The PLA Hustle
Failing the Market Test, Construction Unions Have Turned to Politics
AUGUST 01, 2002 by CHARLES W. BAIRD
A project labor agreement (PLA) is a hustle by unions in the construction industry to make it extremely difficult for union-free contractors to bid successfully for construction projects funded by taxpayer money. In 1947 construction unions had an 87 percent market share nationwide. In 2001 that figure was only 18.4 percent. Failing the market test, construction unions have turned to politics. They lobby politicians to require that open-shop (union-free) contractors sign an agreement to operate according to union rules before they are permitted to bid on any project. In return, compliant politicians get monetary and in-kind electoral support from the unions. Taxpayers be damned.
An open-shop contractor that signs a PLA in order to be able to bid agrees to: (1) force all its employees to either join, or pay dues to, the unions specified in the PLA; (2) do all new hiring associated with the PLA through designated union hiring halls; (3) operate according to union work rules and craft-jurisdiction definitions; and (4) force its employees to pay (or agree to pay on their behalf) into union welfare, benefits, and pension funds. Since it usually takes at least five years for workers to become vested in such funds, and most projects last less than five years, the money is forfeited to the unions when the projects are completed. Moreover, unless employees are to lose their regular benefits and pension plans, payments to them must be maintained during the life of the PLA project.
PLAs should not be confused with “prevailing wage” regulations in taxpayer-funded construction. The federal Davis-Bacon Act and similar laws in many states force successful union-free bidders to pay their employees union wages on such projects. But even when forced to pay union wages, union-free contractors have cost advantages over union-impaired contractors that enable them to bid lower to get contracts. The unions’ restrictive work rules and job classifications drive up costs substantially. The obvious solution to the politicians and their union clients is, through PLAs, to remove all union-free cost advantages.
Of course, politicians cannot simply say that they impose PLAs as a condition for bidding in order to favor unionized over union-free contractors. That’s too transparent. Instead, they claim that PLAs are a way of assuring safe, quality work without labor disputes and project delays, and on-budget. Facts belie those claims.
A nationwide study in 1995 by Charles Culver, a former OSHA official, revealed that on-the-job fatalities were significantly lower in union-free construction than in comparable unionized construction in every year from 1985 through 1993 (Comparison of Nonunion and Union Contractors Construction Fatalities, National Center for Construction Education and Research; www.nccer.org). Moreover, the quality of union-free work is usually just as good as unionized work, and it is often better. It is revealing to note that union-free contractors deemed unqualified to do a job suddenly are deemed well qualified when they sign a PLA.
Unions are synonymous with labor disputes. In the hustle, unions threaten to disrupt the work of union-free contractors who win bids without PLAs, then they say that PLAs will avoid those disputes. It is simple extortion. Moreover, PLAs are not even effective guarantees against strikes by the unions on the jobs they win. For example, the San Francisco Airport PLA includes a no-strike pledge that has been violated at least three times. Nor are PLAs effective guarantees against project completion delays. The Boston “Big Dig” PLA has resulted in substantial delays. It was supposed to be completed in 1998; now the earliest possible completion date is 2004. As for on-budget performance, the original budget for the Big Dig was $2.5 billion. Best estimates now put the cost close to $15 billion.
Sanctioned by the Supreme Court
The legality of PLAs was affirmed in 1993 by the U.S. Supreme Court in the Boston Harbor case. This involved a massive cleanup of Boston Harbor. The Massachusetts Water Resources Authority (MWRA) said that no union-free contractors could bid on the project unless they first agreed to the terms of a PLA. Opponents of the PLA argued that the National Labor Relations Act (NLRA) pre-empted state authority to impose a PLA. The Court upheld the PLA on the grounds that MWRA was acting as an owner-developer of the project, not the employer of the people who actually worked the project. The NLRA controls relations among employers, employees, and unions, not relations between owner-developers and the employers with whom they contract. So a state agency is free to choose whether or not to impose a PLA as a bid qualification.
On February 17, 2001, President Bush reversed Clinton administration policy by signing an executive order that prevents federal agencies from including PLAs as bid specifications on federal construction projects. Under the executive order, union-free firms can use their cost advantages to try to win the bidding, but if a contractor submits a winning bid for a federal project, it is thereafter free to agree with construction unions that it and its subcontractors will work on a union-only basis.
Labor unions and their logrolling partner, the Sierra Club, immediately challenged the legality of Bush’s executive order in federal district court, and on November 7, 2001, Judge Emmet Sullivan declared, on the basis of the Boston Harbor case, that the executive order was pre-empted by the NLRA. This is a manifestly silly ruling because in Boston Harbor the Supreme Court ruled that the NLRA does not pre-empt state PLAs if the state agency involved is an owner-developer rather than an employer. The NLRA is silent on PLAs. If Boston Harbor says anything about federal PLAs, it says that the president, as owner-developer of federal projects, is free to permit or forbid them. Sullivan’s decision is on appeal to the D.C. Circuit Court of Appeals.
The Associated Builders and Contractors (ABC), a nationwide coalition of union-free contractors, has undertaken effective anti-PLA litigation and public education programs in several states. Another organization, the Coalition for Fair Employment in Construction (CFEC), formed in 1998, has organized grassroots opposition to PLAs in California. Eric Christen, its indefatigable executive director, says that the recent victory of which he is most proud is the defeat of a PLA for the construction of the new campus of the University of California at Merced. At this writing, the most important California battles still to fight, according to Christen, involve PLAs on San Mateo Community College, San Francisco City College, and Santa Rosa Junior College.
Alas, there will be many more battles nationwide until politicians begin to think that PLAs cost them more than unions can cover. Groups like ABC and CFEC intend to make that so. They deserve our applause.