The unfair price of union labor
IT'S A tug-of-war that lurks just beneath the surface in almost every sizable public construction project in Massachusetts, pitting organized labor versus nonunion firms. And now, with the state's strained school-construction program groaning under the burden of unanticipated construction costs, the matter is suddenly in the public eye.
That issue: Whether to impose Project Labor Agreements on public construction projects. Those agreements require that all project hiring be done through the union referral system, putting the union halls in charge of assigning workers. And they usually stipulate that the project be bound by rigid union work rules.
Nearly every public construction project of any size brings union pressure for a PLA. We've seen them on the Big Dig and the MWRA's wastewater treatment plant. Several years ago, a bonding package for new courthouse construction got hung up on Beacon Hill while legislative leaders fought over whether to require PLAs. And that's just the high-profile stuff. Organized labor also presses for them on the dozens of schools built around the state each year.
Advocates claim that the agreements guarantee a supply of workers, preclude work stoppages and strikes, and ensure a quality job at competitive prices. With well-trained union labor, ''you are getting more bang for your buck," claims Frank Callahan, legislative director for the Massachusetts Building Trades Council.
But what they also do is make it difficult for hundreds of nonunion firms to bring their regular work practices to public projects. According to Greg Beeman, president of Associated Builders and Contractors of Massachusetts, construction companies that would otherwise compete for projects find it difficult to do so under PLA strictures; thus the agreements bias the process against the 75 percent of non-unionized construction workers.
Meanwhile, the agreements effectively eliminate the possible competitive edge of the nonunion firms that do bid. Why? Because, unlike union firms, where the project workers are hired through the various union halls, nonunion workers have their own team of employees; but, under PLAs, those firms are still required to hire through the union halls, and so can't be assured of having their own people work for them even if they join the union. Further, they must also abide by the turf-protecting rules that govern which functions which tradesmen can perform.
''All the management efficiencies you have developed with your team no longer apply because the union rules are in effect," notes Roberta Schaefer, executive director of the Worcester Regional Research Bureau, and author of a detailed report on PLAs.
Lest anyone think PLAs are essential to ensure fair wages, that's not so: The state's prevailing wage law already mandates that nonunion firms pay the prevailing union wage on public jobs. Now, it is possible that the agreements bring labor peace. But that argument is tantamount to saying that organized labor should have the right to win the exclusion of nonunion firms from projects by threatening disruption if they can't have their way.
So what is the actual cost impact of PLAs? The most comprehensive local study comes from the Beacon Hill Institute, the think tank at Suffolk University, which concluded that the agreements raise the cost of school construction by almost 14 percent. Although a new study by Michigan State University disputes that conclusion as too reductionist, as David Tuerck, Beacon Hill's executive director, notes, it comports with basic economics.
''By discouraging nonunion contractors from bidding on the projects, you reduce the pool of bidders and thus, on average, raise the minimum bid," says Tuerck.
In the past, that issue never generated much public attention when it came to schools. But now, Massachusetts faces a backlog of school projects waiting for funding as it tries to cope with total estimated construction costs that have ballooned from about $5 billion to about $7 billion.
To stretch construction dollars, the Legislature has imposed a moratorium on new projects and required localities to pay at least 20 percent of construction costs, double the old minimum.
So here's one way for localities to pare back their costs: Give PLAs a hearty heave-ho and open the process to true competition. After all, as Schaefer notes in her report, if union labor really is more productive, and if union work rules really don't hike costs, union firms should be able to win their share of contracts without PLAs.
Scot Lehigh's e-mail address is email@example.com