An Unconstitutional Gift To Labor Unions

In the aftermath of Hurricane Sandy, the New Jersey Senate has only passed one bill associated with rebuilding storm-damaged public infrastructure. Sadly, if passed, the bill would only inflate the cost of recovery efforts and future public works.

New Jersey Senate Bill 2425 would grant unions a monopoly on all Sandy reconstruction. It would do so by expanding the reach of what are known as project labor agreements (PLAs), which mandate firms hire union labor and agree to their work rules on all government construction projects. Unfortunately, PLAs have been shown to increase government construction costs to taxpayers and discriminate against non-union construction workers, who represent 86.7 percent of the trade nationally. Higher costs from PLAs lead to less construction, which is the last thing Sandy victims need to recover from the destruction.

PLAs create an uncompetitive bidding process in favor of unions, which invariably amounts to pure political payback from union-biased elected officials. It should be no surprise that SB 2425 sponsor Senator Steve Sweeney, according to the National Institute on Money in State Politics, received tens of thousands in campaign contributions from numerous construction unions in recent elections. Moreover, in Sweeney’s time away from public service, he moonlights as is an ironworker union organizer for which he is rewarded with over $50,000 annually for his services.

A 2010 New Jersey Labor Department study found that PLAs raised school construction costs by 30.5 percent per square foot. It also found that the average duration for PLA projects during fiscal year 2008 was 100 weeks, while for non-PLA projects it was 78 weeks.

If the increased costs and political nature of PLAs aren’t enough of a slap in the face to recovering Sandy victims, according to New Jersey’s Constitution, Article VIII, § III, Paragraph 3, PLAs are extra-constitutional expenditures of taxpayer dollars: “No donation of land or appropriation of money shall be made by the State or any county or municipal corporation to or for the use of any society, association or corporation whatever.”

Such a constitutional provision, known as a “Gift Clause,” is found in 47 state constitutions and limits the legislature’s authority when appropriating public funds to private interests. In New Jersey, legislation transferring public money to private entities is permissible under the Gift Clause only if it satisfies a “public purpose” requirement and the state receives a quid pro quo.

With respect to New Jersey’s Gift Clause, the state Supreme Court declared a “public purpose” must produce a benefit or convenience to the public that directly promotes the welfare of the state. In contrast, private recipients of public funds may only benefit or profit remotely or consequentially. Another stipulation is the public benefit must be inclusive, or universally available — benefits from PLAs are exclusive to labor unions.

Bottom line: PLAs are a gift to labor unions that violates New Jersey’s constitution and undermines a free labor market. PLAs are no different from any other government handout to Big Business. Both are an unconstitutional gift of tax dollars to unworthy beneficiaries.

Historically and for the foreseeable future, elected politicians will continue to peddle laws they purport to promote the general welfare, but in reality is illegitimate aid that profits private parties at the expense of your tax dollars. The onus is on taxpayers to challenge the validity of these laws with the Gift Clause and expose them for what they really are — theft.