A taxpayer victory

When President Bush was elected, EFF was asked to provide his transition team with several policy recommendations, including information on former President Clinton’s executive order related to Project Labor Agreements (PLA). PLAs require use of union labor and rules on all federal construction projects.

Based in part on our recommendation, President Bush issued an executive order overturning Clinton’s, mandating that all construction projects receiving federal funding or aid be subject to open bids. This ended the union’s monopoly on federal projects, allowing other bidders to participate as well. Because of this, Governor Locke was forced to open the bidding process on the capital dome renovations (earthquake damage) or risk losing federal funding since he had chosen to make the project a PLA.

At the request of labor unions, a circuit judge initially invalidated President Bush’s order. The U.S. Appeals Court for the District of Columbia, however, recently reversed the lower court’s ruling and upheld the president’s order.

So what are PLAs and why does any of this matter? A PLA is sold to taxpayers and elected officials under the guise that by agreeing beforehand to use union labor and rules, projects will be on time and in budget due to “labor harmony.” In other words, labor bosses won’t call for a strike. In practice, PLAs artificially increase the price of projects. The only real winner when PLAs are issued are the unions.

A Wharton Business School study on PLAs determined that the “terms and conditions” in these labor agreements on average actually add 6.8 percent to a project’s labor costs. Though estimates vary, projects built by union-only shops increase costs by anywhere from 5 to 26 percent over comparable projects built without union restrictions.

When a nonunion contractor chooses to adopt a PLA in order to win a contract, they are often forced to lay off some or all of their employees to make room for union workers. If the union is unable to supply all the needed workers, a contractor is able to hire outside workers with the understanding that these employees will be replaced as soon as union workers become available.

However, the contractor is still required to pay union representation fees for nonunion employees retained under a PLA. In addition, a contractor may be required to pay into long-term union benefit trusts, from which nonunion employees will never receive vested payments. These mandatory union fees are in addition to the benefits an open-shop contractor already provides employees.

The validation of President Bush’s executive order banning PLAs on federal projects makes a tremendous impact. From this point forward, any project receiving federal funds or aid will be required to be openly bid. This means a PLA will not be permissible for the Tacoma Narrows Bridge project or any other transportation improvements if federal funds are used. Thanks to our recommendation and President Bush’s leadership, taxpayers across the nation will get a financial break.

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Contact: Marsha Richards, Communications Director, (360) 956-3482

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org