The High Cost of Project Labor Agreements

At, Mandy/Liberty Chick provides a comprehensive overview of project labor agreements (PLAs), which impose onerous conditions on contractors who wish to bid on government projects. They may be required to employ workers from union hiring halls, acquire apprentices from union apprentice programs, and require employees to pay union dues. Clearly, this disadvantages non-union contractors who would otherwise not face those costs. Focusing on California, she notes how unions are using regulatory and legal maneuvers to get public officials to agree to PLAs.

While PLAs were once largely embraced in a marketplace when unions represented a greater majority of workers in the US, today’s PLAs must claim other benefits to be reasonably received by a general public that is no longer largely unionized.  Today’s PLAs purport to extend jobs to non-union workers, when in reality they place new impositions on both employers and workers, such as mandatory union-hall hiring, forcing non-union workers to pay union dues and make contributions to others’ pension funds. With the advent of the strict standards of the California Environmental Quality Act (CEQA), PLAs now typically promise union sanctioned “environmental expertise”, adding another weapon to big labor’s arsenal.  Since most unions receive public funding for environmental training and mitigation, union bosses use it to assert their perceived authority by challenging projects on environmental grounds. They effectively hold a project hostage until the parties agree to a PLA and allow union shops to take control of the project’s labor requirements.  It’s nothing less than blackmail, which is how a new spin on the old term “greenmail”came to be mainstream.

Worse, we are likely to see PLAs on more federal projects.

In February 2009, as one of his first duties in office, President Obama signed an executive order that authorized federal executive agencies to use project labor agreements on federal construction contracts with a total cost of $25 million or more.  The order also revoked President Bush’s prior ban on mandatory PLAs, an action he’d taken after congressional hearings produced evidence that PLAs were discriminatory against open-shops and non-union workers, increased costs on most projects and were too often vehicles for abuse .  When the American Recovery and Reinvestment Act was passed only days after Obama’s order, agencies were encouraged to mandate PLAs for all stimulus projects.

Even worse yet, we are likely to see greater costs on public projects as the country struggles out of recession. California’s experience with PLAs is not a good one.

In California, where 18.3% of the overall workforce is covered by a union, much of the recovery opportunities, including PLAs, are focused disproportionately on creating union jobs.  Where does that leave the other 81.7% of non-union workers who are fighting California’s 12.4% unemployment rate?  In construction, California’s union rate is higher than average 23.1%, which makes it even more difficult for private construction to compete. Despite popular belief that the construction industry is overwhelmingly unionized, only about 16% of America’s construction workers belonged to a union in 2009.  That’s a lot of workers left out of the competition when they need the work most.

Mandy also makes the important point that PLAs put minorities at a disadvantage, as most minority contractors are non-union. As National Black Chamber of Commerce President Harry Alford said at a panel I attended last year,“very few people in southeast Washington” worked on the Nationals Park baseball stadium, which was built under a PLA.

For more on project labor agreements, see here.