Study: Project Labor Agreement Mandates Inflate Cost of New Jersey School Construction by 16.25%

0 October 2, 2019  Federal Construction, Open Competition Works, School Construction, State & Local Construction

study released in August 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.

“The latest study by the Beacon Hill Institute corroborates past research in CaliforniaConnecticut, Massachusetts, New York and Ohio that found anti-competitive government-mandated PLAs prevent taxpayers from getting the best return on their investment,” said ABC Vice President of Regulatory, Labor and State Affairs Ben Brubeck. “There is a reason a total of 25 states have passed laws restricting government-mandated PLAs: All taxpayers deserve efficient, accountable and effective construction spending and investment in schools and infrastructure free from costly schemes that discourage competition from qualified, local workers and contractors.”

“Opponents of government-mandated PLAs argue these controversial agreements end fair and open competition and discourage local nonunion contractors from working on projects in their own communities, which effectively limits competition during the bidding process and drives up construction costs,” said David G. Tuerck, president of the Beacon Hill Institute and co-author of the report. “Based on our research findings, we are confident taxpayers are paying more for construction projects subject to government-mandated PLAs.”

“ABC encourages lawmakers to take the study’s findings into consideration as they deliberate legislation promoting government-mandated PLAs on public works projects,” said Brubeck. “Additionally, ABC encourages President Trump to rescind President Obama’s Executive Order 13502, which promotes costly PLA mandates on federal and federally assisted construction projects, and replace it with a common-sense policy that would guarantee fair and open competition from America’s best construction companies and create opportunities for America’s entire skilled construction workforce.”

In 2009, President Obama signed Executive Order 13502, which strongly encourages, on a case-by-case basis, government-mandated PLAs on large-scale federal construction projects and permits state and local governments procuring federally assisted construction contracts to mandate PLAs.

ABC has long opposed wasteful and discriminatory PLA mandates, which past academic studies have shown drive up the cost of construction projects between 12-18% and which discriminate against the 87.2% of U.S. construction workers who choose not to join a union. PLAs typically ensure construction contracts are awarded only to companies that agree to recognize unions as the representatives of their employees on that job; use the union hiring hall to obtain workers at the expense of existing qualified employees; obtain apprentices through union apprenticeship programs; follow inefficient union work rules; pay into union benefit and multi-employer pension plans workers will never benefit from unless they meet vesting requirements; and force workers to pay union dues and/or join a union as a condition of employment.

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