Time to Abolish Project Labor Agreements

Editor’s note: This is an edited version of an Op-Ed that appeared July 2, 2011, in the Detroit Free Press.)

As the state continues to struggle its way out of a recession — technically Michigan’s economy began to grow again in 2010, but jobs remain hard to find — state and local governments should still be looking for every opportunity they can find to cut expenditures without cutting back on core services. Which is why the state Legislature deserves credit for passing legislation recently that prohibits union-only project labor agreements.

The imposition of a project labor agreement means that before a construction company can work on a publicly funded project, it must have a contract with local construction unions. To get this agreement, a company must arrange for payments of union dues and contributions to union pension and health care funds.

For unionized companies this is no big deal; they already have their union contracts. But for non-union construction companies, the PLA is often a deal-breaker; it means they have to pay into union benefit funds from which their employees will never receive a nickel. These payments are on top of the wages and benefits that they already pay their workers. None of this benefits the workers, especially when state or federal prevailing wage laws already often dictate that workers receive union wages and benefits, with or without a PLA.

The upshot is that non-union companies are forced to pay twice for benefits: once for their workforce, then for the union. Alternatively, they could hire new workers from the union hall and take on the project with an unfamiliar workforce. Either approach puts non-union construction companies at an unfair and unjustifiable disadvantage when bidding for government projects.

Needless to say, PLAs drive up costs for taxpayers, as well. According to the Union Membership and Coverage Database, only 21.7 percent of Michigan’s construction labor force is unionized, so a PLA can eliminate four-fifths of the construction workforce from competing for a contract. The Beacon Hill Institute at Suffolk University in Massachusetts found that PLAs added 14 percent to the cost of public construction in Massachusetts and 18 percent in Connecticut. That was over and above the cost of prevailing wage laws in those states. There is little reason to expect that project labor agreements have had a different impact in Michigan.

PLAs also do little to promote labor peace, the oft-given justification for laws that favor unions. Over the long haul, a non-union workplace can only be sustained through mutual respect and trust between employers and employees; a non-union company will typically have at least as good a relationship with its employees as a union company. Nor do PLAs ensure quality workmanship. Non-union companies must meet the same building codes and engineering specifications using the same materials that union companies do, and have their own worker training programs to make sure they do just that.

Michigan’s taxpayers are still burdened by a state prevailing wage law that imposes union wages and benefits on state-funded construction projects; eliminating that requirement will be the logical next step.  But when Gov. Rick Snyder signs this long overdue piece of legislation, non-union construction companies will be able to compete on a more level playing field, and Michigan taxpayers will get better bargains on the roads and buildings they pay for.

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Paul Kersey is director of labor policy at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.