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Bad idea to require project labor agreements

Monday, March 3, 2014
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The only thing worse than allowing project labor agreements, those gifts to trade unions that drive up the cost of public projects by eliminating competition, is requiring them. That’s what Gov. Andrew Cuomo wants to do for most projects over $10 million. The Legislature shouldn’t let him.

The governor’s proposal, part of his executive budget, does contain what seems a limiting condition, but it just serves to illustrate the problem.

Under his plan a PLA would be required only if it would save 5 percent of the cost of the project. But those savings are speculative and based on the cost of “labor strife,” i.e. the added costs if unions struck, demonstrated, sabotaged or otherwise delayed the project. In return for getting the contract, the unions would promise “labor peace.” There’s another term for that: blackmail. And potential labor strife isn’t an issue with nonunion contractors, since they don’t strike.

The savings are also based on unions altering their usual inefficient, costly work rules to allow the job to be done more quickly. But that only brings them closer to being competitive with nonunion contractors, who don’t have the work rules. Those contractors are unlikely to bid on jobs requiring PLAs because 85 percent of workers must be hired from the union hall, which means they can’t use their own workers.

For an idea of real savings, and the cost of PLAs, there’s the recent example of a state highway construction project in Orange County. In that case, the state Department of Transportation first advertised the project without a PLA and then, one month later, issued a contract amendment requiring bidders to agree to a PLA.

A nonunion contractor who had been planning to submit a bid before the last-minute contract amendment submitted it anyway with explicit provisions that it wouldn’t sign a PLA. It was for $68 million, $4.5 million below the next lowest bidder. The contractor, despite having extensive highway construction experience and a good performance record on state contracts, didn’t get the job.

Cuomo’s PLA requirement will particularly hurt minority- and women-owned businesses, which tend to be smaller and nonunion. And it will particularly affect upstate, which has more nonunion contractors than downstate. In fact, on some PLA projects, there isn’t enough unionized local labor, and workers have to be brought in from outside the region or even state. So taxpayers have to pay more and local labor doesn’t even benefit.

This is a bad idea, which the Legislature should reject.

Clarification: Cuomo's proposal would apply only to state infrastructure projects that use the design-build method.

 
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