National Labor Relations Act (NLRA) gives most private sector workers the right
to join or form a labor union and to bargain collectively over wages,
hours, and working conditions. The act allows workers in the construction
industry to enter into a collective bargaining agreement before a project
begins. A project labor agreement (PLA) is a collective bargaining agreement
that applies to a specific construction project and lasts only for the
duration of the project.
In February 2009, President Barack Obama signed an Executive Order (EO) that
encourages federal agencies “to consider requiring” the use of PLAs on
large-scale construction projects. The EO defines a large-scale project as
one where the total cost to the federal government is $25 million or more.
The order states that agencies are not required to use PLAs. Regulations implementing
the EO went into effect in May 2010.
A PLA generally specifies the wages and fringe benefits to be paid on a
project, and it usually includes procedures for resolving labor disputes.
PLAs generally include a provision that unions agree not to strike and
contractors agree not to lock out workers. A PLA may require contractors to
hire workers through a union hiring hall. If not, it may require employees to
become union members after being hired. A PLA applies to all contractors
and subcontractors on a project.
Opponents and proponents of PLAs disagree on the economic effects of PLAs.
Supporters argue that the agreements provide uniform wages, benefits,
overtime pay, hours, working conditions, and work rules for work on major
construction projects. They maintain that PLAs provide contractors with a
reliable and uninterrupted supply of workers at predictable costs for wages and benefits,
and they argue that a PLA makes it easier to manage a large project, which
ensures that it will be completed on time and on budget. Supporters also
say that PLAs help train workers, improve worker safety, and ensure
compliance with labor and health and safety laws.
Opponents argue that PLAs have several disadvantages. They argue that PLAs
increase construction costs. Nonunion contractors may not bid on projects
that are covered by a collective bargaining agreement or, when they bid,
they cannot win contracts on the basis of lower costs. If they have to
hire workers through a union hiring hall, contractors may not be able to use
their own workers. A nonunion contractor’s workers may have to join a
union and pay union dues. When a contractor has to pay into a union
pension plan, employees may not be on the project long enough to vest in
the plan. PLA opponents also argue that nonunion contractors can operate more
efficient worker training programs and that evidence does not indicate that
nonunion construction projects are less safe than union projects. Finally,
opponents argue that federal and state agencies enforce labor and
workplace health and safety laws.
Much of the research on the effect of PLAs on the costs of construction is
inconclusive. In part, it can be difficult to find similar projects where
some use a PLA and the others do not. Instead of comparing similar
projects, economists often use statistical models that attempt to control for differences
in the characteristics of the projects. It can be difficult, however, to
control for all the factors that affect the costs of construction. For
example, if the Davis-Bacon locally prevailing wage is the local union
wage, contractors may pay workers the union wage whether or not the project
is covered by a PLA. In addition, statistical models may not take into account
the quality of construction, whether projects are finished on time, or the
safety records of different projects. Finally, the relationship between
PLAs and construction costs may be interdependent. PLAs may affect
construction costs, but the size and cost of construction may also affect the
use of PLAs.
Date of Report: June 28, 2012
Number of Pages: 12 Order Number: R41310 Price: $29.95
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