Forced Union Payments on Tax Paid Projects
By Mike Thompson • Sep 16th, 2009 • Category: Economic Development, FeatureIn an Executive Order few have heard about, President Obama is trying to eliminate union competition for federal construction projects.
This egregious order encourages Project Labor Agreements (PLAs) on federal construction projects costing $25 million or more. PLAs are collective bargaining agreements between contractors, their subcontractors and labor unions. Under a PLA, contractors must either use union workers or non-union workers who are forced to make contributions to union pension funds and other union programs – from which they will never benefit. These are blatantly discriminatory rules against non-union shops.
The personal cost to the non-union worker is significant, which is why non-union construction firms often don’t bother to bid on construction projects that use PLAs. Even if construction firms do bid on PLA projects, why should non-union workers who win business under a PLA have to pay union dues just to work on these projects which are paid for by their own tax dollars? That is simply unfair.
And in this Right to Work state, it is contrary to what our citizens firmly believe.
Recent data from the Bureau of Labor Statistics shows that only 15.6 percent of America’s private construction workforce belongs to a union. That means that PLAs discriminate against 84.6 percent of construction workers who could be working on federal construction projects if not for the heavy-handed, union-only PLAs.
Non-union workers who might work on PLA federal construction projects will be forced to pay into the union pension funds. A recent study released by Diana Furchtgott-Roth, senior fellow at the Hudson Institute and a former Chief Economist at the U.S. Department of Labor, found that union pension plans perform much more poorly than non-union retirement plans. This might well be why unions are so eager for new pension contributions from those who will never benefit – to cover for these failing plans.
Participants in federal and state-approved non-union apprenticeship programs cannot work on a job covered by a PLA, so young workers are left out in the cold – by presidential decree. This means craft professionals enrolled in all apprenticeship programs other than those offered by the union are excluded from work in their hometowns on federal construction projects paid for with tax dollars.
The construction industry as a whole has been hit hard by this current economic downturn. We need to put people back to work. Union-only PLA rules will keep non-union workers out of work. This is simply harmful public policy for everyone including those here in Virginia looking for construction jobs.
And at a time of deep recession when we are looking to the construction industry to help us dig out of the current climate, the cost of construction projects will rise under union-only PLAs. Many studies show that PLAs increase the cost of construction 10-20 percent when compared to non-union controlled construction costs. These increased costs mean that taxpayers would feel the pain.
So the billions of dollars Congress and the President are pouring into so called “shovel ready” construction projects (roads, bridges, etc) will cost us up to 20% more than they should. Our taxes are once again wasted.
PLAs are not successful at keeping a construction project on time or on budget. Most people have heard about Boston’s “Big Dig,” which was built with a union-only PLA. Though projected to cost $2.2 billion, this project ended up costing more than $14 billion. This is just one example. In addition, union workers are permitted to strike, which can add additional costs to a construction projects Non-union firms don’t strike.
The reason the unions need this PLA rule is to boost their membership. President Obama seems committed to helping unions increase their membership from the current low levels. He still hopes to take away the secret ballot from workers when voting on whether to unionize. That battle is yet to come, right after health care is decided.
The PLA Executive Order may soon become a reality. The comment period on the order has been extended to September 23 by the Federal Acquisition Regulatory Council. It will be interesting to see how this turns out. Tens of thousands of men and women could be adversely impacted when this Executive Order goes into effect. Here in Virginia it is clear that this new rule will hurt our economy.
Public policy simply should not favor unions in a way that discriminates against non-union workers. A level playing field is always best for the country and for our state.
Mike Thompson is the chairman and president of the Thomas Jefferson Institute for Public Policy, Virginia’s premier non-partisan public policy foundation.
For 24 years Mr. Thompson owned his own marketing company in Springfield. During 11 of those years he was also president of a family owned group of furniture stores in Georgia. After selling his company he started the Thomas Jefferson Institute.
He has been very active in national, state and local politics and has been a member of a number of community organizations, commissions, and committees. He is the Past Chairman of the Virginia Leadership Council for the National Federation of Independent Business (NFIB) and serves as Vice Chairman of the internationally acclaimed Fund for American Studies.
These views are his and do not necessarily reflect those the Institute or its Board of Directors.
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At what point in time does this become illegal? And how would the courts resolve this issue?
Mr. Thompson, I do not understand why you are against Labor Unions. Gasp! When you mention Virginia being a “right to work state”, I take it to be code for a right to ”get screwed” state. I see nothing wrong with Tradesmen wanting to be paid a fair and decent wage for the jobs that they do. If it were not for Davis Bacon there would not even be recognition of even overtime pay in this state. I happen to know that there are Federally funded jobs in this state where a contractor hires one union guy, charges the Federal Government as if all of the people on the job were Union workers. Pays all of the guys not in a Union minimum wage and keeps the extra for himself. If a worker does not want to pay into the Union contribution then maybe he shouldn’t hire on to Federally funded jobs if he is so against the idea of a living wage and investing in future benefits. The History of the working class in this country shows to me that by standing up for decent wages and worker safety only increased the quality of life for all Americans. I want to throw up when I hear how Business “friendly” Virginia touts itself to be. “Business Friendly” tells me that you advertise to all Corporations how happy and compliant the “worker bees” are down here in the happy south. If worker reality was so divine why are there so many pay day lenders in this state? Please don’t say there are unfortunate people making bad choices. The reality is that we are still ruled by a bunch of good old boys who imagine themselves taking in the visage of their wonderful Plantations with no recognition of the subsidy that poor whites and enslaved black people paid to subsidize the wealth of the landed gentry. I’m pretty sure that if Thomas Jefferson was alive today he would have made adjustments to the philosophies that he espoused at the time he wrote about them. We are no longer an Agrarian Society. Every Essay on this site is about the evil of government and taxes. No one likes them but can you tell me how without them we can create a general welfare and a common good? IMO what this post is about is not liking an Administration that recognizes organized labor. I do not belong to a Union, but am thinking I need to write a check to the Virginia AFL-CIO if any thing in this State is to ever change.