"Project Labor Agreement" inflates library project costs

MIDLAND — By insisting that all bidders on the Bay County Library project abide by a "project labor agreement" (PLA) stipulating that they sign collective bargaining agreements with local unions, Bay County has effectively barred non-union construction firms from bidding on the project. The result will be inflated prices and a possible scaling-back of the library construction and renovation project.

The $25 million Bay County Library project consists of a new main library in Bay City, and the construction and refurbishing of numerous branch libraries around the county. Bay County has stipulated under its PLA that all contractors must "become signatory parties to the respective current collective bargaining agreements of the appropriate Local Unions of the Tri County Building & Construction Trades Council." Translation: Non-union workers and contractors will be barred from the project.

"Everyone is hurt when a local government abandons the principle of awarding contracts to the lowest qualified bidder," observed Labor Research Associate Paul Kersey of the Mackinac Center for Public Policy. "Those who will be hurt by Bay County’s policy include children, who will have fewer resources for learning and completing their school assignments, and their parents, who will have to pay more in taxes to make up for misguided county policies."

The project will be paid for by a special bond issue that was approved by Bay County voters in August 2000. Bay County also has a prevailing wage ordinance, which dictates wages for workers employed on county construction projects, effectively tying compensation to union wages.

In Bay County, the combined effect of these laws will be to reduce competition and drive up costs. "Our analysis of union vs. non-union wage scales, and the state’s own experience, show that the prevailing wage law alone drives up the cost of government construction by at least 10 percent." said Kersey. "On top of that, while non-union companies can still compete under prevailing wage laws, PLAs take non-union contractors completely out of the game. This not only drives the price of construction higher, it hands a virtual labor monopoly to a clear minority of workers." According to the U.S. Bureau of Labor Statistics only 17.2 percent of construction workers nationally were union members in 2002.

While Bay County Building Authority Director Robert Redmond could not be reached for comment, contractors familiar with the library project report that as a result of inflated construction costs, construction manager Skanska USA has been forced to reduce the size of the new Pinconning branch library by as much as 25 percent. "That’s a lot less library space that Bay County voters thought they were buying when they approved the project," Kersey notes. "And unless the county lifts the PLA requirement, smaller libraries may become the pattern for the entire project."

For more information on the effects of prevailing wage laws, see the Mackinac Center’s report at https://www.mackinac.org/2380. Mackinac Center Analysis of PLAs is available at https://www.mackinac.org/574.