Five Reasons Why Project Labor Agreements Are Bad Public Policy

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Project labor agreements (PLAs) essentially prevent non-union firms from participating in construction projects. They generally do so by including the following language:

  • Union recognition and employment
  • The Contractor recognizes the union as the sole and exclusive bargaining representative of all craft employees working within the scope of this agreement.
  • All applicants for various classifications covered under the agreement required by the contractor shall be referred to the contractor by the local union.

PLAs are back in the news because pending state economic development and climate legislation each call for their use. Their inclusion in the economic development bill is incongruous with and counterproductive to the purpose of the bill which is to make Massachusetts more competitive, affordable and equitable. PLAs fail on all counts.

1. PLAs are anti-competitive and exclusionary because they prevent the vast majority of construction workers from participating in Massachusetts construction projects.

  • According to the federal Bureau of Labor Statistics data analyzed by unionstats.com, 81.8 percent of the Massachusetts construction workforce chooses not to affiliate with a union, and those workers excluded from participating in projects built under a PLA
  • As a result of PLAs’ anti-competitive impact, the Commonwealth’s Supreme Judicial Court has placed strict limits on their use on public projects in Massachusetts

2. Less competition means higher costs for taxpayers. Fewer bidders translate to higher costs – and fewer projects that can be completed. 

  • Earlier this year, a Massachusetts Superior Court struck down a proposed PLA on a Springfield Water and Sewer Commission project. The project’s engineers estimated that the PLA would raise costs by $15.5 million, but when the project was re-bid without the PLA, more than that amount was saved on the bid from a single subcontractor trade.
  • A 2021 RAND Corporation report on the effects of PLAs on affordable housing production in Los Angeles found a 14.5 percent increase in construction costs and an 8 percent rise in overall per-unit costs for projects subject to the PLA. RAND also found that in the absence of the PLA, approximately 800 additional units of housing could have been produced with the same funding, an increase of approximately 11 percent.
  • Just this September, Gov. Gavin Newsom vetoed a bill that would have subjected a minimum of three California State University projects to a PLA because the legislation “could result in additional cost pressures.”

3. PLAs are particularly bad for minority contractors

  • National estimates indicate that the overwhelming majority of Black- and Hispanic-owned construction firms are nonunion and, for all practical purposes, PLAs exclude those contractors, for whom the Commonwealth is trying to make the public construction market more accessible.
  • In a letter to the Massachusetts Senate, the Black Economic Council of Massachusetts (BECMA) wrote, “We are deeply concerned about the historical exclusionary effect that PLAs have had on Black. Latinx, Asian, Indigenous, immigrant women and LGBT workers and construction firms. [A PLA] prohibits construction firms owned by Black people and other people of color – which are overwhelmingly open shop enterprises – from using their own workforce that they have hired, trained, developed and retained, and that are drawn largely from communities of color.”

4. PLAs do not raise wages on public projects. All public construction projects in Massachusetts are already covered by state and federal prevailing wage laws that guarantee union-scale wages for all workers, regardless of labor affiliation. 

5. Using exclusively union workers does not result in a better-trained workforce. All contractors, union and open shop, are subject to both the same Division of Capital Asset Management and Maintenance (DCAMM) certification and local prequalification. Quality control comes not from PLAs, but from these state and local requirements.

Massachusetts continues to espouse the need for a more competitive and affordable business climate. But we cannot expect better results if we continue to enact the same tired old policies like project labor agreements. To put such an anti-competitive provision in the bill designed to accelerate the Massachusetts economy is particularly egregious. Removing this provision from the final bill will signal that lawmakers are serious about improving the state’s competitiveness.

 

Media Contact:

Amie O’Hearn

aohearn@pioneerinstitute.org