Research suggests PLAs boost construction costs and undermine competition

In a preemptive move against construction agreements between employers and unions, negotiated before workers are hired, Sen. Danny Martiny (R-Metaire) has introduced legislation to safeguard competitive bidding practices.

Senate Bill 76 prevents state government officials from mandating Project Labor Agreements (PLAs) on publicly funded construction projects. PLAs call for construction contractors, including those non-unionized, to require their employees to be represented by a union on government-funded construction projects.

PLAs, which are exclusive to the construction industry, lock out non-union construction shops, say officials with the Associated Builders and Contractors (ABC), a private industry group.

The National Labor Relations Act of 1935 passed by President Franklin Roosevelt, also known as the Wagner Act, generally prohibits pre-hire agreements. However, the Wagner Act included an exception for the construction industry. So far, PLAs have failed to make inroads into Louisiana.

John Walters, director of governmental relations for the Louisiana Chapter of ABC and an ardent supporter of the bill, expects it to spark controversy.

“We don’t have a lot of PLA activity in Louisiana but they are popping up all over the nation and it is correct to view this as a preemptive move. There are several studies that show PLAs raise construction costs and hurt competition.”

Research from the Beacon Hill Institute shows that PLAs tend to raise construction costs by about 18 percent. Another study from Maurice Baskin, a law partner with Venable LLP in Washington D.C. who represents construction employees, concludes that PLAs both reduce competition and delay project completion.

Martiny’s bill does not actually mention the phrase “Project Labor Agreement,” but it does preclude state government officials from requiring construction firms to enter into agreements with labor unions. SB 76 also prohibits government agencies from discriminating against construction shops that have declined union representation.

Even if the bill were to pass, however, Louisiana would still follow federally mandated PLAs; SB 76 only applies to state agencies.

Since 97 percent of the construction industry is non-union, says Walters, PLAs would put the overwhelming majority of construction workers at a great disadvantage at a time when the industry is still recovering from a recessionary climate. He also contends that the agreements undermine Louisiana’s Right to Work laws.

“Workers typically are permitted to choose whether to join a union through a federally supervised private ballot election,” he explains. “PLAs require unions to be the exclusive bargaining representative for workers during the life of the project. The decision to elect union representation is made by the employer rather than the employees.”

Although PLAs are yet to take root in Louisiana, a few failed attempts have been made at acquiring Responsible Contractor Ordinances (RCOs) and Responsible Employer Ordinances REOs, which contain language typical to PLAs, Walters notes.

Union officials based in Louisiana have argued that they are needed to help secure benefits.

“PLAs are about construction workers being treated fairly and getting an opportunity to advance and have a career in the construction industry, one that pays a decent living wage with health insurance and retirement benefits,” says Lance Albin, business manager for the Plumbers and Steamfitters Local Union 60 based in Metairie.

Kevin Mooney is an investigative reporter with the Pelican Institute for Public Policy. He can be reached at Follow him on Twitter.