There has always been a complex kind of tension between labor and management, and that relationship — ideally adversarial without being contentious — is necessary so that each side’s leadership can advance their respective agendas. One of the most hot-button issues that consistently tests that relationship is the project labor agreement (PLA).
Simply put, a PLA is a collective bargaining agreement that sets terms for the type of workers that contractors must utilize on a project, how much they are to be paid and what kind of benefits their employers must offer.
These agreements also usually set working conditions, outline procedures for dispute resolution and prohibit strikes and lockouts during the course of the project. Management and one or more labor trade unions are typically the PLA signatories, but the agreements do not usually prohibit nonunion contractors from participating as long as they abide by the conditions laid out in the contract.
PLAs have become the latest lightning rod in the union versus open-shop argument. On Jan. 10, several construction industry groups — including the Associated General Contractors of America, the Associated Builders and Contractors and the National Association of Home Builders — sent a letter to President-elect Donald Trump asking him to repeal President Barack Obama’s 2009 Executive Order 13502, which urges government agencies to require PLAs on projects exceeding $25 million.
Now, with the spotlight focused on this contentious issue in the industry, opponents and proponents of project labor agreements are speaking up for their side amid an uncertain future under the next administration.
The case against government-mandated PLAs
The AGC maintains that many PLAs require nonunion employees and employers to pay into benefits programs on which workers will never be able to collect unless they join a union. In addition, because PLAs are negotiated between unions and management, they typically include wage requirements that could increase costs for nonunion contractors, according to the association.
"The biggest issue is the fact that it restricts fair, free and open competition."
Jimmy Christianson
Regulatory counsel for the AGC
Some industry groups have consistently battled prevailing wage rates, with the ABC calling for the repeal of the Davis Bacon Act, which requires contractors to pay a pre-established wage rate on certain federally funded projects. These rates can be higher or close to the norm depending on the location of the project.
All of these factors, the AGC says, increase costs for contractors and reduce competition because smaller contractors often cannot keep up with the costs or do not agree with one or more PLA conditions.
"The biggest issue is the fact that it restricts fair, free and open competition," said Jimmy Christianson, regulatory counsel for the AGC. To a nonunion company, he said, working under a PLA might be akin to working in another country — a new set of terms and conditions at odds with its existing internal systems.
The bottom line, Christianson said, is that the AGC and other industry groups don't want the government dictating when and where they require construction companies to be subject to a PLA. "Every contractor's fear," he said, "is their project will be next."
Christianson called government-mandated PLAs a barrier to entry for open-shop contractors. However, he added that the AGC has no problem with PLAs if contractors wish to voluntarily enter into one.
Proponents of PLAs speak out
Brent Booker, secretary-treasurer of North America's Building Trades Union (NABTU), minimized this particular executive order’s impact on the construction industry. Over the last eight years, the effect of Obama’s PLA mandate, he said, resulted in less than a dozen projects with a total value of less than $1 billion being built under a PLA.
In addition, NABTU maintains that approximately six of those projects would have been completed under a PLA anyway, given the large base of signatory (union) contractors in the projects’ geographical locations.
"When you peel back the layer of the onion," the executive order did not result in a large amount of projects forced into PLAs, Booker said. And by his estimations, a big chunk of private industry is already choosing to use the PLA anyway. Over the last three years, NABTU has processed more than 428 PLAs totaling $250 billion for a wide variety of industries, construction included, Booker noted.
"Working in the trades can and should be a good career."
Brent Booker
Secretary-treasurer of North America's Building Trades Unions
For example, he said, construction on the new Sacramento Kings $557 million Golden 1 Center basketball arena was completed under a PLA. That project was part of the Community Workforce Pipeline initiative that aimed to direct at least 70 people into union apprenticeship or job training programs so that they could work on the arena. Last year, Mortenson Construction also entered into a PLA for the Milwaukee Bucks arena project.
These projects represent a combination of public and private financing, but Los Angeles Football Club officials announced last May that although the project is privately funded, they would also enter into a PLA with the Orange County Building & Construction Trades Council for the $250 million soccer stadium.
Even in a largely nonunion environment like Florida, Booker said, Disney World has chosen to utilize PLAs in its core construction and maintenance operations to ensure a steady flow of qualified workers. This is evidence, he said, that many private companies find that the well-trained workforce provided by trade unions keeps them competitive, and, despite what industry groups claim, do not create budget overruns.
PLAs also ensure workers are treated fairly, according to Booker, and they often compel the inclusion of contractors and workers who might not otherwise have an opportunity to become involved. Women-owned, rural, minority and otherwise disadvantaged contractors, he said, all have a better shot at work under a PLA, as do businesses located in the geographic area of the project.
This protects local residents from out-of-town contractors bringing in their own lower-paid workers to perform work, reaping the benefits and then exiting the market. PLAs can also give veterans more opportunities, he said, as most agreements include the utilization of the Helmets to Hardhats program, through which military veterans are enrolled and trained in union apprenticeship programs.
What's next for project labor agreements
As for the future of the PLA under a Trump administration, Christianson said, "We hope the Trump administration will roll back the Obama PLA executive order and will replace it with the George W. Bush executive orders that prohibited government-mandated PLAs."
Booker said NABTU supports any move by the next president that guarantees new jobs at a good wage, as well as a safe project site. "I'm in the business of representing people, average construction workers, who just want to have a middle-class lifestyle," he said. "Working in the trades can and should be a good career."
