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The Worst Way to Do Infrastructure Projects

Federal mandates that steer contracts to unionized companies exacerbate the construction industry’s skilled labor shortage. Taxpayers lose when responsible contractors that do a quality job at the best price are frozen out.

A highway under construction.
A highway under construction. A new Biden administration rule makes directed federal construction contracts of $35 million or more subject to project labor agreements. (Shutterstock)
The construction industry’s perfect storm of a 500,000-person workforce shortage, record materials price inflation and controversial public policy is undermining hundreds of billions of dollars of taxpayer investments in federal, state and local government infrastructure projects, as well as clean energy and manufacturing projects procured by private developers.

This means fewer improvements to roads, schools, water systems and energy infrastructure and fewer well-paying construction jobs improving local communities and America’s economy.

Meanwhile, state and local policymakers searching for solutions to battle infrastructure inflation aren’t getting much help from the Biden administration and a divided Congress. A slew of new Biden administration regulations related to project permitting and Buy America, workforce development and labor policies — and the administration’s failure to reduce costly red tape — is diminishing the value hard-working taxpayers deserve from investing in America’s infrastructure projects.

Remarkably, one of the most controversial new Biden administration policies effectively excludes almost 90 percent of the construction workforce and some of the best contractors in the industry from competing. This new rule makes direct federal construction contracts of $35 million or more subject to government-mandated project labor agreements (PLAs). PLAs are project-specific collective bargaining pacts that, when required or encouraged by governments, steer taxpayer-funded contracts to unionized contractors and union labor.

Government-mandated PLAs needlessly exacerbate the construction industry’s skilled labor shortage because they force qualified non-union contractors — and even some union contractors — to replace all or most of their existing employees with workers from specific union hiring halls and to follow inefficient union work rules. This creates excessive cost burdens as well as safety and quality risks for high-performing non-union contractors who in turn cannot effectively compete for taxpayer-funded projects.

Non-union firms employ a historically high 89.3 percent of the U.S. construction industry. Quality and experienced non-union contractors have built more than half of large-scale federal construction projects since 2009 and are more likely to be owned by women and minorities.

PLA proponents rely on junk research funded by unions to justify government handouts to special interests. They also argue that non-union firms and workers are welcome to work on PLA projects — a claim that is technically true if those contractors agree to the many problematic terms in a typical PLA. For example, for the limited number of non-union construction workers who may be allowed to work on a PLA jobsite, more than a third of their compensation is forfeited to unions and union benefit plans unless they join a union, pay union fees and infuse cash into habitually struggling multiemployer union pension plans.

PLA advocates push governments to require their use to regain lost market share and membership because they know that non-union firms are unlikely to pursue PLA projects due to such wage theft and other risks in the fine print of PLAs.

Taxpayers lose when responsible contractors that do a quality job at the best price don’t want to bid on PLA projects. Research has shown that PLA mandates increase construction costs by 12 to 20 percent, which means voters can expect fewer improvements to important local infrastructure projects — and fewer jobs. The Boston Globe editorial board recently proclaimed that “project labor agreements are bad policy.”

Unfortunately, the Biden administration is also pushing PLAs on more than $270 billion worth of federal agency grants for private and state and local government infrastructure projects.

For projects funded with a mixture of local and federal dollars, the 25 states with low construction union density that have enacted laws restricting PLA mandates are immune to PLA schemes and the resulting use of out-of-state contractors and labor that steals jobs from local businesses and residents. But the eight states that have policies encouraging PLA requirements and the remaining states without policies protecting fair and open competition on taxpayer-funded construction projects are under tremendous pressure to require PLAs.

In short, this administration’s effort to freeze the majority of experienced contractors and construction workers out of competing is sure to create delays and needless infrastructure inflation.

The good news for taxpayers and government officials is that builders are fighting back. In March, our organization, Associated Builders and Contractors, filed a federal lawsuit against the new rule mandating PLAs on federal projects, because Americans deserve long-lasting construction projects built safely, on time and on budget by the best contractors and workers, regardless of labor affiliation.

Furthermore, federal lawmakers, governors and a coalition of construction industry, small business and taxpayer advocates are urging Congress to stop inflationary government-mandated PLA schemes by passing the Fair and Open Competition Act, which would prohibit PLAs on federal and federally assisted construction projects.

All Americans would be best served by inclusive, win-win policies that help provide a cost-effective return on federal investment in infrastructure.

Ben Brubeck is the vice president of regulatory, labor and state affairs of Associated Builders and Contractors, a national construction industry trade association.

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