The Truth About Project Labor Agreements

The construction industry is projecting a historic shortage of more than half a million skilled workers in 2023. It is also facing serious supply chain disruptions unprecedented materials cost inflation of 39% since prior to the COVID-19 pandemic and uncertainty caused by a tsunami of Biden administration regulations impacting the construction industry.

The Biden administration is fully aware of these problems that stand to undermine taxpayer investments in the $1.2 trillion infrastructure bill and other measures funding America’s neglected infrastructure, yet it continues to push anti-competitive and costly policies promoting controversial government-mandated project labor agreements on federal and federally assisted taxpayer-funded construction projects, which are sure to exacerbate the construction industry’s skilled workforce shortage and needlessly increase the cost of taxpayer-funded infrastructure projects by 12% to 20%.

The construction industry needs to hire an additional 546,000 craft professionals in 2023, according to an analysis of U.S. Bureau of Labor Statistics data released Feb. 9, 2023 by Associated Builders and Contractors.

However, PLAs typically force contractors to replace most or all nonunion labor with labor from union hiring halls. In addition, PLAs force contractors to hire apprentices exclusively 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 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 Biden administration’s pro-PLA policies are extremely problematic for the industry’s current and future skilled labor shortage because more than 88% of the U.S. construction workforce chooses not to belong to a union.

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 ABC’s 2023 Workforce Development Survey, ABC contractor members invested $1.5 billion on workforce development initiatives in 2022, providing craft, leadership and safety education to 1.3 million course attendees to advance their careers in commercial and industrial construction.

ABC, its 68 chapters and more than 22,000 members and workforce development partners are educating craft, safety and management professionals using innovative and flexible learning models like just-in-time task training, competency-based progression, work-based learning and—with more than 300 government-registered apprenticeship programs across 20 different occupations—developing a safe, skilled and productive workforce.

This strategy not only helps the construction industry’s workforce become 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 promotion and 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.

Unfortunately, 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 the market share of unionized contractors and undermines union investments in union-affiliated government-registered apprenticeship programs.

A 2015 report issued by construction unions claims that “among construction apprentices, 74 percent are trained in the unionized construction industry.”

This means unions are incentivized to ensure the government requires and gives preference to government-registered apprenticeship programs in order to maintain and grow its market share of taxpayer-funded construction projects.

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 and private clean energy 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. They are trained in alternative workforce development programs.

Government-Registered Apprenticeship System Alone Won’t Solve Construction Labor Shortage

Some lawmakers and stakeholders are unaware government-registered apprenticeship programs are not keeping up with industry demand for skilled labor to meet the current backlog of construction projects—which stood at 8.9 months in May 2023, according to ABC’s June Construction Backlog Indicator—and future spending expectations.

It would take 12 years for federal and state government-registered apprenticeship programs to educate the more than half a million workers the construction industry needs to hire in 2023, according to an Associated Builders and Contractors analysis of recently released U.S. Department of Labor data.

ABC estimates that the construction industry’s federal and state government-registered apprenticeship system yielded just 45,000 completers and 250,000 participants in four-to-five-year apprenticeship programs in 2022.

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

These data demonstrate 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-affiliated government-registered apprenticeship programs because union workforce development programs are almost all registered with the DOL or state equivalents and are captured in reported government data, wheres alternative workforce development data is not captured by government data.

This is why government-mandated PLAs and other policies––such as those embedded in the Inflation Reduction Act––that require employers to use apprentices from union-affiliated and/or government-registered apprenticeship programs can be problematic from a practical perspective. Excluding the vast and differing 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 apprentice and contractor who engages in alternative workforce development efforts.

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. Favoring government-registered apprenticeship workforce development strategies instead of supporting all workforce development strategies is a recipe for favoritism, increased costs and reduced competition.

ABC Survey Shows Government-mandated Project Labor Agreements Harm Investments in Workforce Development

In a 2022 survey, ABC members overwhelmingly said government-mandated PLAs harm their company hiring and workforce development practices and ability to complete work safely, on time and on budget.

Roughly 96% 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, 99% 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 98% 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 decisive majority of the survey respondents affirmed that government-mandated PLAs are anti-competitive and discourage competition from quality contractors and their employees. PLA schemes discourage the more than 88% 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, 94% of survey respondents said a PLA would result in worse local hiring outcomes for a project (5% said it would have no impact). In addition, almost 70% of respondents agreed that a PLA would decrease the hiring of women, veteran and disadvantaged business enterprises and construction workers (27% said it would have no impact), 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 direct federal projects from 2009 to 2023 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 nearly 20% more per project and deny opportunity to small businesses and the the best contractors and workers.

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 88% 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 benefits and multiemployer 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; and
• 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 34% hit to the paychecks of nonunion craft professionals on PLA projects.

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.

According to public filings, in the 2021-2022 election cycle, the 15 construction trade unions affiliated with the North America’s Building Trades Unions disbursed nearly $62 million in federal PAC dollars to federal, state and local candidates; committees; joint fundraising committees; national state and local parties; and various other expenses.

These PACs contributed almost $14.5 million to federal candidates who support discriminatory PLA schemes, and $13.2 million—91%—went to Democratic candidates.

Biden Administration Mandates PLAs on Federal Construction Projects

Since President Joe Biden signed Executive Order 14063, Use of Project Labor Agreements for Federal Construction Projects, on Feb. 4, 2022, mandating inflationary and anti-competitive project labor agreements on federal construction projects of $35 million or more, numerous lawmakers and taxpayer and business groups have renewed fierce opposition to the Biden administration’s push for government-mandated PLAs on both federal and federally assisted public works projects.

Government-mandated PLAs needlessly increase the cost of construction by 12% to 20%, reduce competition from contractors employing 88.3% of the construction industry workforce and steal up to 34% of wages from the few nonunion workers allowed to work on a PLA jobsite.

Following the passage of the $1.2 trillion Infrastructure Investment and Jobs Act infrastructure bill­­—and other measures providing billions of dollars for federal, state and local government-procured construction contracts funded by taxpayers’ dollars—free from government-mandated PLAs and preferences, construction industry and taxpayer advocates are engaged in an advocacy battle with construction trade unions and other pro-PLA advocates and lawmakers. It will determine the fate of hundreds of billions of dollars’ worth of construction contracts and new jobs for millions of construction workers in the industry.

ABC slammed the Biden executive order in a Feb. 3, 2022, statement picked up in dozens of publications nationwide:

“This anti-competitive and costly executive order rewards well-connected special interests at the expense of hardworking taxpayers and small businesses who benefit from fair and open competition on taxpayer-funded construction projects.”

A Feb. 9, 2022, ABC op-ed in The Wall Street Journal laid out arguments against the Biden administration’s policy and concluded,

“Taxpayers would be best served by the adoption of inclusive, win-win policies that help America’s construction industry realize the potential of the Infrastructure Investment and Jobs Act of 2021. We can’t rebuild our nation’s crumbling infrastructure effectively, increase accountability and reduce waste with PLAs.”

On Oct. 19, 2022, ABC submitted more than 40 pages of comments to the Federal Acquisition Regulatory Council calling on the Biden administration to withdraw a controversial proposed rule implementing EO 14063 that would require anti-competitive and inflationary PLAs on federal construction contracts of $35 million or more––affecting an estimated 120 federal contracts totaling $12 billion to $14 billion a year––once finalized and implemented in 2023.

Learn more about EO 14063 and the FAR Council’s proposed rule via ABC’s FAQ document.

ABC’s comments also attacked additional Biden administration policies promoting PLA mandates on federally assisted construction contracts procured by developers building private projects and state and local governments procuring taxpayer-funded contracts for construction services. (Visit abc.org/PLAgrants to learn more).

ABC’s opposition to the Biden administration’s pro-PLA policies are joined by more than 50 members of the U.S. Senate and U.S. House of Representatives, 19 Republican governors, a diverse coalition of construction industry, small business and taxpayer advocates and more than 8,000 comments from the public who urged the administration to withdraw its harmful policies promoting PLA mandates on federal and federally assisted construction projects.

In February 2023, an ABC-led coalition of organizations from the construction industry and the business community representing thousands of businesses employing millions of construction industry employees sent a letter to Congress voicing strong support for the Fair and Open Competition Act (H.R. 1209/S. 537), which has been reintroduced in the 118th Congress by Sen. Todd Young, R-Ind., and Rep. James Comer, R-Ky., on Feb. 27. In March, a coalition of taxpayer advocates and government watchdogs sent a letter to Congress in support of FOCA.  Stakeholders can write their lawmakers and encourage them to cosponsor FOCA via this grassroots campaign.

To date, similar pro-taxpayer legislation has been enacted in 25 states prohibiting government-mandated PLAs on state and local construction projects to some degree, creating nearly $1 trillion worth of contracting opportunities free from government-mandated PLAs..

ABC estimates that EO 14063, once finalized via a forthcoming rulemaking by the FAR Council, could impact 120 federal contracts valued at $10 billion to $12 billion annually, which is roughly 40% of the value of federal construction put in place on an annual basis.

Biden’s Alarming PLA Push on Private and State and Local Government Infrastructure Projects

Independent of Executive Order 14063 applying to federal contracts of $35 million or more, other policies by the Biden administration push PLAs on competitive grant and leasing programs administered by federal agencies affecting billions of dollars’ worth of federally assisted construction projects procured by state and local governments.

To date, the total federal funding and leasing programs infected with PLA mandates/preferences by misguided federal agency policies is more than $250 billion, although it is unclear how many of these projects will end up with PLA mandates on them until state and local governments put infrastructure projects out to bid to the contracting community. The public can track these federal agency grant and leasing programs at abc.org/PLAgrants.

In the words of Alabama Gov. Kay Ivey to the White House, states are aware of the Biden administration’s pro-PLA schemes on federally assisted construction projects:

In addition, new lose-lose federal agency policies make it difficult for Alabama to win competitive grants for federal infrastructure dollars to improve roads and utilities unless we agree to mandate union labor by requiring contractors to follow union collective bargaining agreements. If we capitulate to their policy-favoring special interests, out-of-state contractors and labor will win contracts, denying jobs to local, experienced firms and workers. If we don’t agree, federal infrastructure money will flow into other states willing to turn a blind eye to discrimination. Either way, all taxpayers are denied the benefits of open competition and the free market.

In addition, the Biden administration is pushing private developers to mandate PLAs on clean energy construction projects supported by more than $270 billion in Inflation Reduction Act tax incentives and domestic microchip manufacturing facilities receiving more than $50 billion in federal CHIPS Act funding.

In 2009, President Obama issued 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 the Obama order was issued, 27 states 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 states 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.

FOCA legislation ensures a level playing field, increases competition, reduces costs and eliminates cronyism in public works contracting procured by state and local governments.

However, these state and local laws and ordinances do not prevent PLA mandates and preferences required by federal agencies procuring direct federal government construction contracts subject to federal law.

In addition, the Biden administration’s push for PLAs on federally assisted projects will be another misguided reason for blue states and local governments supportive of PLA mandate policies to require the use of PLAs on taxpayer-funded construction projects in order to qualify for federal grants and project approval, etc.

Continuing the #NoPLAs Fight and Support of an All-of-the-Above Workforce Development Strategy

ABC and TheTruthAboutPLAs.com have long been leaders in opposing government PLA mandates and preferences on taxpayer-funded construction projects procured by local, state and federal governments.

In consort with support for a all-of-the-above solution to workforce development, ABC will continue to lead the fight against this anti-competitive and costly EO—and other separate Biden administration policies pushing PLA mandates on federally assisted contracts—with every legal, legislative, public relations, regulatory, grassroots and educational tool in our advocacy toolbox.

Learn more about government-mandated PLAs and Biden administration pro-PLA policies via ABC’s new FAQ document and coalition website at BuildAmericaLocal.com. Urge lawmakers to co-sponsor federal legislation restricting government-mandated PLAs on federal and federally assisted construction projects via this ABC grassroots campaign.

ABC and a diverse coalition of organizations will continue to prioritize defending fair and open competition in public contracting during the remainder of the 118th Congress and President Biden’s term.

ABC will continue to build support for  the Fair and Open Competition Act (H.R. 1209/S. 537), which has been reintroduced in the 118th Congress by Sen. Todd Young, R-Ind., and Rep. James Comer, R-Ky.,

In addition, ABC will continue to 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.

But we cannot do it alone. Concerned taxpayers and the merit shop contracting community can overcome these discriminatory PLA schemes as long as stakeholders and industry leaders remain diligent, support candidates who believe in free enterprise during the critical midterm elections, engage in grassroots advocacy and continue to educate lawmakers, employees and stakeholders about this campaign until a political or legislative solution is achievable.

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