Study after study demonstrates the increased costs from Project Labor Agreements and other attempts to block open-shop contractors from bidding on construction projects. Here are some of the findings from independent researchers.
The Worcester Municipal Research Bureau reported in 2001 that PLAs discriminate against nonunion workers, hurt smaller contractors by restricting their access to projects, and offer no wage benefits on public projects.
PROJECT LABOR AGREEMENTS ON PUBLIC CONTRUCTION PROJECTS: THE CASE FOR AND AGAINST
Worcester Municipal Research Bureau
Report No. 01-04
May 21 2001
Based on an extensive analysis of the literature, legal opinions, and Congressional testimony on the use of Project Labor Agreements (PLAs) on public construction projects, as well as interviews with proponents and opponents of their use, the Research Bureau makes the following observations:
Project Labor Agreements, which are prehire collective bargaining agreements setting the terms of employment on an entire construction project, have been increasingly pursued by unions working on public projects since the U.S. Supreme Court upheld their legality under Federal law in the Boston Harbor case (1993).
PLAs are not needed to secure "fair" wages to workers on public projects, since such wages are already guaranteed under "prevailing wage" statutes in Massachusetts and other states.
The chief benefit that PLAs on public projects offer to the public is a guarantee of labor harmony, i.e., a pledge to avoid strikes and speedily resolve interunion disputes during the course of the project. (Occasionally, however such pledges have been violated.)
The guarantee of labor peace is evidently purchased at the price of reducing the opportunity for nonunion contractors to compete for work on a project, since even if they should be awarded such work, the contractors are then compelled to operate under union rules governing such matters as staffing requirements that undermine the economies that might ordinarily give such contractors an advantage. Thus PLAs tend to constrict the number of bidders on a project compared with those without PLAs, and are likely to reduce the savings to the public that would accrue nonunion contractors who are employed were allowed to follow their customary methods.
Additionally, PLAs tend to discriminate against nonunion workers, by requiring them if they are hired on a project either to join the union or else to contribute agency fees to the union as well as pay into its benefit funds, from which they are unlikely to derive benefits themselves.
Because most smaller contractors are nonunion, PLAs tend to have a detrimental effect in particular on the opportunities available to small businesses.
Under Massachusetts State court decisions, PLAs are allowable under state competitive bidding projects only for projects of large scope and complexity. It seems doubtful that the City Manager's recent decision to order PLAs for the North and Vocation High School construction projects will meet this test.
Construction is one of the most hazardous industries. Each year a substantial number of construction workers lose their lives. Previous studies of construction fatalities have focused on the characteristics of the accidents and the workforce. Such studies are important for developing programs to improve construction safety.
Studies of the characteristics of accidents relative to the type of contractor are of interest to construction owners and insurance companies. Many owners today consider safety performance in evaluating contractor bids for their construction work. This report deals with a study of the characteristics of construction fatalities for nonunion and union contractors. The results of analysis of 5,964 construction fatalities investigated by the The Occupational Safety and Health Administration (OSHA) and states operating OSHA approved state plans from 1985 though 1993 are presented. The analysis compared construction fatalities experienced by nonunion and union contractors in terms of factors such as geography, construction activity, worker age and the causes of fatalities.
The following conclusions are based on the analysis of the 5,964 construction fatalities investigated by OSHA for the period of 1985 through 1993.
The general trend for fatality rates (number of fatalities per 100,000 workers) for both nonunion and union contractors is downward.
Union contractor fatality rates ranged from 20 to 57 percent greater than those for nonunion contractors over the nine year period.
The distribution of total fatalities varied among the 50 states. In several of the right-to-work states the percentage of fatalities for union contractors was considerably less than that for nonunion contractors.
The percentage of fatalities for three industry groups, SIC 15, 16 and 17 was essentially the same for both nonunion and union contractors.
The percentage of fatalities for both nonunion and union contractors for the smaller firs is considerable higher than the percentage of construction employees working for these firms. Firms with 19 or fewer employees account for 41 percent of the employees, but, for nonunion contractors 77 percent of the fatalities and for union contractors 60 percent.
The distribution of fatalities by age group for nonunion contractors is quite close to the age distribution of the workforce population. The percentage of fatalities for union contractors is less than the age distribution of the construction workforce up through the 25 - 34 year age group; above this level the reverse is true.
The percentage of union contractor fatalities from fall heights less than 20 feet is less than that for nonunion contractors (20 percent versus 32 percent); for falls greater than 30 feet the reverse is true (42 percent for union contractors versus 29 percent for nonunion contractors).
The percentage of falls in the union sector for roofing activities is nearly twice that of non-union contractors. For steel erection, the percentage of falls for union contractors is nearly three times that for nonunion contractor.
by Herbert R. Northrup, Ph.D., and Roger G. McElrath
From the post-World War II construction boom to today, organized labor has gone from controlling nearly nine out of ten jobs in the construction injury to just two in ten.
From 1973 to 2007 alone, union membership in the Massachusetts construction industry dropped by half, from 44.8 percent to 20 percent
In dollar term, union projects represented only 27 percent of all construction spending in Massachusetts in 1997.
The reason for this drop in union share of the construction market is high cost.
Union wage and benefit increases have historically exceeded those of the Consumer Price Index (CPI). 1996 was the first time in recent history that union compensation did not rise faster than the CPI. In the early 1980s, union wage and benefit packages regularly rose by 10 percent or more.
Additional construction costs are created by inefficient union staffing requirements and "Terms and Conditions" provisions, which include such items as "show up pay."
In response to its loss of market share, organized labor has sought to legislate so-called Project Labor Agreements (PLA) on public construction projects, Originated in Massachusetts with large projects like the cleanup of Boston Harbor and the Central Artery/Third Harbor Tunnel. PLAs essentially prohibit open-shop (nonunion) contractors from bidding on a project. Organized labor has successfully used PLAs as a tactic to staunch its loss of membership in Massachusetts.
During the 1990s, the period during which PLAs cam into existence, union share of both the labor and construction markets leveled off at about 25 percent after falling steadily since the post-World War II era.
Organized labor controls a disproportionate share of the public construction market, which is dominated by large projects having PLAs. In 1997, organized labor's share of the public construction market was 33 percent, compared to 25 percent in the private sector.
The cost of union PLAs to prop up dwindling union membership is higher construction costs for taxpayers - even though one of the ostensible goals of PLAs is costs savings. These higher costs are due to lack of competition -- not to a difference in wages, since wage rates for public construction projects are the same for both union and open-shop companies under the state's Prevailing Wage Law.
In March 1998, the Massachusetts Superior Court threw out a PLA that had been included in the City of Boston's plans for the renovation of Hyde Park High School, the largest school construction project in the city's history. When the project was re-bid, the number of bidders increased by 60 percent and the lowest bids dropped by nearly 7 percent.
Similar results - more bidders and lower bids - have occurred when PLAs were eliminated from projects in New York, California and Nevada.
In addition to raising construction costs for taxpayers, PLAs discriminate against the vast majority of construction workers in Massachusetts.
Open-shop contractors employ four out of five construction workers in Massachusetts
Union claims to the contrary, open-shop participation in construction projects with a PLA are impossible in practical terms. First, employees of an open-shop company would have to join a trade union for the duration of the project, then hope that they are assigned to the project by the union hall. Second, even if they are hired for the project, they would have to pay union pension and benefit dues for the duration of the project, even though they would not be union employees long enough o quality for any benefits.
In addition to driving construction costs up rather than down requiring union labor on public construction projects has demonstrated none for the public policy benefits originally promised by PLAs.
Contrary to the claims of organized labor that only union contractors have the wherever-withal to do major projects, Engineering News-Record's "Top 400 Contractors" list includes three in the top 10 that are open-shop in part or in full.
Despite union claims that union contractors have better safety records, open-shop fatalities were significantly lower than those of union contractors, according to the only statistical study of construction fatalities investigated by the U.S. Occupational Safety and Health Administration (OSHA). The safety records of the Harbor and Artery projects also contradict organized labor's safety claims.
Although the Harbor and Artery projects have enjoyed labor peace, there is no evidence to demonstrate that PLAs are the reason. In addition, evidence from around the country suggests that union and open-shop contractors often work together on the same project without labor disruptions.