groups opposed to government-mandated PLAs.

This campaign helped prevent PLA mandates and preferences on nearly 99 percent of federal contracts exceeding $25 million from FY2009-FY2015, freeing up a total of $61.46 billion worth of work from PLA requirements so all qualified firms can fairly compete to win these contracts.

From FY2009-FY2015, ABC member prime contractors won 55.89 percent of large-scale federal contracts subject to President Obama’s pro-PLA Executive Order 13502. That’s 626 contracts valued at a total of $39.80 billion (63.65 percent of total value) won by ABC members.

Despite this success, billions of dollars worth of federal and federally assisted construction projects remain a target for government-mandated PLAs.

As a payback to his construction trade union supporters, President Obama may enact Section 7 of Executive Order 13502 during his remaining time in the White House. Lowering the current $25 million threshold, or expanding the order to apply to federally assisted projects, would expose a much larger portion of the construction industry to PLA threats.

In 2016, expect special interests and their political allies to turn up the heat on federal bureaucrats to ensure more PLAs are attached to federal (and other taxpayer-funded) construction projects.

After all, numerous elected officials have a politically motivated interest in creating jobs for construction union members. Fewer union jobs spell disaster for union institutions, union pension plans, and the politicians that depend on union contributions to get elected and pass public policy needlessly favoring Big Labor.

Politicians understand that a lack of union jobs in the construction industry means fewer union dues and “voluntary” political contributions deducted from union members’ paychecks that are funneled into various union slush funds coordinated through Labor Management Cooperation Committees (LMCCs), 527 groups and Political Action Committees (PACs) that support Big Labor’s political allies.

This symbiotic relationship between Big Labor and its political chums cannot continue without healthy union institutions and political contributions from labor unions that fuel the Democrats’ political machine.

The latest union membership numbers—coupled with the complex relationship of entities dependent on union revenue—point to a greater push for local, state and federal governments to mandate PLAs at the expense of taxpayers and the merit shop contracting community.

Regardless, ABC will continue to lead the fight against government-mandated PLAs.

PLA Mandates on Federal Contracts Is Bad Public Policy
There are valid economic and ethical reasons why promoting the special interests of Big Labor–which now composes just 13.2 percent of the U.S. private construction workforce–through PLAs is bad public policy.

For example, on projects already subject to government-determined prevailing wage rates, research has found PLAs on average increase the cost of construction between 12 percent and 18 percent compared to similar non-PLA mandated projects. With the added cost premium of anti-competitive PLAs, there is less construction money available. Because less construction money means fewer total construction projects and construction jobs, union-favoring PLAs could make unemployment in the construction industry even worse.

In addition, there is no compelling reason (other than political self-interest) to create jobs for union members ahead of qualified nonunion employees via government-mandated PLAs. No credible evidence suggests union members or unionized firms are faster, cheaper, safer or produce better quality results.

Qualified nonunion employees deserve just as fair a shot to feed their families as union members.

Unions should use the ultra-competitive market and tough economy as an opportunity to retool their product and make it more lean and efficient to compete in today’s marketplace instead of relying on government handouts to stay relevant.

The decision to agree to a PLA should be left up to individual contractors rather than being imposed by government agencies as a condition of winning a government construction contract.

Government-mandated PLAs reduce competition, increase costs and discriminate against the 86.8 percent of the U.S. construction workforce that does not belong to a union.

The U.S. economy and the construction industry would benefit from free and open competition, without union-favoring government-mandated PLAs, where taxpayers can get the best possible construction product at the best possible price.