The Truth About Project Labor Agreements

In control for the first time since 1993, Democratic leadership in Virginia’s General Assembly is poised to pass legislation at the expense of Commonwealth taxpayers who finance the construction and maintenance of schools, affordable housing roads, bridges and other infrastructure projects in disrepair.

Legislation introduced by Sen. Saslaw (SB 182) and Del. Lopez (HB 358), will eliminate Virginia’s Fair and Open Competition statute restricting government-mandated project labor agreements, which will allow state and local governments to mandate PLAs on public works construction projects.  Other bills by Sen. Surovell (SB 995) and Del. Lopez (HB 1635) eliminate fair and open competition protections on metrorail construction projects procured by the Washington Metropolitan Area Transit Authority, which would permit future PLA mandates on metro construction projects similar to the controversial failed attempt to mandate a PLA on Phase 2 of the Silver Line.

When mandated by governments, PLAs prevent nonunion contractors and subcontractors—which employ 97.8% of Virginia’s construction workforce—from building and working on projects funded by taxpayer dollars. As a result, taxpayers can expect to pay 12% to 20% more on all government-mandated PLA projects.

In addition, legislation introduced by Sen. Saslaw (SB 8) and Del. Carroll Foy (HB 833) would result in prevailing wage requirements on construction projects at non-market rates set by the U.S. Department of Labor, via the 1931 Davis-Bacon Act. As amended, Sen Saslaw’s SB 8 sets a threshold of $250,000, on all state construction projects. And as amended, Del. Carroll Foy’s HB 833 requires prevailing wages on all state construction projects and allows localities to pass an ordinance requiring prevailing wages on local projects.

Research suggests prevailing wage regulations increase compliance and regulatory burdens on small businesses and increases construction costs from 10% to 25%.

The net impact of both of these bills is that it will lead to tax hikes or fewer public works construction projects procured by the Commonwealth’s state and local governments. In addition, it will needlessly steer contracts to out-of-state unionized businesses and unionized workers at the expense of Virginia’s construction industry.

At least 46 construction unions gave a total of $1.68 million in direct contributions to Democratic political campaigns during Virginia’s 2018-2019 cycle, according to campaign filings compiled by the Virginia Public Access Project, a nonprofit that monitors campaign contributions by special interest groups.

It isn’t a coincidence that almost 60% of the aforementioned $1.68 million in political contributions this election cycle—almost all to Democratic lawmakers—came from out-of-state construction unions with a vested interest in getting the Virginia’s new leadership to stifle competition from local and qualified businesses.

Tuesday is Virginia’s legislative crossover deadline and SB 182, SB 8 and HB 833 will come up for a vote before crossover. HB 358 has already passed the House.

Virginia residents can contact their lawmakers and oppose these measures through this grassroots campaign website.

Alternatively, stakeholders with employees, offices and contracts in Virginia can customize this message or the below message and email it to targeted Senate lawmakers.

UPDATE: ABC spoke to Les Sinclair with NewsRadio WINA on Feb. 10 and John Reid of News Radio 1140 WRVA Feb. 12 about these bills as well as the death of bills gutting and eliminating Virginia’s right to work law. In addition, check out ABC Virginia member Eric Stichler’s Feb. 12 op-ed in the Virginia Pilot, “Legislation could raise public costs of building projects,” and ABC’s Feb. 19 op-ed in Bacon’s Rebellion, “Non-union Construction Workers Need Not Apply,” expressing concerns about pro-PLA and prevailing wage legislation moving through the Virginia General Assembly.

UPDATE #2: Tuesday was Virginia’s legislative crossover deadline, and all six of these bills passed their chamber of origin. Both chambers must now pass their opposite chambers’ bills by the legislative session’s sine die adjournment March 7 in order to give Gov. Ralph Northam (D) 30 days to consider the legislation. If bills are sent to Gov. Northam’s desk before March 1, he has seven days to take action. The General Assembly is scheduled to reconvene on April 22 for the purpose of considering bills which may have been returned by the Governor with a veto or recommendations for their amendment.

UPDATE #3: HB 358 was passed 8-3 with 4 abstentions (see discussion and vote at 1:29:10 during the hearing) and HB 833 passed 12-3 along party lines (see discussion at 1:37:00 during the hearing) by the Senate Labor and Commerce Committee on Feb. 17, 2020.

Both measures are on third reading and are expected to be voted on by the full Senate as early as Feb. 20, 2020. Please contact your Senators today.

UPDATE #4: On Feb. 25, the Virginia Senate passed along party lines 21-19 Del. Caroll Foy’s HB 833, which mandates prevailing wage rates on state public works construction projects exceeding $250K and permits localities to mandate prevailing wage rates on local public works projects. The House Labor and Commerce Committee passed Sen. Saslaw’s SB 8, which is HB 833’s Senate companion bill, and it has been referred to the House Appropriations Committee. The full House will likely take action soon once it is voted out of committee.

Feb. 26 the full Senate passed HB 358, which is Del. Lopez’s PLA bill. Feb. 25, the House Labor and Commerce Committee passed SB 182, the Senate companion bill. It will soon move to the full House floor for a vote.

Please continue your grassroots outreach to members of the Virginia General Assembly.

Sample Email to Lawmakers:

Subject: Reject Bills Harmful to Virginia’s Taxpayers and Construction Industry (SB 182/HB 358, SB 995/HB 1635 and SB 8/HB 833)

Dear Senator,

As a member of Virginia’s construction industry, I am writing to tell you how proposed anti-competitive and costly legislation will harm Virginia’s small businesses, kill jobs for Virginia’s skilled construction workforce and needlessly force taxpayers to pay more for fewer construction projects.

Legislation introduced by Sen. Saslaw (SB 182) and Del. Lopez (HB 358) will eliminate Virginia’s Fair and Open Competition statute restricting government-mandated project labor agreements – or PLAs—and allow state and local governments to mandate anti-competitive and costly PLAs on public works construction projects procured by state and local governments.  Other bills by Sen. Surovell (SB 995) and Del. Lopez (HB 1635) eliminate fair and open competition protections on metrorail construction projects procured by the Washington Metropolitan Area Transit Authority, which would permit future PLA mandates on metro construction projects similar to the controversial failed attempt to mandate a PLA on Phase 2 of the Silver Line.

When mandated by governments, PLAs prevent nonunion contractors and subcontractors—which employ 97.8% of Virginia’s construction workforce—from building and working on projects funded by taxpayer dollars.

Government-mandated PLAs force contractors to follow union work rules and hire most or all workers on a jobsite from specified union hiring halls and union apprenticeship programs instead of journeyman and apprentices already employed by their company. That limits the pool of bidders, since nonunion contractors and even some union contractors don’t want to abandon their existing employees and quality-control practices—key components of a safe and productive workplace—for strangers from union halls governed by unfamiliar rules.

Government-mandated PLAs also cause nonunion workers (and some union workers) to lose an estimated 20% in wages and benefits unless they join a specific union, pay membership dues and meet the union benefits plan’s vesting requirements. It’s a form of wage theft that will harm working families employed in Virginia’s construction industry, as well as Virginia taxpayers.

For these reasons, a total of 25 states—including Virginia in 2012 (HB 33)—have passed measures prohibiting government-mandated PLAs on public works projects, thereby ensuring fair and open competition on taxpayer-funded construction projects so the public can get the best possible construction project at the best possible price.

In short, the proposed legislation will allow state and local governments to harm Virginia’s small, women- and minority-owned businesses, kill jobs for Virginia’s skilled construction workforce and needlessly force taxpayers to pay 12% to 18% more for construction projects likes schools, affordable housing, roads, bridges and other infrastructure needs when PLAs are mandated. Virginia lawmakers should be creating opportunities for all Virginians to rebuild their communities instead of only well-connected special interests.

In addition, legislation introduced by Sen. Saslaw (SB 8) and Del. Carroll Foy (HB 833) would result in prevailing wage requirements on public works construction projects at rates set by the U.S. Department of Labor, via the 1931 Davis-Bacon Act.

As amended, Sen. Saslaw’s bill requires the payment of prevailing wages on all state construction projects greater than $250,000. And as amended, Del. Carrol Foy’s bill requires payment of prevailing wages on all state construction projects and permits localities to adopt ordinances requiring prevailing wages on local projects.

Unfortunately, the U.S. Government Accountability Office has concluded DOL’s wage determination process is unscientific and fundamentally flawed, because it typically sets rates that are anything but local, prevailing, timely or accurate.

Coupled with reducing competition and increasing compliance and regulatory burdens on businesses, it is no surprise the track record of prevailing wage laws in other states suggests it will result in increased construction costs from 10% to 25% that Virginia simply cannot afford.

The net impact of both of these proposals is that it will lead to tax hikes or fewer public works construction projects in Virginia, needlessly increase construction costs and steer contracts to out-of-state unionized businesses and unionized workers at the expense of 97.8% of Virginia’s construction workforce.

I’d welcome the opportunity to discuss these important issues with you further as you evaluate this proposed legislation and urge you to oppose these measures. Thank you for your consideration.

Sincerely,

Concerned Voter