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Why URI Should Support Fair & Open Competition

MCA submitted the following written testimony to The University of Rhode Island's Project Labor Agreement Technical Review Committee, which is holding a hearing today on whether to impost a PLA on a campus project.


If they were being honest, PLA proponents would simply admit the reason to impose a PLA is to reduce competition for organized labor which struggles to maintain marketshare. This testimony debunks many of the myths and mistruths spread to prop up PLAs.



To whom it may concern:

 

Thank you for accepting this written testimony from the Merit Construction Alliance, a trade association of New England-based general contractors and subcontractors, several of whom are located or employ Rhode Island residents and have done extensive work in the Ocean State. As an organization that has advocated for fair and open competition in the construction marketplace for 25 years, we urge this body to closely examine the real impacts of project labor agreements. After doing so, we believe you will conclude, as we have, that PLAs are discriminatory, anti-taxpayer, and devoid of the benefits alleged by their proponents.


Project labor agreements are pre-hire collective bargaining agreements between the trade unions and the project owner and/or the general contractor. The PLA requires the use of only union labor, possibly at pay rates exceeding the standard CBAs, in exchange for a promise by organized labor not to strike or disrupt the project. It contains other provisions, but those are add-ons that accomplish little or could be addressed in project bid documents without the need for a PLA.


After years of examining PLAs and their impacts on projects, MCA can offer the following informed observations:


1.      PLAs disadvantage merit shop contractors and employees who are otherwise qualified to bid and work. 

 

PLAs mandate winning bidders use only union labor, but merit shops already have employees who are paid competitive wages (including prevailing wage on public projects), receive generous benefits and are protected by state and federal laws. This includes apprentices in merit shop programs who would be banned by PLA language that mandates use of only apprentices in union-sponsored programs.

 

“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)

 

“Contractors shall employ apprentices who are registered with the Joint Apprenticeship of the Parties and shall employ qualified journeymen.” (UMass-Boston PLA, p. 11)

 

In no other area of public contracting for services do public entities contemplate a mandate that winning bidders must pass over their employees and hire temporary workers.  

 

A merit shop contractor bids on a project knowing the skill, work ethic and productivity of its craftspeople. Estimating actual labor costs is far more difficult without knowing the ability of the workers to be assigned by organized labor under a PLA. This leaves the merit shop little control over the quality of work or the confidence in meeting deadlines. Contractors are putting the solvency of their company on the line when signing a fixed-price contract, and merit shops are not willing to risk the future of the company and its employees by bidding on a PLA project.


After considering the use of PLAs on public projects, a Mass. Superior Court Judge concluded:


“Notwithstanding the lip service the PLA plays to being open to all bidders, it most assuredly is not. The evidence before the court is that the PLA poses such a significant disadvantage to open shops as to render a competitive bid impossible. Certainly, in theory, [plaintiff Wayne J.] Griffin [Electric, Inc.] and others can bid on the Project, but it is bidding blindly, and utterly defies common sense and logic to think that it is a real chance on ‘equal footing.’ No reasonable, otherwise highly qualified contractor or subcontractor would entertain such a colossal risk. For all intents and purposes, the PLA excludes open shops from bidding, as it essentially requires bidders to execute an agreement to use union laborers on the Project." (Ruling of Superior Court Judge Michael J. Callan, May 16, 2024.)

 

2.      MWBEs are disadvantaged by PLAs. Most minority- and women-owned construction companies are merit shop and their employees choose not to join organized labor. 

 

PLAs stop merit shops from bidding, and most minority- and women-owned construction companies are merit shop. A PLA is a systemic barrier that blocks minorities and women from working on a project and building wealth from good-paying jobs.

 

“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.”

 

Skanska Building USA advised Worcester officials against a PLA on Polar Park construction in 2019. “Historically, the unions are not as able to guarantee a diverse workforce,” Skanska wrote. (Even without a PLA, organized labor and union contractors failed to meet diversity goals in building Polar Park, and the union contractors paid millions in fines for misreporting diversity hiring data.)

 

A 2010 Disparity Study (for the Mass. Division of Asset Capital Management and Maintenance) quoted a 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.”

 

Even if MWBEs wanted to sign with organized labor, signatory contractors are required by organized labor to meet significant demands that have the effect of barring small contractors, as explained by a minority contractor in a 2017 DCAMM Disparity Study:

“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.”

 

3.      PLAs reduce competition from responsible merit shop employers and create a monopoly for organized labor.

 

It is patently unfair and irresponsible to deny qualified merit shop contractors and their employees the opportunity to bid and work on public construction. To say “join the union if you want to bid” ignores first, their Constitutional right to freedom of association, and second, shows a lack of understanding of how the union system works. Even if a merit shop employee were allowed to join organized labor, the employer has zero guarantee its employee will be assigned to it for the project.


It is worth observing that most construction workers in Rhode Island, New England and the nation choose to not join organized labor. It’s fair to ask, if organized labor is such a great deal, why does it need recruiters and represent a fraction of the total construction workforce?

In 2023, organized labor represented 12.2% of the construction workforce in Rhode Island, according to the Union Membership and Coverage Database, available at www.unionstats.com.  It’s a similar story in neighboring states Connecticut (13.8%) and Massachusetts (17.8%), and even in New Jersey (12.2%) and New York (18.8%).

 

4.      Stifling competition reduces the number of bidders which results in increased project costs because of higher bid prices. 

 

PLAs and other union-only schemes increase the cost of public construction by approximately 10-20% - or more - 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


Studies aside, there are many examples of the impact and the consequences of PLAs. In May, the Springfield (Mass.) Water and Sewer Commission was blocked by a court order from imposing a PLA. Bids for electrical and masonry were won by merit shops and combined, the bids were $20 million lower than the most competitive union-shop bids.  Had the PLA moved forward, Springfield water ratepayers would have been paying $20 million more for the same project.


There are cases where a project was first bid under a PLA, and then rebid with the PLA lifted. Without a PLA, the number of qualified bidders increased, and the bid prices dropped.

 

·         In 2021, Braintree, Mass., dropped a PLA on a school building project. Filed sub bids were rebid, and the total of the bids dropped by $1.1 millionWith a PLA, Braintree received 40 sub bids and no bid on electrical work. Without the PLA, Braintree received 62 bids, including three for electrical. In nine of the 14 trades, the bid prices dropped after the PLA was removed.


·         After a PLA was scrapped on a federal project in Manchester, N.H., the number of general contractor bidders jumped from three to nine. A New Hampshire-based merit shop won with a bid $6 million less than the first winning bidder, a Florida-based union contractor.


·         Fall River attempted a PLA on five school projects in 2005. After several rounds with a sparse number of bidders, whose bids were millions over budget, the mayor rescinded the PLA. Rebid and open to all qualified contractors, the number of bidders doubled, and bids plummeted. Then-Mayor Edward M. Lambert told the Herald-News, “With more bidders, you tend to get a better price.”

 

5.      PLAs offer many false promises that should be closely examined.


PLA advocates will promise no strikes, better trained workers, guaranteed pay and benefits, higher quality, safer projects, etc. This all amounts to rhetoric and there is no conclusive evidence to support these claims.

Unions can and do strike despite a PLA and a promise not to.  In May 2023, unions shut down the Vineyard Wind project for six days with a strike that included unions who had signed a PLA.


“'That’s how we roll,' said one member of the International Union of Operating Engineers, who asked not to be identified by name," reported The New Bedford Light newspaper.

There are many examples of unions breaking the PLA promise, but in reality, union strikes of any duration or impact are exceedingly rare. In 2023, there were 33 major work stoppages, according to the U.S. Bureau of Labor Statistics. Over the last 20 years, BLS reports, there were an average of 16.7 work stoppages per year. Note this data is across all industries, with construction only a fraction of the incidents.


Training and qualifications: Merit shop employees are highly trained, licensed in their trades by passing the same exams as their union counterparts, and receive on the job training. They have experience working on many of the largest projects in New England, including large construction projects on college campuses.


Pay and benefits: Merit shop employees receive competitive wages and benefits, and on public projects, all workers – union or merit shop - will receive at least the wage determined by prevailing wage or Davis-Bacon statutes. Merit shop employment benefits include paid holidays, vacation and sick time, retirement and 401K plans, health and dental benefits, bonuses and profit sharing. Keep in mind merit shop employees choose to work for their employers and not to join organized labor.


Higher quality and scheduling. If you hear that, keep in mind the exploding toilets at the new union-built UMass-Boston dormitories and the infamous Big Dig in Boston.  Union built under PLAs.


“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:

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.)


You will also recall the Big Dig was billions overbudget and years behind schedule. Read PLAs carefully and see where it ever mentions the project schedule or any penalties for missing deadlines.  (I have yet to find it in reviewing various PLAs, so please share it with me if you do.)


Safety. Construction is inherently dangerous, and every worker – union and merit shop – deserves to go home safe and sound after a day’s work. To cast a blanket assertion that one system or the other is safer is irresponsible and not supported by the data. Merit shops employ safety professionals to inspect jobsites, conduct safety training and regular briefings, provide OSHA certification training, and take the measures necessary to ensure safety. For project owners, MCA recommends reviewing the Experience Modification Ratings of each contractor to understand the past safety performance. Do not accept statements that a contractor is safer or not simply because it is union or not.

 

The only logical reason for a PLA is to reduce competition and create a monopoly for organized labor. A PLA will lock out competition from qualified, experienced merit shops. A PLA will result in a higher construction cost borne by students (via tuition) and taxpayers. There is simply no justifiable public policy reason for imposing a PLA on this or any project.

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