The Obama administration is scheduled to issue a final rule today that allows federal agencies to require public contractors to use public labor agreements (PLA) on large public construction projects. PLAs are collective bargaining agreements that establish the terms and conditions of employment for a specific construction project. They have been used on private jobs, as well as state and local projects, including the construction of schools, hospitals, roads, bridges, power plants and airports. The rule was first issued as Executive Order 13502 (pdf) "Use of Project Labor Agreements for Federal Construction Projects." The final rule due out today implements the Executive Order.
What are the benefits of PLAs? According to Jared Bernstein, a White House economist who writes at the Middle Class Task Force Blog, PLAs provide "structure and stability" to large construction projects:
PLAs also help ensure compliance with laws and regulations governing workplace safety and health, equal employment opportunity and labor and employment standards. The coordination achieved through PLAs can significantly enhance the economy and efficiency of Federal Construction projects.
Bernstein reported that as of last summer, 21 out of 25 major Department of Energy construction projects were (or slated to be) covered by PLAs.
Sounds good for the construction industry, right? Not according to a number of critics, including Rep. John Kline (R-MN), the U.S. House Education and Labor Committee’s senior Republican member, who warned that the new rule "will reduce competition and drive up costs for taxpayers." Kline pointed to the U.S. Department of Labor’s decision last year to cancel a Job Corps Center construction project in New Hampshire as evidence of the dangers PLAs pose to federal job creation and project efficiency. The New Hampshire project was canceled after a local contractor raised a legal challenge to the project's PLA requirement, arguing it was discriminatory and would disqualify most contractors in the state.
Other critics, such as the Workforce Fairness Institute, suggest that the rule forces small businesses "to adhere to costly and non-competitive schemes, [which] will only result in lost jobs." According to Katie Packer, executive director of WFI, “[e]nding fair and open bidding for federal contract work will disqualify employers from competing and increase the costs of projects just as our nation’s debt skyrockets."
Finally, groups like the Associated General Contractors of America flatly oppose any government mandated labor agreement, primarily because they negatively impact small companies, non-union companies, and disadvantaged businesses who frequently become excluded from contracting opportunities by such agreements.