Study: Project Labor Agreement Mandates Inflate the Cost of Connecticut School Construction by 19.8%

0 February 13, 2020  Featured, School Construction, State & Local Construction

study released in January 2020 by the Beacon Hill Institute found that Connecticut schools built under controversial government-mandated project labor agreements cost 19.8% more than schools that were bid and constructed through fair and open competition, free from PLA requirements.

The study, “The Effect of Project Labor Agreements on Public School Construction in Connecticut,” which reviewed data on 95 school construction projects from 2001 to 2019, found that those built under a PLA mandate cost $89.33 more per square foot (in 2019 prices) relative to non-PLA projects. Taxpayers would have saved $503.5 million, or more than $9.7 million per project, if PLAs had not been used.

“This study confirms what we have been saying all along: Government-mandated project labor agreements unnecessarily and significantly drive up construction costs, forcing taxpayers to pay more,” said Chris Fryxell, president of the Connecticut Chapter of the Associated Builders and Contractors. “For years, our state has struggled with fiscal and budgetary issues, including the availability of funds for construction projects. We should be looking to spend every tax dollar as wisely and efficiently as possible, and step one should be the elimination of government-mandated PLAs.”

Fryxell noted that costs are not the only consequence of PLAs— they also have the effect of discriminating against local workers and contractors, based solely on their non-affiliation with a labor union. This can also allow out-of-state union contractors to obtain Connecticut public construction work ahead of local merit shop contractors if the local unions cannot meet labor demands for a project.

“Roughly 85% of the construction industry in Connecticut chooses not to sign on with a union,” said Fryxell. “PLAs effectively prevent those local, qualified workers and contractors from getting a fair opportunity to work on public projects paid for by their own tax dollars, and that’s just wrong.”

Currently, 25 states prohibit government-mandated PLAs, but Connecticut is not among them. Fryxell urged legislators and government officials to read the report and look at the data when they make decisions on the use of PLAs.

“The latest study by the Beacon Hill Institute corroborates 2019 research in New Jersey, and previous 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.”

ABC has long opposed wasteful and discriminatory PLA mandates, which past academic studies have shown drive up the cost of construction projects by 12% to 20% and which discriminate against the 87.4% of U.S. construction workers who choose not to join a union.

“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.”

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; 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.

“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. “Our recent study of 96 Connecticut school construction projects showed that PLAs added 19.84% to construction costs, with the result that the state spent $503 million more on those projects than it would have without the PLAs. This in accord with past studies we have done showing that PLAs consistently add more to costs or bids compared to non-PLA projects. The only possible interpretation is that PLAs are an expensive way of kowtowing to the construction unions wherever they are implemented.”

ABC members overwhelming reported that government-mandated PLAs harm their businesses, hiring and workforce development practices and ability to complete work safely, on time and on budget, according to the results of a membership survey published in 2019.

Ninety-eight percent of survey respondents said they were less likely to bid on a taxpayer-funded construction contract if the bid specifications required the winning firm to sign a PLA with labor unions, and 97% of survey respondents said a construction contract that required a PLA would be more expensive compared to a contract procured via free and open competition.

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