In a surprise move, California Democratic Gov. Gavin Newsom recently vetoed legislation requiring anti-competitive and costly project labor agreements (PLAs) on taxpayer-funded construction projects procured by the state. Newsom admitted mandating PLAs “could result in additional cost pressures” not accounted for in his budget.
PLAs are controversial because they typically force all construction contractors on a project to recognize unions as the representatives of their employees, use union hiring halls to obtain most or all trade labor, exclusively hire apprentices from union-affiliated apprenticeship programs, follow inefficient union work rules, and pay into union benefit and multiemployer pension plans.
PLAs also require construction workers to pay union dues and/or join a union if they want to work on a PLA project and receive union benefits. If they do not satisfy these stipulations, the limited number of nonunion workers allowed on a PLA jobsite lose an estimated 34% of their wages and benefits to union coffers and benefits plans, making them the victims of wage theft.
Most union-signatory contractors love government-mandated PLAs because it is easier to win a bonanza of taxpayer-funded construction contracts when quality nonunion competitors are discouraged from bidding on public works projects.
Likewise, powerful construction labor unions affiliated with the North America’s Building Trades Unions — which sent 91% of its federal PAC dollars to Democrats in the last election cycle — lobby their government allies for PLAs so unions are gifted a monopoly supplying workers to contractors building PLA projects. This results in more forced union dues for labor’s dark-money political coffers, resulting in a negative feedback loop of quid pro quo corruption undermining taxpayer investments in America’s infrastructure.
The Biden-Harris White House, which touts itself as the most pro-union administration in history, has unsurprisingly enacted policies requiring PLAs on all federal construction contracts of $35 million or more. It has also coerced private, state, and local government stakeholders applying for $271 billion worth of federal agency grants to require PLAs on their infrastructure, clean energy, and manufacturing projects.
This administration claims PLAs somehow ensure cost-saving and efficiency in contracting by excluding a record 90% of U.S. construction workers who do not belong to a union as the industry faces a shortage of more than half a million workers in 2024. Yet critics such as Associated Builders and Contractors and a broad coalition of taxpayer watchdogs and trade associations point to evidence that 3,210 large-scale federal construction projects free from government-mandated PLAs valued at $237 billion were built without incident between 2009 and 2023.
Likewise, PLA opponents can cite multiple studies of hundreds of taxpayer-funded affordable housing and school construction projects, which found that government PLA mandates increase the cost of construction by 12% to 20% compared to similar non-PLA projects already subjected to union-friendly prevailing wage regulations. The latest study of affordable housing projects funded by Los Angeles Proposition HHH found that PLA projects were 21% more expensive and suffered delays 27% longer than non-PLA projects.
These realities may explain why Newsom is the latest in a series of high-profile Democratic policymakers to reject legislation expanding PLAs onto more public works projects.
In a June 2023 letter to the Maine legislature preceding her veto of legislation mandating PLAs on off-shore wind facilities, Democratic Gov. Janet Mills wrote that PLA mandates “raise costs” for Maine companies “and could end up favoring out-of-state unions in the region, over Maine-based companies and workers.”
In July 2024, Democratic District of Columbia Mayor Muriel Bowser wrote a letter to the D.C. Council opposing legislation that expanded its pro-PLA statute, asserting that the district’s chief financial officer’s fiscal impact statement found that a PLA “adds about 10% to the cost of each construction project.”
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Even a Boston Globe editorial board headline recently declared PLAs are bad policy.
In today’s hyperpartisan political environment, it’s rare for policy to die on its own merits when it is good for party politics. Think about how harmful government-mandated PLAs must be if prominent Democrats are thumbing their noses at these Biden-Harris policies and publicly resisting legislation that benefits their most prominent union donors.
Ben Brubeck is the vice president of regulatory, labor, and state affairs of Associated Builders and Contractors. Learn more at the national coalition website BuildAmericaLocal.com.