For Dan Acciavatti of
Pamar Enterprises, New Haven, Mich., the “Great Recession” is more than a catch phrase. It has been his reality for the last several years. While he confronted the dire economic situation through difficult decisions, including layoffs, other area contractors used their signatory union’s political leverage to get a leg up on the competition. This advantage often came in the form of government-mandated project labor agreements (PLAs).
Many state and local leaders have learned about the negative impact of PLAs since President Obama lifted a Bush administration ban on PLA mandates on federal and federally assisted construction in February 2009 and issued an executive order encouraging federal agencies to require PLAs on federal construction projects costing more than $25 million. Since President Obama issued the executive order, seven states and nine localities banned government-mandated PLAs to some degree on taxpayer-funded construction projects.
Banning these pro-union mandates on taxpayer-funded construction projects ensures all qualified contractors can compete on a level playing field, regardless of union affiliation. It also means taxpayers get the best construction at the most competitive price.
What Is a PLA?A PLA is a pre-hire contract that sets terms and conditions for a construction project that usually includes provisions designed to discourage bidding from nonunion contractors. A typical PLA requires contractors to recognize a union as the sole representative of their employees and forces employees to pay union scale wages, union dues and into union benefit programs.
PLAs first were used in the early 20th century as a tool for coordinating multiple union collective bargaining agreements on applicable projects. Once union density in the construction industry began to steadily decline in the 1960s, PLAs became a tool to eliminate competition from contractors unwilling to agree to union contracts.
Union officials and some advocates claim PLA mandates are necessary on large-scale construction projects to ensure economy and efficiency of construction. They also argue PLAs ensure fair wages and encourage local hiring.
Despite these claims, merit shop advocates repeatedly have shown PLAs increase construction costs, are unnecessary on complex projects and deprive the vast majority of the construction workforce the opportunity to win work. Numerous studies—from California to Boston—show PLA mandates can increase construction costs by 20 percent or more.
Since the late 1980s, PLA requirements on public construction projects have been a frequent problem for the merit shop construction community. Union representatives have been successful in leveraging their political activism to secure PLA mandates on public construction projects in several parts of the country, including New England, parts of the Midwest and along the West Coast.
The almost 90 percent of the American construction workforce that chooses not to join a labor union effectively becomes barred from competing for projects funded by their own tax dollars.
PLA mandates negatively affect taxpayers as well. Public officials purchase construction on the taxpayers’ dime and have a responsibility to procure the best construction at the most competitive price. By requiring PLAs on taxpayer-funded construction projects, these additional costs are passed on to citizens.
The Open Competition PioneersBans on government-mandated PLAs have been in place since the mid-1990s. Utah enacted the first ban in 1995, followed closely by Montana (1999) and the city of Fresno, Calif. (2000). Officials chose to enact these bans in the years following the U.S. Supreme Court’s Boston Harbor decision, which determined that public entities can decide whether to mandate PLAs on public construction through their role as a market participant. Elected officials in these states and the city of Fresno took the preemptive step of banning PLA mandates to ensure discriminatory requirements would not be thrust upon contractors and taxpayers in the future.
In 2005, several governors got in on the action when former Gov. Mike Huckabee (R-Ark.) issued an executive order prohibiting PLA mandates on state and state-funded construction projects and Gov. Tim Pawlenty (R-Minn.) issued a similar order prohibiting state agencies from requiring PLAs on state projects. Huckabee’s order was a preemptive measure to defend against future PLA threats. With Minnesota’s well-documented history of construction union activism, Pawlenty aimed to protect taxpayers from a real threat of PLA activity.
In 2007, Missouri banned PLA requirements on all state construction and most state-funded projects as well. No state action occurred again until 2011, when seven more states acted to ban PLAs.
On the flip side, union leaders and other PLA beneficiaries worked with elected officials to secure PLA mandates on public construction during the last 20 years. By December 2010, five states had enacted policies encouraging public construction purchasers to require contractors to sign a PLA as a condition of performing public work.
Signs indicated 2011 would be the year an avalanche of states would take action against PLA mandates. The most significant leading indicator of this trend was the adoption of two ballot initiatives in Chula Vista, Calif., and Oceanside, Calif. These cities were primed to adopt language to ensure all contractors have the right to compete for public construction, as citizens had suffered the negative impact of union attempts to monopolize taxpayer-supported construction.
For example, in 2007 it was clear that Gaylord Entertainment’s proposed $1 billon development of the Chula Vista/San Diego bayfront area was in trouble. Although the project had financing and public incentives in place, union leaders initiated a “greenmail” strategy, in which union attorneys use a state’s environmental regulations to unnecessarily tie up a project in red tape until the owners institute a PLA requirement. Gaylord Entertainment held firmly against requiring a PLA and ultimately relocated the project to Arizona. Losing this project cost southern California approximately 10,000 construction jobs and 3,000 permanent positions.
Burned by the Gaylord Entertainment experience, voters approved bans on PLA mandates in Chula Vista and neighboring Oceanside in June 2010. The following November, about 78 percent of voters approved a similar ban for projects funded by San Diego County.
In response, Big Labor leaders used their connections with state lawmakers to nullify existing bans on PLA mandates and interfere with California charter cities’ home rule authority to prohibit government-mandated PLAs. This was achieved through a “gut and amend” process in which language was added into an unrelated bill less than a week before the California legislature closed out its 2011 session. The bill (S.B. 922) passed with little debate and virtually no opportunity for the public to learn about the issue. Gov. Jerry Brown (D) signed S.B. 922 into law on Oct. 3.
The Wave of Action Continues
In the 2010 midterm elections, state lawmakers from coast to coast were dislodged from office in favor of pro-business candidates. The shift in the partisan control of the U.S. House of Representatives is well documented, but an even more dramatic change took place at the state level. Republicans picked up nearly 700 seats and took control of more than 20 state legislative chambers. These electoral shifts, along with sharpening public attitudes about taxpayer waste, created a unique opportunity for merit shop advocates to go on the offensive in state capitals nationwide.
The first state to take action against PLA mandates in 2011 was Iowa, where newly elected Gov. Terry Branstad (R) made a campaign issue out of his opponent’s executive order encouraging state agencies to require PLAs on projects costing $25 million or more. Former Gov. Chet Culver (D) issued this order at the outset of his re-election campaign. Branstad made the case that this kind of government waste was exactly why Iowans needed to make a change at the top. Branstad was elected by a wide margin and issued an executive order banning PLA mandates on state and state-funded construction within hours of taking office.
By the time the ink was drying on the Branstad order in Iowa, legislators in Idaho and Arizona were preparing bills to prohibit PLA mandates in their states. While neither state had a strong history of PLA activity, a very real threat existed for taxpayers. In Arizona, union advocates attempted to secure a PLA mandate on a major green utility project, spurring action from lawmakers. By April, Gov. Jan Brewer (R) had signed legislation to ban government-mandated PLAs, as well as union “greenmail” tactics.
Idaho leaders took a similar path to enacting open competition legislation. While the state was not confronted by a specific threat, PLA mandates were a common occurrence in California and Nevada. With Utah and Montana banning these mandates, the Idaho contracting community and state lawmakers took proactive steps to protect themselves in the future and stay competitive with several neighboring states.
One of the most significant reasons for enacting open competition legislation was the potential for PLA mandates to jump state lines. This threat was especially real for lawmakers in Maine, who enacted a four-year ban on government-mandated PLAs lasting until 2015. New England states like Massachusetts and Connecticut have long histories of labor activists securing PLAs and other union-only mandates. Sensing this economic threat, Maine lawmakers took steps to ensure their taxpayers have the opportunity to get the best construction at the best price.
Tennessee and Michigan offer interesting contrasts in approach and rationale when it comes to banning PLA mandates. Tennessee, like many Right to Work states, has experienced significant economic development in the last decade. This growth has been particularly robust in the manufacturing sector, where several major automobile manufacturers have taken advantage of competitive tax and labor laws and built new factories.
Many firms that move to Tennessee also have taken advantage of significant tax incentive packages. Lawmakers decided to ensure PLA mandates would never be a condition of receiving future financial incentives to do business in the state. Tennessee continues to grow its economy, while other parts of the country are struggling to address stagnant economic growth.
Michigan, on the other hand, has a long history of union influence on public policy and offers insight on how a state can change course in order to provide opportunities for all of its citizens, regardless of whether they decide to join a labor organization. Michigan was one of the states hardest hit by the economic difficulties of the last five years. The recession set in years before the rest of the nation, and lawmakers wrangled with each other to discover the magic bullet that would create the conditions to put people back to work.
The 2010 election ushered new leadership into Michigan’s capital and swift legislative action followed. Within seven months of taking office, lawmakers enacted dramatic construction contracting reform and banned PLA mandates on all public and publicly funded construction projects.
The law already is creating opportunities for merit shop contractors. Several PLA mandates in Michigan have been pulled back and many believe the law will help move Michigan toward economic prosperity.
State efforts to ban PLA mandates still are a priority issue for the vast majority of the construction industry. Merit shop advocates continue to work with state lawmakers around the country to prohibit these mandates on taxpayer-funded work to guarantee the best construction at the lowest possible price.
The following states, counties and localities have banned project labor agreements, to varying degrees, on publicly funded construction projects:
- Utah
- Montana
- Arkansas
- Minnesota
- Missouri
- Nevada
- Iowa
- Idaho
- Arizona
- Tennessee
- Louisiana
- Maine
- Michigan
- Fresno, Calif.
- Orange County, Calif.
- Placer County, Calif.
- San Diego County, Calif.
- Stanslaus County, Calif.
- Lancaster County, Pa.
- Chula Vista, Calif.
- Oceanside, Calif.
- Lewisville, Texas
- Palmdale Water District, Calif.
- Ohio School Facility Commission