‘Project labor agreements’ drive up costs on public-works projects.
April 16, 2017 2:14 p.m. ET
President Trump may be a famous builder, but he could learn something about infrastructure from Wisconsin’s Scott Walker and Iowa’s Terry Branstad. On Monday, Gov. Walker is expected to sign a law prohibiting state agencies and local governments from mandating “project labor agreements” on public works. Gov. Branstad signed a similar measure last week. Mandated PLAs are a sop to unions that inflate construction costs and discourage competition.
Mr. Trump should issue an executive order to follow suit nationwide. On election night he promised to “rebuild our highways, bridges, tunnels, airports, schools, hospitals.” He has floated a $1 trillion infrastructure plan. But much of that could be wasted if blue states and cities force projects to operate under PLAs.
When a PLA is mandated, typically it means that contracted builders, whether union or not, must hire union workers, pay into union benefit plans and follow union work rules. That effectively limits the pool of bidders, since nonunion contractors don’t want to abandon their workforces, a key competitive advantage, for strangers from union halls. Less than 14% of the private construction workforce has chosen to join a union.
In 2001 President Bush signed executive orders that barred government-mandated PLAs on projects with federal involvement. President Obama reversed that policy in 2009. His executive order encourages PLA mandates on federal projects over $25 million and allows recipients of federal funds to require them.
The effect is to drive up costs. A 2011 study examined 551 school projects in California from 1995-2009. The data showed that “costs are 13 to 15 percent higher when school districts construct a school under a PLA.” Or take a specific example, a Job Corps center in Manchester, N.H., which the Labor Department sought bids to build in 2009. Originally the project had a PLA. But a merit-shop contractor filed a successful bid protest. When the PLA mandate was removed, three times as many bids came in, at prices 16% lower. That saved taxpayers $6 million.
Proponents of PLAs claim that they prevent cost overruns and delays by discouraging strikes. As Mr. Trump knows from experience, however, the mere presence of a PLA won’t prevent union members from going on strike. In 2006 three unions helping build the Trump hotel in downtown Chicago walked off the job, despite a no-strike clause in the project’s PLA.
Because of the difficulties PLA mandates present to construction firms, 23 states have passed measures against them. Yet in blue states that are heavily influenced by organized labor, PLAs remain a significant drag on the pace and cost of construction.
In Seattle a PLA hasn’t protected the Highway 99 tunnel from delays, safety concerns, cost overruns, strikes and worse. Since May 2010, data from the federal Transportation Department show, PLAs were mandated on 382 contracts valued at $8.7 billion.
America deserves infrastructure investment free from special-interest handouts. By reinstating a ban on government-mandated PLAs for projects that accept federal funds, President Trump can make good on his election-night promise. With the stroke of a pen, he can begin rebuilding America’s infrastructure—with the help of all qualified businesses and labor at a price that’s right for the taxpayer.
Mr. Brubeck is the vice president of regulatory, labor and state affairs for the Associated Builders and Contractors.
This article originally appeared in the Wall Street Journal