In June, the U. S. District Court for the District of New Jersey found that a 2007 Jersey City ordinance requiring project labor agreements (PLAs) on private projects receiving tax abatements is preempted by the National Labor Relations Act (NLRA).
The case involved a Jersey City ordinance encouraging private developers to invest in the city by offering tax abatements for private developments on the condition developers require construction contractors to enter into a PLA to perform work on a project.
In August, 2014, the New Jersey Chapter of ABC (ABCNJ) led a group of merit shop contractors in filing a suit, arguing the ordinance was preempted by federal law and Jersey City was acting as a market regulator and not a market participant.
After the District Court dismissed the complaint on the grounds that the preemption doctrine did not apply to the city, the chapter brought the case to the Court of Appeals for the Third Circuit in June 2016. In September 2016, the appeals court reversed the decision of the lower court, holding that Jersey City was, in fact, a market regulator in its enforcement of the PLA ordinance and remanding the case to the District Court for preemption analysis. See Associated Builders & Contractors Inc. v. Jersey City (3d Cir. 2016).
The June 15, 2017, decision came from District Court Judge Susan Wigenton, who determined that the ordinance “directly intrudes on § 7 and § 8 of the NLRA,” according to her opinion. See Associated Builders and Contractors Inc. v. Jersey City, No. 14-5445 (D.N.J. 2017).
The Court also held that the PLA ordinance’s attempt to regulate the operation and reporting of apprenticeship programs intruded upon and therefore was preempted by the Employee Retirement Income Security Act.
The ruling will create a level playing field for all qualified contractors competing for work on Jersey City tax-abated projects. It also calls into question the legitimacy of similar anti-competitive local ordinances imposing PLA requirements as well as ordinances requiring contractors to participate in apprenticeship programs.
Jersey City to Adopt New Discriminatory PLA Policy
However, following the loss, NJ.com reported July 19 that Jersey City is pursuing an ordinance tailored around the judge’s decision that will require developers who receive long-term tax breaks for construction projects costing $25 million or more to mandate a PLA on all prime contractors and subcontractors performing work on the project. Most or all contractor craft employees on the jobsite would have to be referred to the project from the union hiring halls, which will discourage competition from local and qualified nonunion contractors and construction workers.
NJ.com reported August 14 the Jersey City council is meeting August 16 to make a final decision on the ordinance and reported, “the local chapter of the NAACP objects to the measure, saying it does not go far enough with its requirements that developers hire local workers and people of color.”
Update: After hours of debate and vigorous opposition from members of the NAACP, the Jersey City Council approved a new pro-PLA ordinance (City Ordinance 17-104) narrowly tailored around the Third Circuit’s ruling by a 6-3 vote.
In response to 2012 action by the Jersey City Council to require PLAs on certain tax-abated projects in the city, and continued use of PLAs on other projects, the Jersey City Political Action Committee (JCPAC) put together a video outlining how Jersey City policies promoting PLAs have excluded minorities from working on local projects instead of leading to increased participation, as proponents of those policies claimed would happen.
Steven Mays, a former union member and African-American Jersey City resident, testified in the video that a union, IBEW 164, sent him to other jobs in the state but none in his hometown. After complaining to union officials and lawmakers, he was harassed and kicked out of the union.
Mays said, “From what I have seen on Jersey City construction sites, the only jobs being made available to locals and minorities are the laborers jobs…The higher paying and higher skilled jobs are just no available.”
President and CEO of the African American Chamber of Commerce of New Jersey, John Harmon, also said, “From my personal experience and the research I have seen, PLAs have had no favorable impact on employment and contracts for minorities and women in construction… In most urban cities in New Jersey, the elected Democratic officials’ campaigns are overwhelmingly funded by unions who promote project labor agreements under the pretense that they will create jobs and contracts for minority and women. But in reality, the real winners are the elected official and the unions. No jobs, no contracts for minorities and women.”
Learn more at www.TheTruthAboutPLAs.com, Jersey City Project Labor Agreement Policies Fail to Deliver Local Jobs. 1/28/14.
Study Finds New Jersey School Construction Under PLAs Fell Short of Minority Participation Goals
An October 2010 report by the New Jersey Department of Labor nd Workforce Development examining FY 2008 school construction projects found that PLA projects fell short of the goals for minority participation by a wider margin than non-PLA construction projects. PLA projects missed their minority hiring goals by 11.6 percent, while non-PLA projects missed their goal by 1.2 percent.
The report also found school construction projects in the state subjected to government-mandated PLAs were 30.5 percent higher than all non-PLA projects. The same report found PLA projects tended to have a longer duration than non-PLA projects. For FY 2008, the average duration of PLA projects was 100 weeks compared with 78 weeks for non-PLA projects.
See Annual Report to the Governor and Legislature – Use of Project Labor Agreements in Public Works Building Projects in Fiscal Year 2008, New Jersey Department of Labor and Workforce Development. October 2010.
Update: A study released in August 2019 by the Beacon Hill Institute found that New Jersey schools built under controversial government-mandated project labor agreements cost 16.25% more than schools that were bid and constructed through fair and open competition, free from PLA requirements. The study, which looked at 107 schools built in New Jersey since 2002, found that those built under a PLA mandate cost $57.84 more per square foot (in 2018 prices) relative to non-PLA projects. Taxpayers would have saved $565.1 million, or more than $7.1 million per project, if PLAs had not been used.
PLAs Are Not a Solution to Minority and Local Hire
Unions and PLA advocates entice the public into accepting anti-competitive and discriminatory PLAs under the guise they will create local jobs for minority and local workers and businesses. But union membership and the hiring halls do not necessarily draw from a local or diverse.
Unfortunately, members of the local and minority contracting community in Seattle, Philadelphia, Washington, D.C., Baltimore, New York City, New Bedford, Conn., Detroit, Des Moines, Las Vegas, Santa Fe, San Diego, San Francisco, Los Angeles and Oakland have made similar complaints recently about government-mandated PLAs failing to deliver jobs for local and minority contractors and construction workers, despite promises by pro-PLA lawmakers and unions.
The public record of poor performance of PLAs demonstrates promises of local hiring and minority inclusion are not consistently met, which is not surprising, especially when more than eight out of 10 U.S. construction workers are not unionized and the vast majority of minority contractors are not unionized.
Unions and their advocates entice the public into accepting anti-competitive and discriminatory PLAs by promising to create jobs for minority and local workers and businesses. However, the truth is local hire can only be achieved by ensuring all construction workers and contractors, regardless of union affiliation, are not burdened by union-favoring PLAs. If lawmakers want to require local and minority worker and contractor participation, they should remove unions from the equation and pass fair laws controlling which qualified workers and contractors can participate on taxpayer-funded construction contracts. Given the workforce shortage plaguing many markets, it makes more sense to enact an inclusive policy that will benefit all.
Lawmakers can help all stakeholders instead of special interests by building safe and quality projects on-time and under-budget through fair and opn competition, free from discriminatory PLA mandates.