Impact - Project Labor Agreements
The Issue PLAs
Once the City Manager, the City Council, the School Superintendent and the School Committee approved the construction of a new vocational school on Bell Hill, local construction unions requested that it be built under a Project Labor Agreement (PLA), that is, a prehire collective bargaining agreement setting the terms of employment on an entire construction project. A number of area contractors objected on the ground that although they were graduates of Worcester Vocational High School, they would be excluded from the opportunity to work on its replacement building simply because they were not union members and did not wish to join a union. Given the magnitude of this project (costing over $100 million), the employment opportunities its construction would generate, and the controversy that ensued over the City Manager's proposal to attach a PLA to the construction specifications, the Research Bureau prepared a study discussing the case for and against Project Labor Agreements. Based on our extensive analysis of the literature, legal opinions, and Congressional testimony on the use of PLAs on public construction projects, the Research Bureau drew the following conclusions:
- 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 by workers to avoid strikes and speedily resolve interunion disputes during the course of the project.
- The guarantee of labor peace is purchased however, at the price of reducing the opportunity for nonunion contractors to compete for work on a project, since even if they are awarded such work, they are 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 and increase costs to the public.
- In fact, based on analyses of other public construction projects, PLAs typically add about 15% to the cost of a project. That would mean an additional $15 million of taxpayers' money to cover the $100 million Worcester Vocational High School, or an additional $1.35 million to the $9 million provided by taxpayers.
- 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 particularly detrimental effect on the opportunities available to small businesses, many of which are minority- and women-owned enterprises.
- Under Massachusetts State court decisions, PLAs are allowable under state competitive bidding projects only for projects of especially large scope and complexity. It seemed doubtful that the City Manager's decision to order a PLA for the Vocational High School construction project would meet this test.
The evidence in the Research Bureau report was used extensively by the Merit Construction Alliance, the statewide organization of non-union contractors, and local non-union firms to plead their case to be allowed to bid on the project. The project manager concluded that the Vocational School project was not of significant scope or complexity, and requiring a PLA on this project would probably not survive a court challenge. Thus, the school is being built without a PLA, and by all accounts, the construction has gone smoothly. More recently, the $600 million City Square project proposed by Berkeley Investments for a mixed use development in downtown Worcester will also be built without a PLA. The PLA study is the most frequently downloaded report on the Research Bureau's website, and one for which the Bureau received national recognition by the Governmental Research Association. In addition, we regularly receive calls and emails from across the country about the report. Excerpts have been reprinted in Building Profits, the magazine for construction financial professionals. Most recently, it was cited by columnist Scot Lehigh of the Boston Globe
(May 20, 2005) to argue against the use of PLAs on school construction projects on which the Commonwealth will spend $10 billion over the next four years. PLAs would add about $1.5 billion to those costs for Massachusetts taxpayers.