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Construction Safety Dispatch Articles
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 It all sounds good. Federal government tax dollars sent directly to construction companies to employ workers who will build roads, bridges and airports. What’s not to like about stimulating an industry that has over 20% unemployment while at the same time creating a physical asset for the community and the nation? That is trickle-down economics at its best; getting the money where it will gush through many pockets before much of it finds its way back to Washington through increased tax revenue.
But will it really create jobs for the tens of thousands of unemployed construction workers? Or will it...
only create jobs for a very small segment of the industry?
As with most things political, a look beyond the rhetoric produces a vision that doesn’t match the painted picture.
Shortly after taking the oath of office, President Obama signed Executive Order 13502 mandating that all construction projects with any federal funding must incorporate Project Labor Agreements (PLAs). A PLA is a pre-hire collective bargaining agreement that limits bids on construction projects to contractors that agree to union representation. Mandating PLA’s on every construction project is a clear give-back to the unions that helped to elect President Obama.
While some might brush this off as politics as usual, consider that only 13% of the construction industry work force belongs to a union. If there are one million unemployed construction workers in the US as President Obama indicated in his speech to the Joint Session of Congress, then 870,000 of them are locked out of his American Jobs Act.
Digging just a little deeper and the numbers are even more startling because only one in ten small businesses in the construction industry are union signatory companies. Yet, President Obama stressed in his speech several times that small business is the job creation engine of America. At the same time he is locking most of those small companies out of consideration for these new infrastructure projects.
This doesn’t even address the arguments put forth by Associated Builders & Contractors, several independent economistsand noted in a recent Wall Street Journal Editorial that PLA’s are a union invention to use their political muscle to organize more companies and cost significantly more. Studies show that projects under PLA restrictions cost an average of 12% to 18% more than projects awarded by open, competitive bidding. Taxpayers pick up the tab.
Several labor-friendly states have recently passed legislation that prohibits state entities from mandating the use of PLA’s including Louisiana, Tennessee, Arizona, Idaho and even certain jurisdictions in California. Right to work states such as Virginia are already balking at the Obama Administration’s requirement that the second phase of the Metro extension which will provide long-overdue service to Dulles International Airport include a PLA. New budget estimates incorporating the PLA requirement have added so much cost to the project that the necessary additional funding through toll road revenues and local county taxes is now in doubt.
It’s almost heretical at this point to add that the problems with PLA’s don’t stop with union pay-back and additional costs. None other than the Government Accountability Office (GAO) released a report in March, 2011 reporting that the Department of Labor, who is responsible for determining the prevailing wage rates to be used in paying union workers on PLA projects, “does not provide a fair determination of actual prevailing wages paid” and “the calculation is not likely to be representative” for the area.
The 1931 Davis Act which established Project Labor Agreements began in response to complaints about “negro” or “colored” labor traveling to take federal construction jobs far from their homes. It morphed into a desire by Congress to keep construction jobs for local workers and to maintain local wage standards against all migratory workers. Had the regulations stopped there, few could complain. After all, who better to employ local workers at local wages than small business owners who have their fingers on the community’s pulse?
But politicians do what politicians have always done and that is to create a new entitlement for favored groups – like union workers. Pay your union dues and you get to work on federal construction projects. If you don’t, you may stay unemployed. But don’t worry – we’ll extend your unemployment benefits.
Source: Penny Pompei, Small Business Examiner
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