The Truth About Project Labor Agreements

The Bulletin, a Philadelphia area newspaper, printed an excellent piece on President Obama’s Executive Order 13502 (“Non-Union Contractors Lose In Obama Policy,” 8/30).

It is required reading, as the piece features great quotes from ABC member contractor Brett McMahon, who  provides thoughtful insight into how PLAs impact non-union contractors and their workforce and why the popularity of PLAs is driven by politics.

Opponents of this measure, such as the Associated Builders and Contractors (ABC), say cutting out so many nonunion companies reduces competition in the bidding process and leads to higher project costs.

PLAs were issued frequently during President Bill Clinton’s administration from 1993 to 2001 but weren’t in use at all during the following eight years when George W. Bush was president. Brett McMahon, a member of the Associated Builders and Contractors’ legislative committee, said he believed PLAs comeback owes to the lavish support Mr. Obama has gotten from the labor movement.

“To cut out that type of percentage of people for no other reason than pure political payback is despicable,” Mr. McMahon said. “We’ve seen it enough from this administration. It’s really getting out of hand.”

He said organized labor now need government supports like PLAs and “card check” – a proposal Mr. Obama supports that would make unionization by secret ballot more difficult – because union pensions are in poor shape and threaten the solvency of organized labor. According to a report by the Washington, D.C.-based Hudson Institute, only about 60 percent of union pension plans are funded above 80 percent, thereby escaping being branded “at-risk.”

Some labor economists, however, contend that government entities have good reasons to pursue PLAs that have nothing to do with advantaging a particular constituency.

Ross Eisenbrey, vice president of the union-backed Economic Policy Institute, said one reason a federal agency would want to issue PLAs is that they allow the agency to take advantage of the vaunted skills of union workers.

“They’re the best-trained, most skilled workers in the occupation,” he said.

Nonunion advocates counter that union shops impose a number of drawbacks that outweigh whatever advantages they present to the agency that hires them, particularly regarding what many regard as antiquated and sometimes peculiar work rules. Those rules often govern which workers may perform tasks as simple as carrying materials and turning on machines.

As such, nonunion contractors are often able to outbid union contractors on government projects, despite the fact that prevailing-wage laws ensure that contractors must pay their workers above a certain wage.

And Mr. McMahon said some prominent PLA-governed projects don’t indicate that union shops reliably produce quality work. He noted that Massachusetts’ calamitous Big Dig, which tunneled Interstate 93 through downtown Boston, was such a project. It was several times over budget, persisted for years after its expected conclusion and resulted in a deadly ceiling collapse.

Mr. McMahon said there are legal problems with PLAs as well as practical ones and that ABC is currently reviewing its options in this regard.

“Just because it’s an executive order doesn’t mean it’s immune from legal challenge,” he said.

Be sure to read the rest of the article to get The Truth About PLAs.