Though President Joe Biden is looking to boost the rights of workers on federal construction projects with a new executive order, a number of construction industry leaders are pushing back, with one organization even calling it “economically damaging.”
The executive order, signed February 4, 2022, requires project labor agreements on federal construction projects valued at or above $35 million. Project labor agreements (PLAs) are collective bargaining agreements between trade unions and contractors which govern terms of employment for all workers on a construction project.
A project labor agreement, or PLA, is a prehire collective bargaining agreement that sets the wages and benefits for all workers on a project. The agreement is project-specific and only lasts for the duration of that project’s work.
A PLA basically guarantees that the project it applies to will use union labor, and is meant to ensure all workers on a project are being paid according to preset terms. Additionally, according to the White House statement on the executive order, as of January 30, 2022, federal contractors in new or extended contracts must pay a $15/hour minimum wage.
Learn more about what defines a PLA and how they work
Project Labor Agreements (PLAs): What Contractors Need to Know
Though some groups voiced their support for the measure at first, 16 groups representing the construction industry sent a letter to the White House strongly opposing the order on February 15, 2022.
“The administration’s flawed rationale justifying pro-PLA policies ignores marketplace realities and broad opposition to government-mandated PLAs within the construction industry,” said the letter.
The letter’s signatories include groups such as the Associated Builders and Contractors, National Association of Home Builders, National Utility Contractors Association, and National Black Chamber of Commerce, among others.
The letter asserts that “…government-mandated PLAs needlessly increase costs for taxpayers.”
“These jobsite-specific collective bargaining agreements unique to the construction industry unfairly limit competition by some of America’s best contractors,” the letter continues.
Though the White House is still searching for ways to improve on the roughly $1 trillion in spending that was approved in 2021 as part of the Biden administration’s “Build Back Better” agenda, it has received a significant amount more pushback to the move than it likely expected.
Even groups that didn’t add their names to the recent open letter have still voiced their disapproval with the move, such as the Associated General Contractors (AGC).
“It is hard to explain why the President would choose to impose government mandated project labor agreements to solve a problem that doesn’t exist,” said AGC CEO Stephen E. Sandherr. “Government-mandated project labor agreements undermine the collective bargaining process by imposing a separate agreement in a specific region that applies only to a limited number of construction firms and unions.”
“These imposed PLAs undercut the benefits of the collective bargaining agreements that were negotiated in good faith between employers and labor union and will likely prompt many firms to think twice about participating in the bargaining process in the future,” Sandherr added.
“While the EO’s expressed intent is to help with management challenges that can interfere with federal construction projects, [the National Utility Contractors Association (NUCA)] considers mandating PLAs will only exacerbate existing workforce capacity challenges by our industry,” read a statement from the National Utility Contractors Association.
NUCA, along with other opposing contractors, thinks that the executive order runs the risk of excluding contractors from much-needed opportunities: “PLA requirements restrict the majority of construction firms who traditionally bid on contracts that include federal financing assistance. State and local governments who might be interested in contracting with qualified merit-shop contractors who provide quality services might be excluded as a result of this policy.”
Sandherr echoed this point, saying that “Excluding the vast majority of construction workers, inflating the cost of federal construction, and working against the interests of taxpayers is bad politics and even worse policy.”
As more organizations push against the move, the White House may be convinced to consider further action on the issue. NUCA noted that it “urges the Administration to rescind this executive order as quickly as possible,” while Sandherr added that “[AGC] will explore every possible avenue as we push back against this needless and economically damaging new executive order.”