NJ’s project labor agreements discriminate against minority businesses and workers
In 2024, during Black History Month, the African American Chamber of Commerce is shining a spotlight on the racial disparities in New Jersey’s government procurement process.
Recently, the Murphy administration released a study that showed a “statistically significant disparity” when it comes to public contracts awarded to minority businesses. In fact, according to the study, minority African American businesses received less than half of 1% of $18.5 billion dollars the state awarded to contractors. A prime example of the disparity: Minority-owned businesses represented 9.19% of the available construction businesses but received only 0.14% of the dollars on construction contracts valued from $65,000 to $5,710,000.
New Jersey has to fix its project labor agreement policy
The release of the data contained in the Disparity Study helps to move stakeholders and the administration forward to find solutions. However, significant obstacles remain in the fairness of the state procurement process for minority- and women-owned businesses: the state’s project labor agreement, or PLA, requirements, which inherently discriminate against non-union enterprises.
Since 2002, the state of New Jersey has allowed discriminatory PLAs to be placed on any public works contract over $5 million. PLAs discriminate against workers who are non-union, which is more than 78% of the construction workforce in the state. And an overwhelming 98% of all African American and Hispanic construction companies are non-union. Furthermore, at $5 million, New Jersey has the lowest threshold for PLAs for state works of any state in the country, meaning there are fewer and less lucrative projects for non-union and minority firms to bid on.
PLAs also come at a huge cost to New Jersey taxpayers. The most recent study conducted by the New Jersey Department of Labor and Workforce Development found that PLA projects costs were 30.5% higher than all non-PLA projects and they had a longer duration by about 22 weeks. Over 10 years have passed since this study was prepared, and not a single body or association has refuted the analyses and conclusions.
Unfortunately, some unions are pressuring local towns, such as Parsippany, Montclair and Brick, into passing ordinances to require PLAs on all public works projects in their municipalities and school districts. These ordinances are being passed with little input or knowledge by taxpayers, who will ultimately pay for artificially inflated construction costs contained in the PLAs. Despite false assurances from union officials with a vested interest in these discriminatory schemes, PLAs have been proved to be an expensive and deceptive practice that hurts taxpayers and discriminates against local and minority workers.
For example, last April, the New Jersey Superior Court Appellate Division ruled that the Delaware Joint Toll Bridge Commission “violated its fiduciary and legal duties” because it required a PLA for its project that resulted in just one bid at $69 million, or roughly 20% more than the estimated project cost. This is just one instance that shows how PLAs exclude qualified contractors and raise costs considerably for taxpayers.
New Jersey policy cannot discriminate against a majority of its workers
If the Legislature is looking for solutions, it need search no further. To ensure that more of our public works contracts are afforded to minority- and women-owned businesses, New Jersey needs to increase the threshold from $5 million to $35 million so that our state is in alignment with the federal contracting levels as recently stipulated by President Joe Biden. The current PLA requirements discriminate against the majority of New Jersey’s workers and only benefit the union special interests.
Ensuring that taxpayer-funded construction projects are open to all workers who are paying for these projects with their own tax dollars is what is fair and equitable. Equal access to public works projects is the only way to ensure fair and equitable change for our state’s minority- and women-owned construction businesses.
John E. Harmon Sr., IOM, is founder, president and chief executive officer of the African American Chamber of Commerce of New Jersey.
On Jan 26, 2024, ABC New Jersey and Harmon’s group issue his press release, calling on the governor to abandon the state’s pro-PLA policies in order to include more minority businesses and workers in the construction industry:
AACCNJ and ABC-NJ Respond to Study Showing State Contracting Excludes Minority and Women-Owned Businesses: NJ’s Project Labor Agreement Requirement Discriminates Against Minority Businesses
TRENTON — January 26, 2024. The Associated Builders and Contractors of New Jersey (ABC-NJ) and the African American Chamber of Commerce of New Jersey (AACCNJ) issued the following statement regarding a recent report by the Murphy Administration showing minority and women-owned businesses are greatly underrepresented in public works contracts:
Both organizations thank Governor Murphy and the Administration for releasing the forthright data in the Disparity Study. The Governor’s commitment to being a part of the solution to ensure that women and minority owned businesses receive equitable and fair opportunities in state procurement is a step forward to a fairer playing field for all. Together, we are calling on the State’s legislative leadership to be a part of the change and solution as well.
“Since 2002, the State of New Jersey has allowed discriminatory Project Labor Agreements to be placed on any public works contract over $5 million. PLAs discriminates against workers who are non-union, which is more than 78% of the construction workforce in the state. An overwhelming 98% of all African American and Hispanic construction companies are non-union. Furthermore, at $5 million, New Jersey has the lowest threshold for a PLAs for state works of any state in the country, meaning there are fewer and less lucrative projects for non-union and minority firms to bid on.” said John E. Harmon, Sr., IOM, Founder, President & CEO, AACCNJ.
“If the legislature is looking for solutions, they need to search no further. To ensure more of our public works contracts are afforded to minority and women-owned businesses, increase the threshold from $5 million to $35 million so that our state is in alignment with the federal contracting levels as stipulated by President Biden. The current PLA requirements discriminate against the majority of New Jersey’s workers and only benefits the union special interests,” Harmon continued.
“The Murphy Administration has stated that small businesses are the backbone of New Jersey and I could not agree more. It is my opinion that the best way to foster the growth and success of minority and women owned construction businesses’ in New Jersey would be to remove barriers for them to grow. By increasing the threshold for PLA work on public projects, this would allow more minority and women owned businesses to grow into prime contractors if they choose and be able to perform work throughout the state without barriers. These companies are invested in their employees through workforce development, apprenticeship and safety. Their production of quality work should be taken seriously and they should be allowed to compete regardless of labor affiliation,” said Samantha DeAlmeida Roman, President & CEO of the Associated Builders and Contractors of New Jersey.
ABC-NJ and AACCNJ look forward to working with the Governor, his Administration, Legislative Leadership including Senate Labor Chairman Joe Lagana and Assembly Labor Chairman Anthony Verrelli to achieve the objectives outlined and remain committed to being at the table, to work on fair and equitable change on behalf of our state’s minority and women-owned construction businesses.
About Associated Builders and Contractors: ABC is a national association representing 21,000 merit shop construction and construction-related firms in 68 chapters across the United States. ABC is the industry’s liaison to federal, state and local governments and the public at large. ABC-NJ is the largest ABC Chapter, with over 1,200 members in all specialties within the construction industry, comprised primarily of firms that perform work in the industrial and commercial sectors. ABC-NJ is the voice of free enterprise in the construction industry, encouraging open competition based solely on merit. For more information, please visit our website at abcnjc.org.
About the African American Chamber of Commerce of New Jersey: The AACCNJ performs an essential role in the economic viability of New Jersey. While providing a platform for New Jersey’s African American business leaders, to speak with a collective voice, the AACCNJ advocates and promotes economic diversity fostering a climate of business growth through major initiatives centering on education and public policy. The Chamber serves as a proactive advocacy group with a 501(c) 3 tax exemption, which is shared by the National Black Chamber of Commerce.
Discrimination is discrimination: