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Labor’s Under-the-Radar Power Grab

Tuesday, February 21, 2012

A closer look at project labor agreements and their high cost to taxpayers.

Big Labor has made many ambitious and high-profile efforts to attract national attention, such as the so-called Employee Free Choice Act (EFCA, better known as “card-check”), stacking the National Labor Relations Board with union-friendly hacks, and impeding Boeing’s plans in right-to-work states like South Carolina.

These efforts appear designed to remind the American people and the officials who represent them that, notwithstanding a severe decline in membership in recent decades and despite growing unpopularity (if opinion surveys are to be believed), Big Labor is loud, proud, and not planning to disappear anytime soon.

Unfortunately for the unions, such efforts have met with only mixed success, in no small part because their publicity has provoked a ferocious and expensive backlash by labor’s opponents. EFCA floundered even in a filibuster-proof Democratic Senate; President Obama’s latest NLRB appointments, made during a non-recess recess of the Senate, are facing judicial scrutiny; and Boeing negotiated a settlement with its union that is largely favorable to its position.

Far more rewarding for labor than high-profile endeavors have been comparatively under-the-radar efforts at the local and state level.

Far more rewarding for labor than these high-profile endeavors, however, have been comparatively under-the-radar efforts at the local and state level to steer lucrative municipal, county, and school district construction projects to union-only shops, especially in jurisdictions where free labor predominates.

These vehicles, known as project labor agreements, impose certain labor-friendly requirements on construction of public buildings. Under such strictures, even non-union workers must pay union dues, while non-union contractors have to contribute to union health and pension plans (even if they already offer their own). In addition, non-union workers must be approved by a union before being dispatched to a job, and only union apprentices can work on PLA projects.

PLAs, says Eric Christen, executive director of the Coalition for Fair Employment in Construction (CFEC), constitute “modern day Jim Crow laws that are immoral and have no place in a decent society.” These agreements, Christen told me, “are about raw power being exercised by those in power who favor one group (unions) over another (everyone else).”

Morality aside, several studies (admittedly, some of which were at least partially funded by the construction industry) have revealed that PLAs significantly increase costs to taxpayers. According to a 2009 report by the Beacon Hill Institute, had the pro-PLA executive order that President Obama implemented upon assuming office been in effect in 2008, and all federal construction projects in that year—worth $25 million-plus—been performed under PLAs, the cost to federal taxpayers would have increased by $1.6 billion to a total of $2.6 billion.

In addition, a 2001 Ernst & Young analysis of construction projects in an upstate New York county revealed that “bidder participation was diminished because the county chose to utilize a PLA. Further, the use of PLAs adversely affects competition for publicly bid projects to the likely detriment of cost-effective construction … There are no apparent valid economic justifications for the continued use of a PLA.”

A 1998 article in the Journal of Labor Research concluded that PLAs “provide little, if any, competitiveness to the union contractor and may be disruptive to other owners and contractors involved in the local construction market.”

And for all the sports fans out there, a comparison of FedEx Field, where the Washington Redskins play, and M&T Bank Stadium in Baltimore, home to the Ravens, shows that the cost per seat of the latter, built mainly with union labor under prevailing wage laws, was more than 13 percent higher than the per-seat cost at FedEx Field, a merit shop project.

These agreements ‘are about raw power being exercised by those in power who favor one group (unions) over another (everyone else).’

A good recent case study can be found in the San Diego Unified School District (SDUSD), where a board majority supported by labor voted to implement a PLA in 2009. In December, the district commissioned a study by Rea & Parker Research that it claimed showed the PLA had not increased costs for the district and had generally resulted in projects coming in under budget and ahead of schedule.

Scott Barnett, a San Diego Unified trustee, told me that PLA projects are “on average completing faster” than non-PLA projects, which “means ultimately a savings for taxpayers” of about $1.6 million per year. For this reason and others, Barnett, who was once skeptical of the benefits of PLAs, is on record saying they’re “good for taxpayers.”

Balderdash, says CFEC’s Christen. First, even the district acknowledges that it has received only half as many bids under the PLA as it used to.

Second, Christen points to a peer-reviewed study conducted last summer that was “far more detailed, comprehensive, and sound than the Rea & Parker report” and that found PLAs adding 13 to 15 percent to the cost of the typical project. CFEC believes the San Diego Unified PLA in particular pads the cost to taxpayers by some 20-plus percent, or a total of about $16 million.

While Barnett and the district quarrel over the assessments presented in the contractors’ study, Christen notes serious problems in the Rea & Parker methodology, including its comparison of new building construction to audio-visual and athletic field projects and sidewalk improvements—akin, in Christen’s opinion, to “comparing the average weight of Chihuahuas and kittens and concluding that cats must be bigger than dogs.”

Third, whereas the district asserts that under the PLA, “in 2011 workers from low income SDUSD zip codes represented 41 percent of all workers, exceeding the aggressive PSA goal of 35%,” non-union contractors cite data indicating the district has fallen far short of its local hiring benchmarks. “They are like Petruchio in Shakespeare’s Taming of the Shrew,” says Christen, “constantly trying to convince Kate that night is day and day is night.”

Groups like CFEC and the Association of Builders and Contractors have made it their mission to shine a light on PLAs so that unions can’t continue, like Petruchio, to darken the day. But until Kate wises up, and taxpayers awaken to the harmful effects of PLAs, labor will continue to enjoy success at the local level.

Michael M. Rosen is a contributor to THE AMERICAN and an attorney and writer in San Diego.

FURTHER READING: Rosen also writes “Software Patents: Reform, Not Repeal,” “The Real Problem With High-Speed Rail,” and “The Real Problem with Government Employee Unions.” Jonah Goldberg says “Public Unions Must Go.” Michael Barone claims “Public Unions Force Taxpayers to Fund Democrats.” Nick Schulz explains “Why U.S. should cheer for Scott Walker.”

Image by Rob Green / Bergman Group

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