November 2, 2011
PROS AND CONS OF USING PROJECT LABOR AGREEMENTS
By: John Moran, Principal Analyst
You asked for the arguments for and against using project labor agreements (PLAs) in construction projects that receive government funding. You also asked about community workforce agreements (CWA), which are provisions in PLAs that include targeted building trade hiring provisions to create employment and career paths for low-income or under-represented people. This report includes components of CWAs in the debate over PLAs.
A PLA is a collective bargaining agreement that applies to a specific construction project and lasts only for the duration of the project. Essentially, it guarantees the project will use union labor.
Governments can require that recipients of government funding for a construction project use PLAs. Also, private sector companies may choose to enter into PLAs for a specific project or series of projects (Toyota and Wal-Mart are examples of corporations that have chosen to use them). The entity seeking to complete the construction project enters into an agreement with a union or group of unions, such as an area trade union council, before seeking bids from contractors to do the work. That way any contractor interested in submitting a bid knows the job will require union labor.
A PLA generally specifies the wages and fringe benefits to be paid on a project, and it usually includes binding procedures to resolve labor disputes. PLAs typically include a provision barring unions from striking and contractors from locking out workers. A PLA generally requires (1) contractors to hire workers through a union hiring hall or (2) employees to become union members after being hired. A PLA applies to all contractors and subcontractors on a project.
There is considerable debate between the opponents and proponents of PLAs. Opponents say PLAs are anti-competitive and increase costs. Proponents say they ensure decent wages, a quality workforce, and timely completion of projects within budget.
The non-partisan Congressional Research Service issued a report on PLAs on July 1, 2010, indicating the evidence is inconclusive regarding the cost of PLAS on construction projects (see attachment Project Labor Agreements, CRS R41310).
Proponents of PLAs argue that the agreements have several advantages, including that they:
1. provide uniform wages, benefits, overtime pay, hours, working conditions, and work rules for work on major construction projects;
2. provide contractors with a reliable and uninterrupted supply of qualified workers at predictable costs;
3. ensure that a project will be completed on time and on budget due to the supply of qualified labor and relative ease of project management;
4. ensure no labor strife by prohibiting strikes and lockouts and including binding procedures to resolve labor disputes;
5. make large projects easier to manage by placing unions under one contract, the PLA, rather than dealing with several unions that may have different wage and benefit structures;
6. may include provisions to recruit and train workers by requiring contactors to participate in recruitment, apprenticeship, and training programs for women, minorities, veterans, and other under-represented groups (this is a common CWA provision);
7. reduces misclassification of workers and the related underpayment of payroll taxes, workers compensation, and other requirements;
8. may mean a larger percentage of construction wages stay in state; and
9. may improve worker safety by requiring contractors and workers to comply with project safety rules.
PLA proponents note that the positive impact of creating career paths for women, minorities, veterans, and other under-represented populations (a common CWA component) may not be easily measured in the short term. But they say that developing qualified workers in the construction trades, and including people who historically were underrepresented in the trades, has a positive long-term economic benefit for the individuals who receive the jobs and for the construction industry as a whole.
Opponents argue that PLAs have several disadvantages, including that they:
1. increase costs by mandating union wages and work rules and inhibiting competition;
2. are anti-competitive because nonunion contractors may choose not to bid because either their members would be required to join a union if the contractor wins the bid or the contractor would not be able to use its own workers if the PLA required hiring through the union hiring hall;
3. are inherently unfair to nonunion contractors and nonunion employees;
4. are an unnecessary mandate (if imposed by law);
5. hinder the use of nonunion contractor training programs that may operate more efficiently and are job specific, instead of union apprenticeship programs of a fixed duration; and
6. are unnecessary because of existing prequalification procedures that screen contractors that bid on public projects.
PLA critics also note that the issue is not always that PLAs are detrimental. Sometimes, they argue, having a PLA is not proof of an improved situation. For example, the available evidence does not show that PLA construction projects are safer than non-PLA projects.
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