Study: Project Labor Agreement Mandates Inflate Cost of Construction 13 Percent

A study released today by the Beacon Hill Institute found that Ohio schools built under government-mandated project labor agreements (PLAs) cost 13.12 percent more than schools that were bid and constructed through fair and open competition, free from PLA requirements. The study looked at 88 schools built in Ohio since 2000 and found that those built under a PLA mandate cost $23.12 more per square foot than projects built without PLA mandates.

“The study released today by the Beacon Hill Institute corroborates past academic research that shows that anti-competitive government-mandated PLAs prevent taxpayers from getting the best return on their investment,” said ABC Vice President of Regulatory, Labor and State Affairs Ben Brubeck. “All taxpayers deserve efficient, accountable and effective construction spending and investment in schools and infrastructure free from special-interest handouts that discourage competition from qualified, local workers and contractors.”

“Associated Builders and Contractors encourages Ohio lawmakers to join the 23 pro-taxpayer states that have passed measures that ensure government neutrality toward PLAs,” said Brubeck. “Additionally, ABC encourages President Trump to rescind President Obama’s Executive Order 13502, which promotes costly PLA mandates on federal and federally assisted construction projects, and replace it with a common-sense policy that would guarantee fair and open competition from America’s best construction companies and create opportunities for America’s entire skilled construction workforce as Washington considers a federal infrastructure plan.”

The full study, Project Labor Agreements and the Cost of School Construction in Ohio, is available on the Beacon Hill Institute's website.

Background on ABC and Government-Mandated PLAs

ABC has long opposed wasteful and discriminatory PLA mandates, which past academic studies have shown drive up the cost of construction projects between 12 percent and 18 percent. PLAs typically ensure construction contracts are awarded only to companies that agree to recognize unions as the representatives of their employees on that job; use the union hiring hall to obtain workers at the expense of existing qualified employees; obtain apprentices through union apprenticeship programs; follow inefficient union work rules; pay into union benefit and multi-employer pension plans workers will never benefit from unless they meet vesting requirements; and force workers to pay union dues and/or join a union as a condition of employment.

In 2009, President Obama signed Executive Order 13502, which strongly encourages, on a case-by-case basis, government-mandated PLAs on large-scale federal construction projects and permits state and local governments procuring federally assisted construction contracts to mandate PLAs.

In April, Wisconsin became the 21st state to adopt a measure ensuring fair and open competition on state and local projects since 2011. In 2015, then West Virginia Gov. Earl Ray Tomblin became the first Democratic governor to sign a bill that banned discriminatory PLA mandates when he signed the bipartisan Establishing Fair and Open Competition in Governmental Construction Act (SB 409). A total of 23 states have enacted measures restricting government-mandated PLAs.

ABC has recently argued against PLA mandates on federal and federally assisted construction. In an April 16 Wall Street Journal op-ed, Mr. Brubeck urged President Trump to take executive action to ensure the government could not discourage nor encourage PLAs.

In addition, ABC National Chairman Chuck Goodrich’s April 10 op-ed in The Hill urged passage of the Fair and Open Competition Act (H.R. 1552/S. 622), which would guarantee government neutrality toward PLAs. The bill was approved by the U.S. House of Representatives Committee on Oversight and Government Reform on March 28.