Understanding Project Labor Agreements (PLAs)

Event

Date

Q: What is a PLA?A: A PLA is a contract.

Q: What is a PLA, really?A: Big Labor’s tool to create a

virtual monopoly on construction jobsites by reducing competition

from quality nonunion contractors.

Q: But how does a PLA reduce competition? I thought anyone can bid on a PLA?A: Typical provisions in PLAs discourage MOST merit shop

contractors from bidding on PLA projects because they hurt construction employees and their employers.

How PLAs harm nonunion employers and employees.• PLAs take away

construction employees’ rights to elect union representation.

X

How PLAs harm nonunion employers and employees.• PLAs force employers

and employees to follow inefficient and counterproductive union job classifications and work rules contained in local union collective bargaining agreements. This adds additional costs and is a source of frustration for employees and management.

How PLAs harm nonunion employers and employees.

• PLAs require contractors to obtain employees from union hiring halls.

How PLAs harm nonunion employers and employees.• Nonunion

employees are required to pay non-refundable union dues and fees or join a union in order to work on a PLA project.

How PLAs harm nonunion employers and employees.• PLAs require non-

signatory contractors to pay their employees’ health and welfare benefits to union benefit funds. Nonunion employees LOSE this money.

How PLAs harm nonunion employers and employees.

Multi-Employer Pension Fund Liability• PLAs force contractors to pay into underfunded

and mismanaged multi-employer union pension plans that can expose merit shop contractors to pension withdrawal liabilities that can put a company out of business.

• Workers lose too.

How PLAs harm nonunion employers and employees.

• PLAs typically require merit shop companies to obtain apprentices exclusively from union apprenticeship programs or SAC or BAT approved programs.

• Places contractors at a competitive disadvantage and reduces employment opportunities for new entrants into industry.

Q: How do anti-competitive PLAs impact the pool of available

bidders?

PLAs Reduce Competition• Union Membership in 2009 XX Private Construction

Workforce

UnionMembership(7.8%)

NonunionMembership(92.2%)

Source: Union Membership and Coverage Database

January 2010, www.unionstats.com

PLAs Reduce Competition

Source: Union Membership and Coverage Database

January 2010, www.unionstats.com

Union Membership Percentage of Construction Workforce

7.8

20.5

30.3

14 12.414.5

0

5

10

15

20

25

30

35

Per

cen

t

South Dakota

Iowa

Minnesota

North Dakota

Nebraska

U.S.

PLAs Reduce Competition

Source: Union Membership and Coverage Database

January 2010, www.unionstats.com

StateTotal

WorkersUnion

%Nonunion

%

State Rank by %

Union Total

Nonunion Total

State Rank

South Dakota 16,536 7.80 92.20 34 1,293 15,243 47

Iowa 58,940 20.50 79.50 16 12,071 46,869 18

Minnesota 96,115 30.30 69.70 4 29,118 66,997 11

Nebraska 30,607 12.40 87.60 27 3,801 26,806 36

North Dakota 16,249 14.00 86.00 22 2,270 13,979 43

PLAs Reduce Competition• Union Membership in 2009 U.S. Private Construction

Workforce

UnionMembership(14.5%)

NonunionMembership(85.5%)

Source: U.S. Department of Labor (DOL) Bureau of Labor Statistics.

January 2010, www.bls.gov/newws.release/union2.nr0.htm

Three Ways PLAs Increase CostsLabor Costs• Inefficient Union Work Rules/Productivity• Double Health and Pension Costs to Nonunion

Contractors Competitive Costs• Economic Theory in Competitive Construction

Bidding: Correlation Between Less Competition and Higher Labor and Construction Costs

What is the PLA Cost Premium?• PLAs Increase Costs Between 12 Percent and

18 Percent• Studies Available at www.abc.org/plastudies

The Results of PLAs in Your Community

The Results of PLAs in Your Community

“PLAs are special interest handouts that deny

taxpayers the accountability they

deserve from

government.”

PLAs Waste Taxpayer Dollars

“Union-Only PLAs discriminate against minority- and women-owned businesses and their diverse workforce.”

PLAs Discriminate

PLAs Discriminate

“PLAs amount to de facto segregation … African-American workers are significantly underrepresented in all crafts of construction union shops ... this problem has been persistent during past decades and there appears to be no type of improvement coming ... PLAs are anti-free-market, non-competitive, and, most of all, discriminatory.”

National Black Chamber of Commerce

“WCOE opposed federally mandated project labor agreements … PLAs will disproportionately impact small business, particularly those owned by women and minorities.”

Women Construction Owners & Executives, USA

“We believe PLAs make it more difficult for minority-owned contractors to compete … they effectively work against the goals of increasing the number of projects awarded to minority-owned businesses by placing roadblocks in our way.”

Latin Builders Association, Inc.

“(PLAs) are bad for business, especially small businesses which constitute most of our membership. They impose undue restrictions on our ability to compete, increase the cost of doing business, reduce employee benefits, and interfere with the free negotiation process between employee and employer. They are patently unfair to small businesses who do not have the resources to comply with yet another government mandate.”

United States Pan-Asian-American Chamber of Commerce

“(PLAs) are not good business for small business in general, and particularly for women and minorities in business … the impact on women and minorities trying to compete in federal procurement would be devastating.”

National Association of Women Business Owners

Minority and Women’s Business Groups Oppose Discriminatory Union-only PLAs.

Q: If PLAs are not in the public interest, why do governments and corporations use

PLAs?A: Politics, Power and Propaganda.

The Politics of PLAs.

Executive Order 13502: A White House Gift to Big Labor

• Repealed President Bush’s PLA ban on federal and federally-assisted projects since 2001 ($147 billion worth of construction)

• Federal projects ONLY > $25 million.

• An encouragement, NOT a mandate.

• Does not cover federally assisted projects.

• Federal agency procurement officials will decide PLA use (with a little help from Big Labor’s friends).

• FAR Council Final Rule Issued 4/12.

Section 7 of Executive Order 13502Section 7. The Director of the OMB, in consultation with the Secretary of Labor and with other officials as appropriate, shall provide the President within 180 days of this order, recommendations about whether broader use of PLAs, with respect to both construction projects undertaken under Federal contracts and construction projects receiving Federal financial assistance, would help to promote the economical, efficient, and timely completion of such projects. [Note: Order was issued Feb. 6, 180 days sets the deadline at Aug. 5 but an order hasn't been issued]

Q: If PLAs are not in the public interest, why do governments and corporations use

PLAs?

A: Politics, Power and Propaganda?

Common Arguments in Support of PLAsWages and BenefitsNo Strike PromiseLocal HireUnion ProductivityUnion SafetyApprenticeshipPLAs are Used in the Private SectorPLAs Reduce CostsPLAs Attract High Road Contractors and Increase Competition?Anyone Can Bid a PLA Project!Illegal Immigrants/Undocumented Workers

Get the Truth About PLAs on our blog

www.TheTruthAboutPLAs.com

Federal Davis-Bacon Prevailing Wage RatesUnion County, South Dakota

Construction Type: Building Rates Fringes

Boilermaker $ 33.84 17.83Carpenter $ 20.57 9.85Electrician $ 22.19 8.34+10%Ironworker $ 21.14 9.35Laborer $ 13.80 7.75Plasterer $ 21.00 2.50Plumber $ 23.86 8.00Sheetmetal Worker $ 21.24 9.61Power Equipment Operator $ 15.68 3.95

Figures found through www.wdol.com