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Commentary

Project Labor Agreements Give Unionized Companies Unfair Advantage



Americans may be about to experience a trillion-dollar infrastructure boom. All those zeros mean getting the most for taxpayers’ money is particularly important. That makes government-mandated project labor agreements a major issue impacting taxpayers and the construction industry’s ability to rebuild America’s infrastructure.

Government-mandated project labor agreements are typically drafted by construction unions, without input from nonunion contractors, that all bidders on particular projects must accept. Typical terms include union representation and mandatory membership or union fees for all workers (including those working for nonunion employers), following union work classifications and rules (including getting all workers from union hiring halls and all apprentices from union apprenticeship programs), and contributing to union benefit and multi-employer pension plans that few nonunion members will get a penny from.

They are also contentious. Construction unions want them; nonunion construction firms and workers oppose them on taxpayer-funded projects.

Unions claim project labor agreements result in lower project costs, decreased delays, increased safety and quality, and labor peace. All those claims have been powerfully rebutted. But one claim that hasn’t gotten sufficient attention is unions’ constantly reiterated claim that PLAs “level the playing field” for all competitors.

In one sense, government-mandated project labor agreements (PLAs) do level the playing field for rival bidders. Everyone must follow union-determined policies and pay union-determined wages. However, their intent is not to level the playing field, but to provide unions a huge home-field advantage by handicapping nonunion firms’ ability to utilize their superior abilities and punishing them and their workers with extra burdens.

This is obvious from the exclusion of nonunion contractors from PLA negotiations. They have no ability to incorporate terms that allow them to use their resources most efficiently, while unions hold the power to hamstring those efficiencies. As David Tuerck reported, one union official revealed the truth when he said that such PLAs’ real purpose was “to fight the growing nonunion element throughout the country.”

Under PLAs, nonunion contractors must give up their flexibility, as with workers who can cross highly inflexible union job boundaries. They give up access to nonunion apprentices. They give up the ability to make more efficient use of less-skilled “helper” workers, stymied by union-imposed limitations. They even give up the ability to choose their own workers, who they trust and already work well with in teams, to the requirement that all workers come through union hiring halls. In sum, they make nonunion contractors act like union contractors. And government bodies also provide special advantages to those who agree to use PLAs.

Mandated PLAs, in combination with prevailing wage laws, also keep nonunion contractors from passing on lower costs to taxpayers from a labor force paid market rates less than inflated union scales.

Even under a PLA requiring companies to pay prevailing wages, Tuerck notes that nonunion workers “have to pay dues and accept deductions from their paychecks that go toward benefits that they already receive from their employer, and that they, as nonunion workers, will never collect from the unions.” Paying dues they would not otherwise pay leaves nonunion workers with less.

PLA requirements also force nonunion contractors to pay for the cost of the union benefit package, in addition to paying the costs of the fringe-benefit package they have agreed to provide their workers. And both amounts are substantial. Further, when the burdens keep nonunion contractors from bidding on PLA contracts, it reduces the demand for nonunion contractors’ and workers’ services.

PLAs’ differential treatment of union and nonunion workers is also revealed in claims that they decrease labor unrest. Nonunion workers don’t strike. Unions strike. So PLAs reduce the threat of union unrest. But that means PLAs pre-emptively pay unions extortion money to avert their implied threat of disruption, while penalizing those who would not strike.

PLAs are not about providing a “level playing field.” They are about mandating the unions’ playing field for those who would reject it, given the choice, unfairly harming both nonunion contractors and workers. And they don’t just tilt the field against those outside unions. They also tilt the field against taxpayers, whose wallets are lightened by the inefficiencies and higher costs they produce.


Gary M. Galles is a Research Fellow at the Independent Institute, Professor of Economics at Pepperdine University, and Adjunct Scholar at the Ludwig von Mises Institute.






  • MyGovCost.org
  • FDAReview.org
  • OnPower.org
  • elindependent.org