Government-Mandated Project Labor Agreements Exacerbate Construction Industry’s Skilled Labor Shortage

1 March 30, 2021  Featured, Federal Construction, State & Local Construction

The construction industry needs to hire an additional 430,000 craft professionals in 2021, according to an analysis of U.S. Bureau of Labor Statistics data released March 23 by Associated Builders and Contractors.

Yet federal, state and local lawmakers continue to push anti-competitive and costly policies promoting controversial government-mandated project labor agreements on taxpayer-funded construction projects, which are sure to exacerbate the construction industry’s skilled workforce shortage.

Even though more than 87% of the U.S. construction workforce chooses not to belong to a union, PLAs typically force contractors to hire most or all apprentices from union-affiliated apprenticeship programs, as specified in the PLA or applicable union’s collective bargaining agreement referenced in the PLA.

For example, Article 13 of the PLA (pdf) mandated by District of Columbia lawmakers on the federally assisted South Capitol Street Corridor P – Phase 1 Project has the following problematic apprenticeship language (see page 42), which forces contractors to use apprentices affiliated with union programs instead of their own existing apprentices, who are not affiliated with union programs:

This project received federal assistance from the U.S. Department of Transportation’s Federal Highway Administration, which also approved the PLA mandated by the District of Columbia government.

The truth is the vast majority of tomorrow’s construction industry workforce—those participating in government-registered apprenticeship and industry apprenticeship programs not affiliated with unions—would not be able to meaningfully participate on government-mandated PLA jobs, stifling a key workforce development pipeline of skilled labor needed to meet America’s future infrastructure needs.

Government-Mandated PLAs Limit Industry Workforce Development Efforts

According to the results of Associated Builders and Contractors’ 2020 Workforce Development Survey, ABC contractor members invested $1.5 billion on workforce development initiatives in 2019, providing craft, leadership and safety education to 1.1 million course attendees to advance their careers in commercial and industrial construction. Safety education accounted for nearly half of the total workforce investment, averaging $1,147 per employee annually.

In addition, ABC’s 69 chapters and workforce development partners are building a workforce that is safe, skilled and productive, using innovative, competency-based, market-driven education methodologies and flexible learning models and apprenticeships in more than 50 professions. This strategy not only helps the construction industry’s workforce get educated and achieve their career goals, but also recognizes every worker is unique in their desires, skills and dreams, which helps connect high school students, minorities, reentering citizens, veterans and women to rewarding careers in construction.

ABC’s investment in an all-of-the-above approach to workforce development has produced a network of ABC chapters and affiliates in hundreds of locations across the country that offer more than 800 apprenticeship, craft, safety and management education programs—including more than 300 U.S. Department of Labor and state equivalent government-registered apprenticeship programs across 20 different occupations—to build the people who build America.

When Associated Builders and Contractors signed the Pledge to America’s Workers at the White House in July 2018, it promised to educate and develop at least 500,000 construction workers by 2023. ABC far exceeded that goal in 2020.

PLA lobbyists and advocates often disparage ABC’s inclusive workforce development programs and efforts to promote an all-of-the-above workforce development solution to the construction industry’s skilled labor shortage crisis because it threatens their market share and investments in union-affiliated apprenticeship programs.

Besides pushing for anti-competitive and costly government-mandated PLAs, unions lobby their buddies in government to steer taxpayer-funded grants to union apprenticeship programs, create apprenticeship-to-journeyman ratios favorable to unions and mandate apprenticeship program participation requirements on taxpayer-funded public works projects in order to cut competition from nonunion firms, resulting in more contracts for union-signatory contractors and more jobs for union members.

However, the truth is that the vast majority of the construction industry workforce has never participated in union-affiliated apprenticeship programs or government-registered apprenticeship programs.

In addition, some lawmakers and stakeholders are unaware these apprenticeship programs are not keeping up with industry demand for skilled labor to meet the current backlog of construction projects—which stood at to 8.2 months in February 2021, according to ABC’s March Construction Backlog Indicator—and future spending expectations.

Data from the U.S. DOL indicates that in 2020, a total of just 20,354 apprentices from the 25 Office of Apprenticeship states completed construction apprenticeship programs registered with the U.S. DOL. To be clear, the data is from federal OA-registered programs affiliated with construction unions and programs not affiliated with unions such as those run by ABC chapters, ABC member contractors, industry associations, community and technical education workforce development programs.

That means that if the 2020 rate of graduation held constant, it would take almost 21 years for federal OA-registered apprenticeship program completers to fill the estimated 430,000 vacant construction jobs needed in 2021 alone. It is undeniable these programs are not meeting industry demands.

Of note, there are other government-registered apprenticeship programs regulated by states that are similar to the registered programs receiving oversight by the U.S. DOL OA. However, it is unknown how many apprentices completed construction industry apprenticeship programs registered with such state agencies, known as State Apprenticeship Agencies, in 2020.

The DOL’s Registered Apprenticeship Partners Information Data System, which receives data from all 25 OA states and 9 of the remaining SAA states plus Guam, estimated that in 2020, a total of 26,661 apprentices completed construction industry registered apprenticeship programs from RAPIDs participating states.

While it cannot be verified by U.S. DOL data due to data limitations in the RAPIDS program, it is estimated that about 35,000 to 40,000 apprentices completed government-registered apprenticeship programs from all 50 OA and SAA states and DC in 2020.

At 2020 rates, it would take more than 10 years for all government-registered construction industry apprenticeship program completers to fill the estimated 430,000 vacant construction jobs needed just in 2021.

[Note: Since this blog post was published the DOL updated its website with new FY 2020 data. There were 20,749 completers of federal OA-registered apprenticeship programs in the construction industry in FY 2020].

Map of Apprenticeship States SAA v OA as of March 24, 2021.

The Construction Industry Needs Lawmaker Support of an All-of-the-Above Workforce Development Strategy

This data demonstrates that the vast majority of upskilling and workforce development in the construction industry occurs outside of union and nonunion government-registered apprenticeship programs. In addition, an even greater amount of construction industry workforce development and upskilling occurs in programs not affiliated with union government-registered apprenticeship programs because the union apprenticeship programs are almost all registered with the U.S. DOL or state equivalents and are captured in reported government data.

This is why government-mandated PLAs and other policies that require employers to use apprentices from union-affiliated and/or government-registered apprenticeship programs can be problematic from a practical perspective. Excluding the workforce development systems already in place exacerbates the skilled labor shortage facing the entire construction industry by steering work to participants in union-affiliated, government-registered apprenticeship programs at the expense of every other contractor bidding for work.

In short, there needs to be a commitment by policymakers to enact an all-of-the-above workforce development strategy where workers and employers have the freedom to choose the best way to rebuild America’s construction workforce to rebuild America.

ABC Survey Shows Widespread Opposition to Government-mandated Project Labor Agreements

ABC members overwhelmingly say government-mandated PLAs harm their company hiring and workforce development practices and ability to complete work safely, on time and on budget.

Almost 97% of survey respondents said the PLA provisions that would require their firm to hire most or all of their company’s apprentices from union-only apprenticeship programs would harm their company’s investment in workforce development programs.

Of ABC survey respondents, 98% 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 fair and open competition.

A clear majority of the more than 500 survey respondents affirmed that government-mandated PLAs are anti-competitive and discourage quality contractors. These PLAs discourage the more than 87% of U.S. construction workers who choose to not join a union from bidding and working on projects in their own local communities, which are paid for by their own tax dollars.

In fact, 97% of survey respondents said a PLA would result in worse local hiring outcomes for a project. In addition, almost 90% of respondents agreed that a PLA would decrease the hiring of women, veteran and disadvantaged business enterprises and construction workers, which have traditionally been unaffiliated with labor unions.

Corrupt Government-mandated PLAs Rig the Bidding Process

While ABC’s campaign against anti-competitive PLA mandate schemes on federal projects has been largely successful, lawmakers requiring and encouraging the use of special interest-favoring PLA mandates on non-federal projects funded by federal, state and local tax dollars continues to needlessly cost hardworking taxpayers perhaps nearly 20% more per project.

PLA mandates rig the bidding process to discourage experienced nonunion and some union contractors and their qualified workforce from competing to build transformational taxpayer-funded projects. And they deny good-paying, local jobs to the more than 87% of U.S. construction industry workers who choose not to affiliate with unions.

Problematic terms in government-mandated PLAs discourage competition by forcing contractors to:

  • Use union hiring halls to obtain most or all workers instead of their existing workforce.
  • Obtain apprentices exclusively from union apprenticeship programs.
  • Follow inefficient union work rules.
  • Pay into union benefit and multi-employer pension plans that the few nonunion employees permitted on the project will be unlikely to access unless they join a union and vest in these plans.
  • Require their existing workforce to accept union representation, pay union dues and/or join a union as a condition of employment and receiving benefits on a PLA jobsite, resulting in an estimated 20% hit to the paychecks of local craft professionals.

Potential PLA mandates on taxpayer-funded contracts expose officials to intense political pressure, as construction unions raise and spend millions of dollars to help elect lawmakers willing to pass policies that grant donors a monopoly on public works construction projects.

There is great concern that the 117th Congress and/or the Biden administration might expand the use of government-mandated PLAs on federal and federally assisted construction projects.

Federal and State Government-mandated PLA Policies

ABC supports fair and open competition and opposes government-mandated PLAs on local, state, federal and federally assisted construction projects because hardworking taxpayers deserve more efficient and effective policies that will encourage all qualified contractors and their skilled workforce to compete to build long-lasting, quality projects at the best price.

In February 2009, former President Obama signed Executive Order 13502, which encourages federal agencies to mandate PLAs on large-scale federal construction projects exceeding $25 million in total cost on a case-by-case basis, and permits recipients of federal assistance to mandate PLAs on state and local public works projects.

Since former President Obama issued Executive Order 13502 in 2009, 26 states have responded to the threat of discriminatory PLA mandates and preferences by enacting Fair and Open Competition Act legislation prohibiting government-mandated PLAs on state and local taxpayer-funded construction projects to some degree to send a message to the federal government that PLA mandates are not welcome on local projects.

Unfortunately, some of these states have rolled back common-sense FOCA measures following Democratic party takeovers of state government, bringing the total number of current states with active pro-taxpayer FOCA measures to 25.

To date, all legal challenges to state and federal FOCA policies ensuring government neutrality in public works contracting have failed.

ABC’s efforts to enact state FOCA laws prevented government-mandated PLAs on $633 billion worth of construction capital outlay through the end of 2019.

In addition, dozens of communities across the country have also enacted similar FOCA laws.

These efforts ensure a level playing field, increase competition, reduce costs and eliminate cronyism in public works contracting procured by state and local governments.

Take Action to Support Fair and Open Competition in Public Works Contracting

According to a March 2021 model developed by Markstein Advisors, every $1 billion in extra overall construction spending generates an average of at least 5,700 construction jobs, and every $1 billion in extra construction spending on infrastructure generates an average of at least 3,000 construction jobs. As the construction industry faces a 9.6% unemployment rate nationally, and some states are in much worse shape, America’s infrastructure remains critically underfunded totaling $2.6 trillion by 2029 and more than $5.6 trillion by 2039, lawmakers need to be doing all they can to maximize taxpayer investments in infrastructure while helping all construction workers find quality jobs to rebuild their communities.

ABC encourages ABC chapters, members and industry stakeholders to participate in a grassroots campaign urging their U.S. House and Senate lawmakers to sign on as a cosponsor of the Fair and Open Competition Act (S. 403/H.R. 1284), reintroduced in the 117th Congress by Sen. Todd Young (R-Ind.) and Rep. Ted Budd (R-N.C.).

In a Feb. 24 ABC press release, ABC applauded the introduction of FOCA, which would encourage more qualified construction companies to compete for federal and federally funded construction projects, providing value for hardworking taxpayers while benefiting the construction industry.

After the bill was introduced, an ABC-led coalition of 17 construction industry and business associations sent a letter to Congress in support of the bill, urging them to immediately pass this legislation. In addition, a National Taxpayers Union-led coalition of a dozen taxpayer, free market and consumer advocate groups sent Congress a letter of support for FOCA.

On March 5, ABC and a coalition of 14 industry and employer groups sent a letter to President Biden raising concerns about the expansion of policies encouraging or mandating PLAs on federal and federally assisted construction projects.

In 2021, ABC will continue to implement effective legislative, legal and regulatory strategies complemented by communications and grassroots campaigns to educate government procurement officials, lawmakers, industry stakeholders, the media and hardworking taxpayers about the harmful effects of special interest PLA schemes.

ABC will fight for federal, state, and local policies that create a level playing field in the procurement of government construction contracts, increase competition, help small businesses grow, curb construction costs and spread the job-creating benefits of taxpayer-funded contracts throughout the entire construction industry.

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One Response to Government-Mandated Project Labor Agreements Exacerbate Construction Industry’s Skilled Labor Shortage

Edmund Norton April 30, 2021 at 6:47 pm

So … how is this going to play out in the Biden infrastructure roll out… as he has been more pro union than any other President….

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