The Truth About Project Labor Agreements

While you were out rebuilding America, here are yesterday’s media reports and notable statements on today’s final rule implementing President Obama’s pro-project labor agreement (PLA) Executive Order 13502 into federal procurement regulations.

• Wall Street Journal (“Unions Win Public Contracting Row,” 4/12)
• Statement from House Education and Labor Committee Senior Republican Member Rep. John Kline (R-MN)
• Workforce Fairness Institute (WFI) (“Obama Administration Continues To Reward Big Labor At The Expense Of Small Businesses,” 4/12)
• Portfolio.com (“New Obama Rule Benefits Unions,” 4/12)
• Statement from White House Middle-Class Task Force’s economist Jared Bernstein (“Project Labor Agreements: A Better Deal for Big Labor All,” 4/12).

From the Wall Street Journal (“Unions Win Public Contracting Row,” 4/12):

“The executive order, which will become effective next month, is the latest in a series of moves by the administration that are favorable to unions, whose members could play a critical role in the upcoming midterm elections as Democrats try to hang on to seats in Congress.”

“This is the latest win for unions in their tug-of-war with employers. Unions recently welcomed Mr. Obama’s recess appointment of former union lawyer Craig Becker to the National Labor Relations Board after the nomination failed to win enough Senate votes. But unions have expressed frustration that their most important legislative priority, a bill that would ease unionization, is stalled in Congress. Unions are also looking to the executive branch to act on its own, independently of Congress, on other labor issues.” 

Check out more key quotes on this gift to Big Labor after the jump.

Here is more on the final rule from an April 12 statement from House Education and Labor Committe Senior Republican Member Rep. John Kline (R-MN):

“Project Labor Agreements reduce competition, increase costs for taxpayers, and add layers of bureaucracy and red tape to federal construction projects,” said Kline. “Creating a formal federal process for imposing these Depression-era mandates on construction projects may be a win for special interests, but it’s a loss for workers, taxpayers, and small businesses hoping to compete for federal jobs.”

Kline pointed to the U.S. Department of Labor’s decision last year to cancel a Job Corps Center construction project in New Hampshire as evidence of the dangers PLAs pose to federal job creation and project efficiency. The New Hampshire project was canceled after a local contractor raised a legal challenge to the project’s PLA requirement, arguing it was discriminatory and would disqualify most contractors in the state.

PLAs generally require federal contract bids to adhere to union work rules and wage scales and to pay benefits into union pension funds even when non-union workers – who will never benefit from these funds – participate in the project.

“PLAs are an antiquated approach to federal contracting designed to favor large, unionized contractors at the expense of smaller employers,” said Kline. “The likely consequence of this new federal regulation will be higher costs for taxpayers and far less competition among job creators trying to get the American economy back on track.”

Katie Packer of the Workforce Fairness Institute (WFI) describes how this gift to Big Labor will harm small businesses and job creation (“Obama Administration Continues To Reward Big Labor At The Expense Of Small Businesses,” 4/12):

“Today’s news that the administration will once again put Big Labor ahead of small businesses and workers serves as further proof that job creation is not President Obama’s top priority. With record unemployment, forcing businesses both large and small to adhere to costly and non-competitive schemes will only result in lost jobs,” said Katie Packer, executive director of the Workforce Fairness Institute (WFI).

“Ending fair and open bidding for federal contract work will disqualify employers from competing and increase the costs of projects just as our nation’s debt skyrockets. It has become clear that the Obama Administration fails to understand that small business owners, not union bosses, create jobs and they will be the ones who bear the burden of these reckless and short-sighted policies.”

Kent Hoover, Washington Bureau chief for Bizjournals, had this to say about the final rule at Portfolio.com (“New Obama Rule Benefits Unions,” 4/12).

“So PLAs might make sense for large, complicated projects. But $25 million doesn’t go as far as it used to, so lots of run-of-the-mill projects likely will be forced to go with union labor as a result of this new rule.

Other changes favoring unionized companies in federal contracting may be coming down the pike.

Business groups fear the Obama administration will issue a new rule requiring federal contractors to provide a minimum level of wages and benefits to their employees.

The president seems intent on using federal contracting as a tool for promoting economic justice, which in his view means promoting labor unions. Taxpayers, however, are more interested in getting the best value at the best price for whatever the federal government needs. That may not be compatible with slapping a union label on everything the government buys.”

Finally, here is a statement in defense of project labor agreements and President Obama’s Executive Order 13502 from Jared Bernstein, the White House Middle-Class Task Force’s chief economist and economic advisor to Vice-President Joe Biden (“Project Labor Agreements: A Better Deal for Big Labor All,” 4/12). 

We may tear Bernstein’s statement apart in the next couple of days but an email sent to us today by a TruthAboutPLAs.com reader has a go at  it first:

“Shouldn’t Veep Joe Biden’s Middle-Class Task Force be in the business of advancing the interests of ALL of the middle class, not just Obama’s Big Labor political cronies? 

And this Bernstein guy calls himself an economist? On the first day of my Econ 101 class in high school we learned that when you concentrate competition to a few firms (in this case, just 15 percent of the private construction workforce is unionized), you create monopolistic conditions. When there is a lack of competition and/or a monopoly, costs increase. The entire purpose of PLAs is to create a monopoly for Big Labor. 

No wonder why we have 25 percent unemployment in the construction industry and our economy is suffering. This administration’s assault on small business is partially to blame for the current state of our economy.”

As you can see, our readers are passionate about this issue. Speaking of Congress and the White House’s “assault on small businesses,” check out www.HaltTheAssault.com.