01.06.2011 0

Project Labor Agreements Could Lock Out Non-Unions Shops

By Kevin Mooney — With John Boehner (R-Ohio) now officially sworn in as the new House Speaker you might think that organized labor’s pursuit of special interest paybacks from the Obama Administration is dead in the water. You would be wrong.

The stipulations and restrictions included in Project Labor Agreements (PLAs) union bosses have advanced at the state level could be used to undermine “Right to Work” laws that guard against coercive practices, according to industry representatives and free market advocates.

PLAs establish guidelines for firms bidding on construction projects that put private shops at a severe disadvantage. Typically a contractor will be required to hire workers through union hiring halls and abide by a variety of union rules.

An executive order from President Obama signed in Feb. 2009 encourages federal agencies to use PLAs on construction projects costing over $25 million. This reverses an earlier executive order from President Bush that banned PLAs. Non-union companies have expressed concern that organized labor can now angle itself into areas of the country that are largely non-unionized at the expense of taxpayers thanks to Obama’s order.

Research from the Beacon Hill Institute shows that PLAs could raise construction costs by as much as 18 percent. If Obama’s executive order had been in effect in 2008, and all federal construction projects worth $25 million or more been subject to PLAs, the cost to federal taxpayers would have increased by $1.6 to $2.6 billion, according to the Beacon Hill report.

Union membership declined nationally from 17.5 percent of construction workers in 2000 to 15.6 percent in 2008, and then to 14.5 percent in 2009, the most recent figures from the Bureau of Labor Statistics show. Even in more unionized states, the overwhelming majority of construction outfits are non-unionized. This means PLAs could effectively lock out the majority of construction workers from new business opportunities in deference to narrow special interests; more than eight of 10 construction workers are non-union.

While non-union contractors are permitted to bid on PLA projects, they are typically awarded to unionized contractors. PLAs provide a framework for pre-hire agreements between construction contractors and labor unions that mandate the use of union rules for the duration of a particular construction project. The National Labor Relations Act (NLRA) generally prohibits pre-hire agreements, but an exception has been created for PLAs.

“Louisiana’s Right-to-Work Law allows employees within the state the right to join a union as well as the right to refrain from joining a union,” John Walters, the Director of Governmental Relations for the Louisiana Chapter of Associated Builders & Contractors, Inc. (ABC), said in an interview.

“Workers typically are permitted to choose whether to join a union through a federally supervised private ballot election,” he explained. “PLAs require unions to be the exclusive bargaining representative for workers during the life of the project. The decision to elect union representation is made by the employer rather than the employees.  PLAs are called pre-hire agreements because they can be negotiated before the contractor hires any workers or employees vote on union representation.”

Union-only PLAs strip away the right of construction workers to a federally supervised private ballot election when deciding whether to unionize their workplace thereby undermining Louisiana’s Right-to-Work law, Walters added.

In his analysis of the order, Maurice Baskin, the legal counsel for ABC, wrote:

“The Order will result in widespread discrimination against the many construction workers who do not belong to unions, and denies their right to Freedom of Association and Equal Protection. The Order will cause money to be unfairly taken from such workers and funneled into under-funded union pension plans, from which the workers can receive no benefits. The Order will increase costs to the federal taxpayers by arbitrarily limiting competition for federal construction work.”

Brett McMahon, an ABC representative, warns that fallout from PLAs could be particularly acute in the teeth of a recession.

Decades of studies have shown that PLAs increase the cost of construction,” said McMahon, who is also vice-president of Miller and Long, a Maryland-based concrete construction company. That’s a bad idea during good economic times, but it’s utterly foolish when we are already financially upside-down as a nation. We are financing these projects with debt that is underwritten by taxpayers — many of whom are not going to be able to work on these projects without paying union dues.”

Looking ahead in 2011, the same free market advocacy groups successfully blocked costly legislation such as “card check” from becoming a reality must now turn their attention to administrative activity that circumvents congressional approval.

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