A late-January Associated Builders & Contractors study indicated how construction unemployment rates through the end of last year sustained a downward trend dating to 2010. “The ongoing year-over-year decline in the national unemployment rate is an indication of the health of the construction job market and its recovery from the deep recession,” explained economist Bernard Markstein, Ph.D., who analyzed U.S. Bureau of Labor Statistics December 2016 data for ABC. “However, the shortage of skilled construction workers is hindering the ability of the sector to grow, with more than 80 percent of Associated Builders and Contractors members reporting a shortage of appropriately skilled labor.”
The construction unemployment data adds a market factor argument to an ABC-led coalition’s request that Donald Trump consider rescinding an onerous Barack Obama executive order encouraging project labor agreements (PLA) on federal construction contracts of $25 million and up. The order’s net effects were emblematic of a White House whose policy was skewed to organized labor, hostile to the notion of merit, and indifferent to financial realities.
“Taxpayers are not getting the best bang for their buck when experienced and quality contractors and their skilled employees are shut out of federally assisted construction contracts procured by state and local governments with PLA mandates because of President Obama’s failed policy,” said ABC President Michael Bellaman. “The coalition encourages the Trump administration and Congress to advance policies that ensure fair and open competition and job creation for all of America’s construction industry as a result of government investment in federal and federally assisted construction projects.”
Associated General Contractors of America, National Association of Home Builders and the U.S. Chamber of Commerce joined ABC in the coalition, which engaged President Trump in a pre-inauguration letter, stating: “As you know from your extensive real estate and construction experience, a PLA is a collective bargaining agreement unique to the construction industry that typically requires companies to agree to recognize unions as the representatives of their employees on that job, use the union hiring hall to obtain workers, follow union work rules and pay into union benefit and multi-employer pension plans that nonunion employees will be unlikely to access. This forces employers to pay ‘double benefits’ into existing plans and union plans and places firms opposed to these costly provisions at a significant competitive disadvantage. PLAs typically force construction workers to pay union dues or join a union if they want work.”
ABC noted that despite the outgoing administration’s efforts, PLA-rooted problems resulted in nearly 99 percent of federal contracts subject to the Obama order being bid without an agreement mandate. Those problems kept 1,173 contracts worth nearly $65 billion PLA mandate free, allowing all qualified firms to bid on the taxpayer-funded projects. Complications surrounding PLA, however, did not prevent organized labor-influenced California, Hawaii, Illinois and New York lawmakers from mandating agreements on state or local infrastructure projects receiving federal assistance.
“When mandated by government agencies, PLA can interfere with existing union collective bargaining agreements and unfairly discourage competition from nonunion contractors and their employees, who comprise 86.8 percent of the U.S. private construction workforce,” the coalition told the incoming commander in chief. “Multiple studies of hundreds of taxpayer-funded school projects found PLA mandates increase the cost of construction between 12 percent and 18 percent compared to similar non-PLA projects. Recent government-mandated PLA on federal and federally assisted projects have resulted in litigation, reduced competition, increased costs, needless delays, and poor local hiring outcomes.”
The rationale for a PLA, or any other non-market mechanism increasing the labor cost in public or private construction, is undermined by skilled worker shortages ABC and AGC repeatedly cite in post-recession project activity reports. A dearth of qualified tradesmen invariably drives wages upward in a market-guided manner unencumbered by the heavy-handed terms of a PLA.