Internet Explorer 11 is not supported

For optimal browsing, we recommend Chrome, Firefox or Safari browsers.

The Best Way to Do Infrastructure Projects

Some interest groups don’t like project labor agreements, but new research shows that they benefit taxpayers and the construction industry while strengthening our skilled trade workforce.

Black and white photo of Grand Coulee Dam construction workers.
Construction workers at the Grand Coulee Dam in Washington state. The dam was built, beginning in the 1930s, under project labor agreements. (Library of Congress)
Before the ink was even dry on President Joe Biden’s executive order on the use of project labor agreements for large federally funded infrastructure projects, some interest groups started crying foul and filing lawsuits.

While courts will ultimately adjudicate the legal merits of these claims, the bigger and more important question is what real-world data tells us about project labor agreements. How do PLAs impact projects out in the country, their workers and the construction industry as a whole? New research suggests that they have a positive effect, bringing more cost-saving efficiencies to projects for businesses and the taxpayers who foot the bills while strengthening and diversifying our infrastructure workforce.

PLAs, often regarded as “de-risking” mechanisms, function as construction management tools. They are pre-hire agreements between construction companies and labor organizations that establish the terms of employment, coordinate workflow among different crafts, promote investment in apprenticeship programs that train next-generation construction workers, and ban strikes, lockouts and other costly labor disruptions.

They’ve been in use since at least the 1930s, including on the Grand Coulee Dam project in Washington state. The Tennessee Valley Authority has used a master PLA since 1991. Today, PLAs are employed on many large projects, including NFL stadiums. Yet there is a lot of mythology out there about PLAs, largely due to the dearth of comparative research that can isolate their impact on specific project outcomes.

It is for this reason that a recent study conducted by our organization, the nonpartisan Illinois Economic Policy Institute, along with the Project for Middle Class Renewal at the University of Illinois Urbana-Champaign, is especially timely and instructive.

In one of the largest ever data sets used to assess PLAs — the first to examine port projects and the first to analyze apprenticeship and diversity outcomes — researchers examined 95 projects at the Port of Seattle between 2016 and 2023 with 366 bids and a cumulative value of just under $1 billion. Projects ranged from upgrades to Seattle-Tacoma International Airport to seaport projects supporting container ships and cruise lines. Twenty-three of the projects were covered by PLAs while 72 were not.

The results were telling. PLA-covered projects had an average of 16 percent more bidders than non-PLA projects and were more likely to be awarded at a cost below the original project engineering estimate. Moreover, projects covered by PLAs employed more apprentices training for construction careers, particularly from the historically underrepresented demographics of women and people of color that the industry sees as critical to meeting its long-term workforce-supply goals.

Seeking to hone in on an apples-to-apples comparison, researchers looked at 31 projects — 10 of them PLA and 21 non-PLA — valued at between $2.5 and $7.5 million, right near the Port’s $5 million guideline for PLA coverage. The results for this subsample were consistent in finding that PLAs had 16 percent more bidders per project, but they were far more illuminating on issues of cost and efficiency.

Based on engineers’ estimates, PLA projects would have been expected to be awarded at a cost of 47 percent more than non-PLA projects because they were larger and more complex. Instead, they came in at just 39 percent more. And 80 percent of PLA projects in this subgroup cost less than their engineer’s estimates, versus just 57 percent of non-PLA projects. This strongly suggests that PLAs perform as intended, improving cost efficiency on projects and ensuring that taxpayers get more value for their money.

Collectively, these findings present some uncomfortable questions for the critics of PLAs, including ideological opponents and some contractors’ associations. Two of them sued to block the federal government’s new PLA rule, though one of the lawsuits has been dismissed.

For example, why are they against policies that control construction costs and are correlated with more competition among contractors? Why would they oppose work rules that deliver more apprenticeship opportunities in an industry facing a historic labor shortage while providing more construction-career pathways for historically underrepresented groups? Perhaps most important, why aren’t non-PLA projects more successful at driving costs below their engineer’s estimates? Isn’t that suggestive of a model that is more wasteful and inefficient?

To be sure, the seemingly never-ending ideological and legal attacks against PLAs reflect an effort to advantage some businesses over others in the race to win trillions of dollars in forthcoming federal infrastructure investments. Government’s obligation is to maximize value and efficiency for taxpayers and the stability that America’s construction sector needs to meet demand. On this scorecard, the data is clear that PLAs may be just the insurance policy that American taxpayers need.

Frank Manzo IV is an economist with the nonpartisan Illinois Economic Policy Institute. He holds a master's degree in public policy from the University of Chicago. His research interests include labor market analysis, economic development, infrastructure investment, the low-wage labor force and public finance.

Governing’s opinion columns reflect the views of their authors and not necessarily those of Governing’s editors or management.
From Our Partners