A FEW DAYS AGO, President Biden signed an executive order requiring that all federal construction projects over $35 million be conducted under a project labor agreement, or PLA. The executive order could cover $262 billion in federal government projects.
In a recent op-ed, Frank Callahan of the Massachusetts Building Trades Unions claimed that the executive order “will increase quality and lower the costs of federal construction projects.” He could not have been further off the mark.
A project labor agreement is an agreement between a builder and a contractor under which the contractor adheres to union work rules and hiring procedures. This means that, whether the contractor is a union contractor or not, workers must be hired through union hiring halls, that non-union workers join a union and pay dues for the length of the project, and that union rules apply to work conditions and dispute resolution. The supposed purpose is to reduce the “complexity” of a building project and to preserve labor peace. The actual purpose is to discourage non-union contractors from bidding.
The Biden administration contends that PLAs “will help alleviate the management and coordination challenges that can stymie progress on major construction projects. This helps projects get completed on time and helps the government get the best value for taxpayers’ dollars.”
But this argument is nonsense. It ignores the fact that the Bush administration managed to initiate almost $60 billion in federal projects without PLAs and without a single cost overrun or delay attributable to the absence of a PLA. The reason is obvious. No contractor, union or not, benefits from delays and cost overruns or needs a union hiring hall to find skilled workers.
It would seem also that non-union contractors would have a cost advantage in bidding for “complex” projects in that they are not burdened by the necessity of having to deal simultaneously with several union hiring halls, each with its own collective bargaining agreement, culture, and work‐rule history. If a project is genuinely “complex,” it would seem better to deal with a contractor with its workforce under a single roof.
Then there’s the administration’s claim that PLAs save taxpayers money. There is no basis for making that claim. The Beacon Hill Institute has found that PLAs have increased costs on school construction projects in several states, including Massachusetts, New Jersey, Ohio, and Connecticut.
You wouldn’t guess it from reading Mr. Callahan’s op-ed, but only 13 percent of construction workers belong to unions. In fact, the real motivation behind the idea of requiring a PLA is that it requires the builder to hire from the small pool of workers who do belong to unions. That plus the fact that the work has to be done under restrictive and inefficient union rules explains why we typically find that PLA projects cost more than non-PLA projects of the same type. Our studies show that PLAs have increased costs of school projects by 12 to 20 percent.
President Biden takes pride in positioning himself as the country’s “most pro-union president.” That he may well be. But with this action, he also makes himself anti-worker and anti-taxpayer. Let’s hope that the next president revokes this thoroughly wrongheaded gift to big labor.
David G. Tuerck is president and William F. Burke is director of research at the Beacon Hill Institute for Public Policy Research.