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Forced Union Payments on Tax Paid Projects

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In an Executive Order few have heard about, President Obama is trying to eliminate union competition for federal construction projects.

This egregious order encourages Project Labor Agreements (PLAs) on federal construction projects costing $25 million or more. PLAs are collective bargaining agreements between contractors, their subcontractors and labor unions. Under a PLA, contractors must either use union workers or non-union workers who are forced to make contributions to union pension funds and other union programs – from which they will never benefit. These are blatantly discriminatory rules against non-union shops.

The personal cost to the non-union worker is significant, which is why non-union construction firms often don’t bother to bid on construction projects that use PLAs. Even if construction firms do bid on PLA projects, why should non-union workers who win business under a PLA have to pay union dues just to work on these projects which are paid for by their own tax dollars? That is simply unfair.

And in this Right to Work state, it is contrary to what our citizens firmly believe.

Recent data from the Bureau of Labor Statistics shows that only 15.6 percent of America’s private construction workforce belongs to a union. That means that PLAs discriminate against 84.6 percent of construction workers who could be working on federal construction projects if not for the heavy-handed, union-only PLAs.

Non-union workers who might work on PLA federal construction projects will be forced to pay into the union pension funds. A recent study released by Diana Furchtgott-Roth, senior fellow at the Hudson Institute and a former Chief Economist at the U.S. Department of Labor, found that union pension plans perform much more poorly than non-union retirement plans. This might well be why unions are so eager for new pension contributions from those who will never benefit – to cover for these failing plans.

Participants in federal and state-approved non-union apprenticeship programs cannot work on a job covered by a PLA, so young workers are left out in the cold – by presidential decree. This means craft professionals enrolled in all apprenticeship programs other than those offered by the union are excluded from work in their hometowns on federal construction projects paid for with tax dollars.

The construction industry as a whole has been hit hard by this current economic downturn. We need to put people back to work. Union-only PLA rules will keep non-union workers out of work. This is simply harmful public policy for everyone including those here in Virginia looking for construction jobs.
And at a time of deep recession when we are looking to the construction industry to help us dig out of the current climate, the cost of construction projects will rise under union-only PLAs.  Many studies show that PLAs increase the cost of construction 10-20 percent when compared to non-union controlled construction costs. These increased costs mean that taxpayers would feel the pain.

So the billions of dollars Congress and the President are pouring into so called “shovel ready” construction projects (roads, bridges, etc) will cost us up to 20% more than they should.  Our taxes are once again wasted.

PLAs are not successful at keeping a construction project on time or on budget. Most people have heard about Boston’s “Big Dig,” which was built with a union-only PLA. Though projected to cost $2.2 billion, this project ended up costing more than $14 billion. This is just one example.  In addition, union workers are permitted to strike, which can add additional costs to a construction projects Non-union firms don’t strike.

The reason the unions need this PLA rule is to boost their membership. President Obama seems committed to helping unions increase their membership from the current low levels. He still hopes to take away the secret ballot from workers when voting on whether to unionize. That battle is yet to come, right after health care is decided.

The PLA Executive Order may soon become a reality.  The comment period on the order has been extended to September 23 by the Federal Acquisition Regulatory Council.  It will be interesting to see how this turns out.  Tens of thousands of men and women could be adversely impacted when this Executive Order goes into effect.  Here in Virginia it is clear that this new rule will hurt our economy.

Public policy simply should not favor unions in a way that discriminates against non-union workers.  A level playing field is always best for the country and for our state.

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