The Truth About Project Labor Agreements

Some construction union lobbyists and bosses market anti-competitive and costly project labor agreements to public and private construction owners as a tool to guarantee labor peace on construction jobsites by prohibiting union-led strikes that can delay a project and increase the cost of construction.

PLA advocates know that strikes, work stoppages, slowdowns and other labor unrest authorized by union leadership and executed by rank and-file members can shut down a jobsite and delay the opening of a project, potentially costing public and private construction owners time and money and harming the project end-user’s bottom line.

In fact, one of the key reasons PLAs were originally developed in the 1930s was as a solution to prevent costly strikes on important large-scale public works projects like dams during an era when more than 80% of the U.S. construction workforce belonged to a union.

Today, just 12.7% of the U.S. construction workforce belongs to a union, according to the Bureau of Labor Statistics—a total reversal from when more than eight out of ten U.S. construction workers were members of a union.

In an effort to stop decades of declining membership, during the last thirty years construction trade union lobbyists have turned to their buddies in government to mandate PLAs on public works projects to help them win market share and increase union membership.

Arguments by PLA advocates that these anti-competitive and costly PLA schemes are needed to prevent union-led strikes and labor unrest flirt with extortion.

“It’s a classic case of the firefighter arsonist,” said ABC Vice-President of Regulatory, Labor and State Affairs, Ben Brubeck. “Unions offer lawmakers a solution to a problem they create in exchange for a labor monopoly on taxpayer-funded construction projects. Some lawmakers turn a blind eye to these extortionary tactics because of politics, or they simply don’t know better. But the truth is that strikes in today’s construction marketplace are relatively rare, and there have been strikes on PLA projects, which calls into question the value of these schemes preventing labor unrest.”

The U.S. Department of Labor Bureau of Labor Statistics’ Work Stoppages Program, which tracks major work stoppages involving 1,000 or more workers, found there have been just seven major work stoppages in the construction industry in the last 10 years.

Update: According to the the Labor Action Tracker by Cornell University’s School of Industrial and Labor Relations, there were only nine labor actions in 12 locations since the beginning of 2021 to February 2023 specific to the construction industry.

In addition, according to the most recent data available from the Federal Mediation and Conciliation Service, there were just 45 construction industry work stoppages from 2015-2019 and 101 work stoppages from 2010 to 2014.

“Why lawmakers continue to soak taxpayers with a 20% cost premium for a solution to a problem that is rare and rewards the party that creates the problem is baffling,” said Brubeck. “It’s even more puzzling when you examine the record of union strikes on public and private projects subjected to PLA mandates, despite promises that PLAs allegedly prevent strikes.”

Joseph Hunt, who retired from serving as the president of the Ironworkers Union in 2011, devoted his President’s Page column in the February 2008 edition of The Ironworker (“Ironworkers Have Tradition and Honor in Project Labor Agreements“) urging Ironworker union members not to strike on PLA projects:

“Once again, it is my duty to inform you there has been an increase in work stoppages on jobs governed by project labor agreements.”

“A No Work Stoppage-No Lock Out clause is the most important because it is the foremost reason owners and contractors are willing to use the agreement [a PLA] to commit to an all-union job.”

“They [owners] have a choice, and they know that the nonunion do not have jurisdictional disputers, nor do they have strikes.”

“Hunt’s admission that government-mandated PLAs result in an all-union job, nonunion workers don’t disrupt jobsites and ironworkers have been striking on PLA projects was devastating to the union’s pro-PLA lobby,” said Brubeck. “It undermined decades of lies told by PLA advocates and sympathetic lawmakers who attempted to disguise what PLAs really are: schemes whereby government cronies cut competition from quality local nonunion contractors and  union-signatory firms not affiliated with the unions favored in the PLA and steer contracts to political donors—in this case union-signatory contractors and union labor—at inflated costs shouldered by hardworking taxpayers.”

Examples of strikes and walkouts on notable private and taxpayer-funded PLA projects across the country call into question the value of PLAs and their controversial no-strike promise.

Media reports have called the federal, state and local taxpayer-funded Highway 99 tunnel mega-project underneath Seattle’s downtown waterfront the “West Coast’s Big Dig,” noting parallels to Boston’s notoriously delayed and budget-busting series of tunnels and highway improvements. The Seattle project has been plagued by delays, cost overruns, featherbedding, union strikes and labor disputes, a poor safety record, employees working on the jobsite while drunk, sexual harassment allegations and violations of state and federal minority contracting rules. Both projects were procured with controversial government-mandated PLAs.

In 2018, the National Labor Relations Board imposed a settlement requiring that the steamfitters union stop illegal strikes and job actions against firms working at the $20 billion Hudson Yards multi-building private development in New York City, which was subject to a PLA. In 2015, the project was also subjected to a PLA-violating strike that impacted 30 other NYC jobsites and was resolved after a judge issued a restraining order against striking workers.

Federally assisted projects that were part of the World Trade Center reconstruction following the 9/11 attacks in New York City suffered strikes in 2015, 2013 and 2011, despite no-strike promises contained in these projects’ PLAs. Of note, the 4 World Trade Center jobsite suffered a crane accident in February 2012. In August 2012, the New York Post reported the Port Authority cracked down on drinking by construction union members following a series of accidents and reports of excessive workday boozing by union tradespeople employed at various World Trade Center construction projects, including 4 World Trade Center.

A chapter in ABC General Counsel Maury Baskin’s report, Government-Mandated Project Labor Agreements: The Public Record of Poor Performance (2011 Edition), documents construction delays and cost overruns caused by strikes on more than a decade of various PLA projects across the country.

Of note, Chicago was a relative hotbed of strikes on PLA projects in 2010, but the most famous private project subjected to a strike in Chicago occurred on the $850-million Trump International Hotel and Tower in downtown Chicago. In June 2006, the company developing the $850-million project in downtown Chicago sued three labor organizations for breaching the terms of a PLA after union members walked off the project during a strike (401 North Wabash Venture LLC v. Chicago and Cook County Building and Construction Trades Council, N.D. Ill., No. 06-CV-3077, 6/5/06).

The development company eventually settled the suit against the Chicago and Cook County Building and Construction Trades Council, the Construction and General Laborers’ District Council of Chicago and Vicinity and Laborers’ International Union Local 6.

Joseph Gagliardo, managing partner of the firm Laner, Muchin, Dombrow, Becker, Levin and Tominberg Ltd., represented 401 North Wabash in the action and told the media that the unfortunate lesson emerging from this strike and suit was to question the real value of PLAs with Chicago unions.

“The whole purpose of the project labor agreement is to prevent interruption and prevent delay and have labor peace,” he said. “So the question this strike raises is—and I don’t know the answer to it—what impact will this strike have on the willingness of other building owners to engage in a project labor agreement?”

The Truth About Government-mandated PLAs

ABC supports fair and open competition and opposes government-mandated PLAs on local, state, federal and federally assisted construction projects because hardworking taxpayers deserve more efficient and effective policies that will encourage all qualified contractors and their skilled workforce to compete to build long-lasting, quality projects at the best price.

In February 2009, former President Obama signed Executive Order 13502, which encourages federal agencies to mandate PLAs on large-scale federal construction projects exceeding $25 million in total cost on a case-by-case basis, and permits recipients of federal assistance to mandate PLAs on state and local public works projects. A handful of states and dozens of municipalities have passed laws encouraging the use of government-mandated PLAs on state and local public works projects.

There is concern that the 117^th Congress and/or the Biden administration might expand the use of government-mandated PLAs on federal and federally assisted construction projects.

Such policies promoting PLA mandates are a bad deal for hardworking taxpayers and the construction industry because PLA mandates increase construction costs by 12% to 20%. They rig the bidding process to discourage experienced nonunion and some union contractors and their qualified workforce from competing to build transformational taxpayer-funded projects. And they deny good-paying, local jobs to the more than 87% of U.S. construction industry workers who choose not to affiliate with unions.

Problematic terms in government-mandated PLAs discourage competition by forcing contractors to:

• Use union hiring halls to obtain most or all workers instead of their existing workforce.
• Obtain apprentices exclusively from union apprenticeship programs.
• Follow inefficient union work rules.
• Pay into union benefit and multi-employer pension plans that the few nonunion employees permitted on the project will be unlikely to access unless they join a union and vest in these plans.
• Require their existing workforce to accept union representation, pay union dues and/or join a union as a condition of employment and receiving benefits on a PLA jobsite, resulting in an estimated 20% hit to the paychecks of local craft professionals.

Union lobbyists justify “pay-to-PLA” schemes and government policies with seemingly compelling arguments and misinformation. They contend PLAs are a tool to not only prevent union strikes, but also ensure the use of local labor and deliver projects safely, on time and on budget. But the truth is these goals can and have been achieved without anti-competitive and costly government-mandated PLAs. And the performance of some PLAs has failed to deliver on the various promises made by PLA advocates.

Take Action to Support Fair and Open Competition in Public Works Contracting

ABC encourages ABC chapters, members and industry stakeholders to participate in a grassroots campaign urging their U.S. House and Senate lawmakers to sign on as a cosponsor of the Fair and Open Competition Act (S. 403/H.R. 1284), reintroduced in the 117^th Congress by Sen. Todd Young (R-Ind.) and Rep. Ted Budd (R-N.C.).

In a Feb. 24 ABC press release, ABC applauded the introduction of the bill, which would encourage more qualified construction companies to compete for federal and federally funded construction projects, providing value for hardworking taxpayers while benefiting the construction industry.

After the bill was introduced, an ABC-led coalition of 17 construction industry and business associations sent a letter to Congress in support of the bill, urging them to immediately pass this legislation. In addition, a National Taxpayers Union-led coalition of a dozen taxpayer, free market and consumer advocate groups sent Congress a letter of support for FOCA.

On March 5, ABC and a coalition of 14 industry and employer groups sent a letter to President Biden raising concerns about the expansion of policies encouraging or mandating PLAs on federal and federally assisted construction projects.

As Congress and the Biden administration move forward with plans for a multi-trillion dollar infrastructure plan, the coalition will continue to push back on government-mandated PLAs and call out bogus arguments supporting anti-competitive and costly PLA schemes.