D.C. Agrees to Costly Project Labor Agreement
It is well-documented that Project Labor Agreements drive up costs, by some estimates up to 12 to 18 percent. This is because PLA’s subvert competitive bidding by forcing facility owners (normally government agencies) to enter into collective bargaining agreements.
The result is that construction companies must agree to pay union wages, benefits, and agree to featherbedding union work rules. Worse, if contractors use non-union construction workers, they are still required to pay union dues and make payments into underfunded union pensions.
Since commonsense would dictate it is contrary to the public interest to agree to a PLA, it should not be much of a surprise that on September 9, the office of Washington D.C. Mayor Vincent C. Gray announced the city will sign a PLA for the construction of the new D.C. United soccer stadium. The estimated cost for the building is $300 million.
According to the press release, “The PLA being signed tomorrow is a powerful tool to ensure ‘first priority’ employment and federal Davis-Bacon wage rates for District workers.” It also compares the PLA to the one agreed upon to build Nationals Park in D.C. This comparison alone should give the city pause in agreeing to such a contract.
First, whether or not a PLA is used, federal Davis-Bacon wage rates must be obeyed in the District of Columbia.
Second and more importantly, the Nationals Park PLA (like the new D.C. United PLA) supposedly codified local hiring promises and was purported to control costs. Yet, the outcome and broken promises from the Nationals Park PLA should have been enough to discontinue PLA use.
According to the DC Progress report, The True Cost of the Washington Nationals Ballbark Project Labor Agreement, “The Nationals Park PLA created a huge barrier for the District’s non-union workforce: 85 percent of construction workers and 95 percent of minority-owned contractors were left out of the work.”
Further the reduced competition in bidding increased construction costs:
The cost of the ballpark may reach $800 million, more than double the initial cost estimate of $395 million. The union-only PLA increased costs by reducing the pool of potential bidders. Future PLAs will do the same.
Another study, Broken Promises, Big Losses: The Story of DC Workers Watching from the Dugout as the $611 Million Washington Nationals Ballpark is Built, found:
non-D.C. residents worked 506,926 journeyperson hours (71.1 percent of total journeyperson hours), while D.C. resident worked just 206,444 journeyperson hours (28.9 percent), far below the PLA requirement that D.C. residents work 50 percent of total journeyperson hours.
Additionally, the study found that half of the contractors involved in the project have hired no new apprentices, and of the companies that hired new trainees, only 17 of 56 met the PLA requirement that 100 percent of new apprenticeships go to D.C. residents.
Unfortunately, increasing costs to the taxpayer and giving special privileges to labor unions is par for the course in Washington, D.C.