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Josh Reap, CEO & President, Associated Builders & Contractors NH/VT
President Joe Biden’s visit to New Hampshire on Tuesday to tout the benefits of the $1.2 trillion infrastructure bill will be celebrated by construction union bosses who stand to gain from controversial Biden administration policies. Yet these overreaching policies are and will cost taxpayers a fortune while undermining critical taxpayer investments in America’s infrastructure.
The Biden administration continues to take a dangerously partisan approach with its union-only policies, meaning New Hampshire’s hardworking taxpayers are getting less and paying more. Back in February, the president signed Executive Order 14063 requiring federal construction contracts greater than $35 million to be subjected to bad policies called project labor agreements. PLAs are jobsite-specific union collective bargaining agreements that direct taxpayer-funded public works contracts to union-signatory contractors, giving unions a monopoly to build projects procured by federal agencies.
This administration’s union giveaway is a lose-lose for taxpayers and its business community and here is why.
First, when the government mandates PLAs, taxpayer dollars are squandered on public works because PLAs discourage competition from construction firms that employ 87% of New Hampshire’ construction workforce who freely choose not to join a union.
PLAs force qualified, local contractors to replace all or most of their current employees with workers from union halls and follow inefficient union rules, creating excessive cost burdens as well as safety and quality risks for high-performing nonunion contractors. Nonunion firms were awarded more than half of the federal government’s large-scale construction projects since 2009, and are more likely to be owned by women and minorities.
Second, for the few nonunion construction workers allowed to work on a PLA project, a third of their compensation is forfeited to union benefits plans unless they join a union, pay union fees and prop up multiemployer union pension plans.
Third, while PLAs create wage theft from nonunion workers, they increase construction costs by 12% to 20%, resulting in fewer construction projects and improvements to roads, bridges, utilities, schools, affordable housing and clean energy projects—and the creation of fewer jobs.
The Biden administration’s rationale for bombarding taxpayers with extra costs through anti-competitive labor agreements is shaky. It claims PLAs improve the quality of construction by employing skilled and highly paid union labor and prevent delays caused by union strikes. But all federal construction contracts are already subject to the Davis-Bacon Act of 1931, which requires contractors to pay government-set wages and benefits at union scale on most federal construction projects with or without a PLA. Construction jobs with PLAs have a mixed track record of strikes, cost overruns, delays and other problems.
Eliminating competition from the majority of New Hampshire’s experienced contractors and construction workers is not the answer to building long-lasting federal construction projects safely, on time and on budget—especially when America’s construction industry is facing a skilled labor shortage of 650,000 people in 2022.
New Hampshire taxpayers know firsthand the benefits of fair and open competition and the perils of government-mandated PLA schemes. Almost a decade ago, members of Associated Builders and Contractors of New Hampshire/Vermont sued to block the Obama administration’s Labor Department from requiring a PLA mandate on the construction of a U.S. Department of Labor Job Corps Center in Manchester.
In 2013, the PLA-free project drew three times as many bidders and bid prices that were 16% less than when the project was previously bid with a PLA mandate. PLA-free bidding saved taxpayers more than $6.2 million and allowed a local firm with local workers to build the project on time and on budget to the satisfaction of the DOL.
For these obvious reasons, when given the option, federal agencies mandated PLAs on just 12 out of nearly 2,075 large-scale federal construction projects since President Obama signed Executive Order 13502 in 2009. EO 13502 encourages the use of PLAs on federal projects on a case-by-case basis in contrast to Biden’s blanket PLA mandate.
Likewise, 24 states have laws restricting government-mandated PLAs on state and local construction projects. In addition, Republican governors are fighting back against other recent Biden administration policies pushing PLAs on federally assisted construction projects procured by state and local governments. Of note, the New Hampshire legislature has an opportunity to pass legislation (S.B. 274) prohibiting government-mandated PLAs and ensuring fair and open competition on state and state-assisted taxpayer-funded construction projects.
Taxpayers would be best served by the adoption of inclusive policies that encourage fair and open competition, which help all of America’s construction industry realize the potential of the Infrastructure Investment and Jobs Act of 2021. We cannot rebuild our nation’s crumbling infrastructure, increase accountability or reduce waste with PLAs.