Biden Policy Hurts America's Construction Workforce

MCA weighed in with a lengthy rebuke of the Biden Administration's mandate of union-only workers on federal construction projects. MCA submitted comments to the Federal Acquisition Regulatory (FAR) Council during a public comment period of regulations to implement the project labor agreement.



Public Comments of the Merit Construction Alliance of Massachusetts, Inc., on FAR Case 2022-003

Our nation is at a moment in history when we need all hands on deck. The historic devastation caused by Hurricane Ian in Florida will take years to repair, and that includes an undetermined number of federally funded projects that will be subject to President Biden’s Executive Order mandating PLAs on federal projects priced over $35 million. When time is of the essence, when rebuilding our nation’s third largest state must be a national priority, it is particularly ill-conceived to bench more than four-fifths of the country’s construction workforce – those who choose to work outside the confines of organized labor.

The FAR Council’s proposed rule, FAR Case 2022-003, is based on illogical public policy that discriminates against a majority of American construction workers, unnecessarily impedes fair and open competition, and will increase the cost of federal construction projects by severely limiting competition. Imposing project labor agreements (PLAs) on federal projects would serve to:

- Discriminate against the majority of construction workforce and contractors who are merit shop and choose to work outside the confines of organized labor.


- Block minority- and women-owned companies from bidding and working on the project as the vast majority are merit shop and wish to remain so.


- Circumvent tried and tested federal construction regulations and practices,


- Increase project costs as PLA projects are shown to escalate costs by millions of dollars more in numerous studies and on actual projects. Meanwhile, construction costs are already climbing at historical rates due to material and worker shortages.


PLAs Lock Out Nonunion Construction Workers

No one, including the MCA, would think it fair to lock out union labor from an opportunity to work on a public project. So why is it acceptable to deny nonunion labor the same opportunity?


· A PLA requires contractors to employ union workers referred by the union local. “The Contractor recognizes the Union as the sole and exclusive bargaining representative of all craft employees working within the scope of this PLA on the Project.” (Source: UMASS-Boston PLA p. 9, 10/20/2010)


· That would require a merit shop to not use its own employees, which may result in layoffs – especially at a smaller contractor – and use union labor.


· It is difficult to imagine that sound public policy would encourage an employer to fire its workforce. In no other area of contracting for services, that we are aware of, does the federal government contemplate imposing such a requirement on winning bidders.


· In the United States, 12.5% of construction workers are employed by merit shop contractors, according to data from unionstats.com, the only reliable internet database tracking union membership utilizing U.S. Census Bureau data.


· Nonunion workers have a constitutional right to join or not join organized labor, and they should not be disadvantaged regardless of the decision they make. Considering the U.S. Supreme Court’s Janus decision, it’s a fair question to ask whether the Executive Branch can circumvent the court’s ruling by mandating construction workers join organized labor for the opportunity to work on a federal project. This amounts to the government requiring employees of contractors and subcontractors to give up their First Amendment rights while doing the government’s work.


PLAs Block Merit Shop Contractors from Bidding

Claims that nonunion contractors can bid on PLA projects are disingenuous. While PLAs do not overtly state “nonunion contractors need not apply,” the onerous terms and conditions of PLAs have that very effect:

· Under a PLA, nonunion contractors would be required to obtain most or all workers from the union hiring halls. What are they supposed to do with their loyal, permanent employees? There employees include minorities, women and veterans. Are they supposed to lay them off? They will not abandon their employees.


· Under a PLA, non-union contractors could be forced to exclude apprentices enrolled in registered nonunion apprenticeship programs. “Contractors shall employ apprentices who are registered with the Joint Apprenticeship of the Parties and shall employ qualified journeymen.” (UMass-Boston PLA, p. 11)


· The unions require signatory contractors to meet significant demands that have the effect of barring small contractors, as explained by a minority contractor in a survey with the Commonwealth of Massachusetts’ head construction agency:


“Union requires a $50,000 bond and a million other type of requirement[s] that eliminate small companies to qualify to become a signatory. We are MBE, DBE for a reason; we don’t have the resources like other contractors.” (Source: 2017 DCAMM Disparity Study)


· In opposing PLAs, the National Black Chamber of Commerce explained:


“Government-mandated project labor agreements, or PLAs, typically require companies to agree to recognize unions as the representatives of their employees on that job, use the union hiring hall to obtain most or all workers, obtain apprentices exclusively from union apprenticeship programs, follow union work rules and pay into union benefit and multi-employer pension plans that any nonunion employees permitted on the project will be unlikely to access unless they join a union and vest in these plans. This forces employers of nonunion workers to pay ‘double benefits’ into existing plans and union plans, and places firms opposed to these costly provisions at a significant competitive disadvantage.”


MBE and WBE Contractors Will Be Harmed by PLA

A PLA will certainly harm minority- and women-owned construction firms that are nonunion – and anecdotal evidence shows the majority are merit shop.


· A 2010 study by the Commonwealth of Massachusetts quoted an construction-firm owner as saying:


“You find very few of these companies that are union. Okay. And there are lots of MWBE companies out there, but you can’t access them if you’re doing a union job because people tend not to go union.”


· In a report to the City of Worcester, Mass., in which it recommends against adopting a PLA on the new ballpark, Skanska Building USA stated:


“Historically, the unions are not as able to guarantee a diverse workforce.”


Minority Community Public Opposition to PLAs


Across the nation, members of the minority community have publicly opposed PLAs:


· "[C]laims that a PLA can be a tool to ensure minority construction workers and businesses are used on a public project is a farce," stated Harry C. Alford, the late president & CEO of the National Black Chamber of Commerce.


· “Government-mandated PLAs are opposed by the NBCC because almost all minority-owned contracting firms are not affiliated with unions. African American-owned contracting firms are typically small businesses and employ their own core workforce of skilled construction workers who are not unionized and are generally more diverse than construction workers coming from union hiring halls.” (Harry C. Alford, president & CEO of the National Black Chamber of Commerce.)


· “98% of Black and Hispanic construction companies are non-union shops. Thus, a Project Labor Agreement greatly limits the opportunities for Black and Hispanic firms,” said John Harmon, Sr., IOM, Founder, President & CEO of the African American Chamber of Commerce of New Jersey.


“The possibility of Black and Hispanic labor is greatly suppressed. It is beyond disappointing when we see diversity clauses added to legislation that is fundamentally harmful to minority communities.”


“The diversity language within this bill is a guise of permissive language that has absolutely no benefit to the African American community within the state.”


· “These PLAs promise 'local hire' and outreach to minority neighborhoods, but the unions’ promises have always been empty,” wrote Shane Harris, a San Diego activist.


Laws & Agencies Successfully Govern Public Construction


Federal laws and regulations already provide the legal requirements, rules and oversight. They govern workers’ rights, pay rates and safety. They ensure qualified and experienced of contractors are hired.


The Davis-Bacon Law already sets the pay rates for federal construction projects regardless if the winning bidder is a merit or union shop. The Occupational Health and Safety Administration strictly enforces workplace safety.


What Do PLAs Accomplish?

1. Reduce Competition. PLAs reduce competition from nonunion contractors and create a monopoly for organized labor.


"When a PLA is in place, it grants a union leader the power to call all the shots and determine which locals get total and complete control of multibillion-dollar public and private construction projects. Those in charge decide what it’s going to cost in labor to get the job done. They become the ultimate power brokers, controlling numerous jobs and commanding the loyalty of countless beneficiaries down the line," writes Kevin Barry, director of the construction division of the United Service Workers Union in Queens, in a New York Post opinion column. Mr. Barry continued:


"We have long been taught that monopolies are harmful and drive up the cost of business while potentially sidelining the best and brightest workers. It’s time we acknowledge that such excessive powers granted by the government are abhorrent, leading directly to corruption.


2. Solve Union-Made Problems. The problems that a PLA allegedly solves are problems created by organized labor. Strikes, jurisdictional disputes and grievances may be hallmarks of organized labor, but unheard of by merit shop employees. And there is no guarantee a PLA will prevent the issues, as we have seen examples of strikes on PLA projects.


3. Increase Costs. PLAs increase costs due to decreased competition and inefficient union work rules.


a. PLAs and other union-only schemes increase the cost of public construction between 10-20% according to numerous studies comparing PLA and non-PLA project costs.


A study of Connecticut school construction found PLAs raised the final costs by 19.84 percent. (The Effects of Project Labor Agreements on School Construction in Connecticut, by Burke and Tuerk, January 2020.)


"Municipal leaders everywhere need to rethink the whole idea of entering into PLAs for school and other construction projects, in that PLAs result in spending more tax dollars than necessary on these projects and thus reduce the number of projects that can be built." - David G. Tuerck, Executive Director, Beacon Hill Institute


b. In Massachusetts, the cities of Worcester and Lowell chose fair and open competition in 2019. They rejected organized labor's demands for project labor agreements:


i. "According to our consultant a PLA would add 10-15% onto construction costs. With an estimated $270.5 million in construction costs, this would equate to $27-40.5 million added to the project, exclusively funded by the City and residents." Lowell City Manager Eileen Donoghue, May 23, 2019, memo to the Lowell City Council.


ii. The Worcester Redevelopment Authority asked its construction consultant, Skanska Building USA for an opinion on a PLA, and rejected a PLA on the new ballpark. Skanska wrote:


1. "PLA's cost more, historically, and this has been cited in the 2003 and 2017 studies by the Beacon Hill Institute."


2. "One of the factors that increase construction costs on these projects are requirements from the unions to have some number of support workers on site at all times, whether needed or not. These workers merely drive up the cost without a resultant benefit to the project, but the unions require them."


(Source: Project Labor Agreements on Chapter 149a Projects, Jan. 23, 2019, by Keith Martin, Skanska USA Building.)


PLAs Do Not Guarantee Price or Quality


Since advocates claim PLAs guarantee costs, timelines and quality, it is fair to examine those claims. In a review of PLA language, there is no evidence of provisions that guarantee schedules, price or quality, nor provisions that provide consequences for failure of organized labor to adhere to the PLA. Here are examples of two well-known PLA projects with publicized quality issues:


- The Big Dig – over budget, not on time. When addressing the matter of workmanship and continued spiraling costs on the Big Dig, State Auditor Joseph DeNucci reported: "Not only have taxpayers paid for shoddy work, they are now paying for the repairs." (Source: "Audit: Pike should Dig deeper to recover $$," The Boston Herald, July 31, 2007.)


- UMass Boston dorms – “In the first weeks of school, dorm elevators abruptly fell several floors with students inside. Water shot out of one toilet when you flushed another, students reported. The rooms are often stifling hot, but the showers are frigid.” (Source: https://www.bostonmagazine.com/education/2018/11/12/umass-boston-dorm-problem/)



PLA vs. Non-PLA comparisons


There are instances where we can fairly compare construction projects with and without PLAs. The differences are revealing.


U.S. Dept. of Labor Job Corps Center, Manchester, N.H​


Between 2009 and 2012, the federal government proceeded with bidding on this project. According to public sources:


· Three general contractors bid under the PLA and when the PLA was removed and the project rebid, nine general contractors bid.

· The winning bidder under a PLA bid again when the PLA was dropped, and that company’s bid dropped by $3.6 million – on the same project.

· The original winning bidder, a union contractor based in Florida, did not win the bid on the New Hampshire project.

· A New Hampshire merit shop firm won the project with a bid $6M less than the original winning bid, a 16.47% savings for taxpayers.

The Garage Mahal


In Massachusetts, the cities of Worcester and Lowell both completed $21 million parking garages in 2007. Worcester built 503 parking spaces, while Lowell built 900 spaces. Unlike Lowell, the Worcester project used only union contractors and labor to get 45% fewer spaces in what the Telegram & Gazette dubbed the “Garage Mahal.”


Fall River Forced to Drop PLA


In 2005, the City of Fall River, Massachusetts imposed a union-only Project Labor Agreement on that city’s five-school construction project. The Merit Construction Alliance was forced to file a lawsuit challenging the legality of the PLA to protect the interests of the merit shop community and Fall River taxpayers.


After several rounds of a sparse number of bidders, whose bids came in millions over budget, Fall River’s mayor rescinded the PLA and re-bid the project allowing all qualified, responsible bidders, regardless of union affiliation, to participate. The results were predictable: the number of bidders doubled and bid prices plummeted, which left the mayor to publicly conclude, “With more bidders, you tend to get a better price.”



Conclusion


The PLA Executive Order and the FAR Council’s proposed rule, FAR Case 2022-003 represent ill-conceived public policy, lacks supporting data and rationale, and is contradictory to its stated goals. There is no legitimate reason for the EO and the proposed rule to circumvent the federal government’s existing public construction laws and processes.


The majority of the nation’s construction workforce, which is nonunion, will be denied the opportunity to bid and work on projects they are funding with their state and federal tax dollars.


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