HomeMy WebLinkAboutAgenda Packet - CC - 2022.02.07 Study SessionCity of Burlingame
BURLINGAME
F,
Meeting Agenda - Final
City Council
Monday, February 7, 2022 6:00 PM
Study Session
BURLINGAME CITY HALL
501 PRIMROSE ROAD
BURLINGAME, CA 94010
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City Council Meeting Agenda - Final February 7, 2022
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2. STUDY SESSION
a. Presentation on Project Labor Agreements (PLAs)
Attachments: Staff Report
U.S. Congressional Research Service, Project Labor Agreements (July 1, 2010)
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City of Burlingame Page 2 Printed on 2/3/2022
To
Date:
From
STAFF REPORT
Honorable Mayor and City Council
February 7, 2022
AGENDA NO: Study Session
MEETING DATE: February 7, 2022
Scott Spansail, Assistant City Attorney — (650) 558-7204
Subject: Presentation on Project Labor Agreements (PLAs)
RECOMMENDATION
Staff recommends that the City Council receive this presentation and report on Project Labor
Agreements (PLAs), and provide policy direction to staff on whether to provide more in-depth
analysis at a future City Council meeting.
BACKGROUND
The City Council requested that staff organize a study session regarding Project Labor
Agreements. Following this request, staff conducted research on the topic and prepared this staff
report and accompanying presentation. The purpose of this report is to analyze PLAs for large
public contracts in the City of Burlingame, and to understand the legal and procedural impacts that
may accompany their use. Staff will also review the most common advantages and disadvantages
of PLAs, as noted by Dr. Gerald Mayer in a Congressional Research Service Report on the
subject.'
As mentioned above, the intent of this study session is to consider the potential effects of PLAs on
large public contracts within the City of Burlingame. It is not an exhaustive study of all potential
impacts of a PLA, nor is it an endorsement or repudiation of using these agreements in the future.
Following the presentation, staff requests that the City Council provide policy direction on whether
to pursue additional information regarding the potential impacts of a PLA on public projects.
DISCUSSION
Brief History of Project Labor Agreements
The National Labor Relations Act of 1935 (NLRA) grants nearly all private sector workers the right
to form or join a labor union. These unions then have the right to bargain collectively for wages,
hours, and other working conditions, directly with an employer. The NLRA also explicitly allows
employers and unions in the construction industry to enter into "pre -hire" collective bargaining
agreements. As the name suggests, a pre -hire collective bargaining agreement is one which is
U.S. Congressional Research Service. Project Labor Agreements (R41310; July 1, 2010), by Gerald Mayer
1
Presentation on Project Labor Agreements (PLAs) February 7, 2022
negotiated and signed by the parties prior to commencing the project. A PLA is a subset of these
pre -hire agreements, with the defining characteristic being that it solely applies to, and only survives
as long as, a specific construction project (or series of projects).
PLAs are not a new concept and date back to the passing of the NLRA. PLAs were used in the
construction of the Grand Coulee Dam in Washington (1938), the Shasta Dam in California (1940),
the Trans -Alaska Pipeline, and Walt Disney World. Today, PLAs are occasionally used in large-
scale construction projects throughout the United States; however, they are most commonly seen
in the largest jurisdictions. For example, in 2020 the City of San Francisco adopted a City-wide
Project Labor Agreement with the City of San Francisco Building Trades Council and its affiliated
unions. This PLA covers all Public Works and Parks and Recreation projects that have an estimated
value of over $1 Million, with an exemption allowing certified Local Business Enterprises to contract
without a PLA for projects less than $5 Million. The use of cost -based PLAs in smaller jurisdictions
is also present in the Bay Area, but the number of agencies that utilize this practice is very low.
Rather, smaller jurisdictions in San Mateo County that have decided to use PLAs, including the
Cities of San Mateo and Half Moon Bay, have decided to use them on an individual project -by -
project basis, rather than utilizing them for all projects over a specific monetary threshold.
What is a Project Labor Agreement?
A Project Labor Agreement, also commonly referred to as a Community Workforce Agreement, is
a type of pre -hire, collective bargaining agreement between a public agency or developer, labor
unions and contractors for a specific project. A PLA generally includes a set of terms that will govern
a project in its entirety, including (but not limited to) wages, working conditions, safety rules, and
work schedules. In the Bay Area, most PLAs also include provisions related to the use of local
workers.
PLAs are most commonly used for larger, more complex projects. Naturally, this also means that
PLAs are often used only in the most expensive projects within a jurisdiction. As noted above, PLAs
are typically negotiated between the project owner (government entity), and the local unions and
contractors. Since PLAs are by definition a pre -hire agreement, they are negotiated prior to any
advertisement of bids, and the PLA itself is incorporated into the bid documents. Therefore, all
bidders, including the general contractor and their subcontractors, are agreeing to be bound by the
terms and conditions of the PLA upon award of the project.
Common Terms of a Project Labor Agreement
A PLA will typically cover a wide set of work -related issues, including uniform wages, hiring
procedures (including subcontractors), benefits, management rights, overtime pay, hours, work
stoppages, dispute resolution, working conditions (including schedules), PLA administration, and
other rules for major construction projects.
On February 6, 2009, President Barack Obama signed Executive Order 13502, which reversed
prior Executive Office policy by encouraging federal agencies to consider the use of PLAs on large-
scale ($25,000,000+) federal construction projects. Following the signing of the Executive Order,
the federal Office of Management and Budget (OMB) issued regulations that helped to implement
the President's Order. The OMB regulations, while not controlling on local governments, are helpful
2
Presentation on Project Labor Agreements (PLAs) February 7, 2022
in understanding what a PLA will typically govern in a specific project. These regulations state that
a PLA for federal projects must:
• Bind all parties (including subcontractors) to the terms and conditions of the PLA
• Allow all contractors and subcontractors to compete for contracts and subcontracts whether
or not they are otherwise a party to the collective bargaining agreement
• Contain promises not to strike, lockout, or similarly disrupt a project
• Issue procedures for resolving any labor dispute that could arise during the project
California law also provides a minimum standard of what must be included in a PLA. A City's
authority to enter into a PLA is governed by California Public Contract Code (PCC) Sections 2500-
2503. To be in compliance with the PCC, a PLA must do all of the following:
• Prohibit discrimination based on race, national origin, religion, sex, sexual orientation,
political affiliation, or membership in a labor organization in hiring and dispatching workers
for the project
• Permit all qualified contractors and subcontractors to bid for and be awarded work on the
project without regard to whether they are otherwise parties to collective bargaining
agreements
• Contain an agreed -upon protocol concerning drug testing for workers who will be employed
on the project
• Contain guarantees against work stoppages, strikes, lockouts, and similar disruptions of the
project
• Provide that disputes arising from the agreement shall be resolved by a neutral arbitrator
Of course, a governmental entity has broad discretion to negotiate other terms into a PLA. For
example, PLAs often include hiring goals to incentivize the hiring of a targeted group of workers,
including members of the local workforce, veterans, minority -owned businesses, and other
historically disadvantaged residents and businesses.
Advantages and Disadvantages of PLAs
PLAs have advocates and opponents. Proponents tout an agreement's ability to ensure fair wages
and satisfactory working conditions, and its capacity to ensure there are no labor stoppages that
would slow a project's completion. Conversely, opponents argue that such agreements stymie
competitive bidding, and add increased costs to the project — including costly administration of the
PLA itself.
While each project will have a unique set of challenges that may make a PLA more or less
desirable, it is helpful to analyze the most commonly stated advantages and disadvantages of these
agreements. Below is a list of the most common advantages and disadvantages of PLAs, taken
directly from Dr. Gerald Mayer's Congressional Research Service Report.3
2 Ca. Pub. Cont. Code § 2500-2503
3 U.S. Congressional Research Service. Project Labor Agreements (R41310; July 1, 2010), by Gerald Mayer
3
Presentation on Project Labor Agreements (PLAs)
February 7, 2022
Advantages:
• A PLA provides uniform wages, benefits, overtime pay, hours, working conditions, and work
rules for work on major construction projects.
• A PLA provides contractors with a reliable and uninterrupted supply of workers at
predictable costs for wages and benefits. PLAs prohibit strikes and lockouts. Because local
unions are generally members of a national union, a union can recruit workers both locally
and nationally.
• A large project is easier to manage if there is a PLA. Instead of dealing with several unions
that may have different wages and benefits and whose contracts may have different
expiration dates, contractors must deal with a single collective bargaining agreement.
• Because labor costs are predictable and because a PLA makes it easier to manage a large
project, a PLA helps ensure that a project will be completed on time and on budget.
• A PLA may help train workers by requiring contactors to participate in apprenticeship and
training programs.
• A PLA can improve worker safety by requiring contractors and workers to comply with
project safety rules.
Disadvantages:
• PLAs can increase costs. Because a PLA sets standard labor costs and work rules,
nonunion contractors cannot win bids based on lower costs. Nonunion contractors may
choose not to bid on projects that are covered by a collective bargaining agreement. The
result may be fewer bids and higher costs.
• If a PLA requires contractors to hire workers through a union hiring hall, contractors may
not be able to use their own workers.
• If a contractor is able to use his own workers, the workers may have to join a union and pay
union dues. If a contractor has to pay into a union pension plan, the employees may not be
on the project long enough to vest in the plan.
• Nonunion contractors may operate more efficient worker training programs.
• Instead of apprenticeship programs of a fixed duration, nonunion contractors can train
workers for specific tasks.
• Evidence does not indicate that nonunion construction projects are less safe than union
projects.
C
Presentation on Project Labor Agreements (PLAs)
February 7, 2022
Next Steps
As stated, the intent of this study session is to consider the potential effects of PLAs on large public
projects within the City of Burlingame. Should the City Council wish to pursue additional
consideration of a PLA policy, staff will tailor a future presentation on the subject to address
Council's questions. Depending on the City Council's direction, staff may also require the aid of
outside consultants and other legal services to provide clarity on a potential PLA policy.
Fiscal Impact
The fiscal impact of a PLA policy is unknown at this time. However, it would likely require an
estimated $20,000 in contracted legal services to draft an instrument conveying the policy. Further,
the administration of a PLA policy, including (but not limited to) the negotiation of future PLAs,
would likely be substantial.
Exhibit:
• U.S. Congressional Research Service. Project Labor Agreements (July 1, 2010), by Gerald
Mayer
5
Congressional
Research
service
Project Labor Agreements
Gerald Mayer
Analyst in Labor Policy
July 1, 2010
Congressional Research Service
7-5700
www.crs.gov
R41310
CRS Report for Congress
Prepared for Members and Committees of Congress
Labor
Summary
The 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. Aproject 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 and
improve worker safety.
Opponents argue that PLAs have several disadvantages. They argue that PLAs increase
construction costs. Because a PLA sets standard labor costs and work rules, nonunion contractors
cannot win bids based on lower costs. Moreover, nonunion contractors may not bid on projects
that are covered by a collective bargaining agreement, resulting in fewer bids and higher costs. If
a PLA requires contractors 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. If a contractor has to pay into a union pension plan, employees may not be on the
project long enough to vest in the plan. Opponents of PLAs 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.
Much of the research on the effect of PLAs on construction costs is inconclusive. In part, it can be
difficult to find and compare similar projects where some use a PLA and others do not. If similar
projects cannot be found, it can be difficult to control for factors that affect the costs and quality
of construction. Studies of the effects of PLAs may not include variables that account for the
quality of the work performed or whether the projects were finished on time.
Congressional Research Service
Labor
Contents
Project Labor Agreements
The Use of PLAs..............
President Obama's Executive Order on PLAs
Advantages and Disadvantages of PLAs
The Economic Effects of PLAs .............
Contacts
Author Contact Information
2
2
4
Congressional Research Service
Labor
he National Labor Relations Act of 1935 (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 (CBA) before a project begins. Aproject 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 Executive Order 13502, which encourages
federal agencies "to consider requiring" the use of PLAs on large-scale construction projects.
Regulations implementing the Executive Order (EO) went into effect in May 2010.
This report begins with a description of PLAs. It then describes President Obama's EO and
summarizes regulations to implement it. The report then examines arguments for and against the
use of PLAs and reviews research on the economic effects of the agreements.
Project Labor Agreements
Most collective bargaining agreements are between an employer and a labor union and usually
last for a specific period of time (e.g., for three years or five years). The NLRA allows employers
and unions in the construction industry to enter into pre -hire agreements, which are CBAs
between employers and unions that are reached before workers are hired for a project. Under one
type of pre -hire agreement, one or more unions negotiate a contract with one or more building
contractors. The agreement applies to projects before they arise and lasts for a specific period of
time. A project labor agreement is another type of pre -hire agreement. A PLA applies to a specific
construction project and lasts only for the duration of the project. All contractors and
subcontractors on the project are bound by the agreement.Z
A PLA generally specifies the wages and fringe benefits to be paid on a project. A PLA may
require contractors to hire workers through a union hiring hall.3 If not, it may require employees
' The NLRA is also known as the Wagner Act, after Senator Robert Wagner of New York who sponsored the bill in the
Senate. Representative William Connery of Massachusetts sponsored the bill in the House of Representatives. The
Railway Labor Act covers labor-management relations in the airline and railroad industries. The Federal Service Labor -
Management Relations Statute governs labor-management relations for most federal workers. For more information on
the NLRA, see CRS Report RL32930, Labor Union Certification Procedures: Use of Secret Ballots and Card Checks,
by Gerald Mayer.
2 Section 8(f) of the National Labor Relations Act (NLRA) allows employers and unions in the construction industry to
enter into pre -hire agreements. Section 8(e) of the act allows agreements that limit work on a project to contractors who
agree to the terms of a PLA.
This section of the report is based on CRS Report 98-965, Project Labor Agreements in Federal Construction
Contracts: An Overview and Analysis of Issues, by Gail McCallion; CRS General Distribution Memorandum, Project
Labor Agreements Under Federal and New York Law, by Vince Treacy (a copy of this memorandum is available from
the author of this report); John Lund and Joe Oswald, "Public Project Labor Agreements: Lessons Learned, New
Directions," Labor Studies Journal, vol. 26, Fall 2001, pp. 1-2; and John T. Dunlop, Project Labor Agreements, Joint
Center for Housing Studies, Harvard University, W02-7, September 2002, pp. 14-15. (Hereafter cited as Dunlop,
Project Labor Agreements.)
3 Under union hiring hall procedures, a union refers members to jobs. Generally, members who have been out of work
the longest are referred first. A PLA that requires contractors to hire through union hiring halls may allow nonunion
contractors to hire a certain percentage of "core" employees outside of the union hall referral procedures. Fred B.
Kotler, Project Labor Agreements in New York State: In the Public Interest, Cornell University, School of Industrial
and Labor Relations, March 2009, p. 4.
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Labor
to become union members after being hired. After they are hired, employees may petition the
National Labor Relations Board (NLRB) to decertify the union or reject the requirement that they
join the union.4
A PLA usually includes procedures for resolving labor disputes. For example, if there is a
disagreement between management and the unions over the interpretation of the PLA, the dispute
may go to mediation and then to arbitration. PLAs usually include a provision that unions agree
not to strike and contractors agree not to lock out workers.
The Use of PLAs
PLAs have been used in the United States since at least the 1930s. According to a 1998 report by
the Government Accountability Office (GAO), PLAs were used in the construction of the Grand
Coulee Dam in Washington in 1938, the Shasta Dam in California in 1940, the Trans -Alaska
Pipeline, Walt Disney World and the Kennedy Space Center in Florida, and the cleanup of Boston
Harbor.5 PLAs were also used in the construction of nuclear power plants in Hanford, WA, and
Oak Ridge, TN.6
According to the GAO report, the total number of PLAs is not known. The report states that there
is no identifiable group in either the private or public sectors that keeps comprehensive data on
the number of PLAs. Nevertheless, GAO's research concluded that most PLAs are in the private
sector and that they have been used in all 50 states and the District of Columbia on both private
and public projects.'
President Obama's Executive Order on PLAs
On February 6, 2009, President Obama signed Executive Order 13502, which encourages federal
agencies "to consider requiring" the use of PLAs on large-scale construction projects. The EO
defines large-scale projects as those where the total cost to the federal government is $25 million
or more. The order states that agencies are not required to use PLAs. It also states that agencies
are not prevented from using PLAs on projects not covered by the order.
The EO states that agencies may require a PLA if it will
advance the Federal Government's interest in achieving economy and efficiency in Federal
procurement, producing labor-management stability, and ensuring compliance with laws and
4 The NLRB administers and enforces the NLRA. The NLRB is an independent federal agency that consists of a five -
member Board and a General Counsel. The General Counsel's office conducts secret ballot elections and investigates
complaints of unfair labor practices. National Labor Relations Board, Basic Guide to the National Labor Relations Act
(Washington, DC: U.S. Government Printing Office, 1997), p. 33, available at http://www.nlrb.gov.
5 U.S. Government Accountability Office, Project Labor Agreements: The Extent of Their Use and Related
Information, GGD-98-82, May 1998, pp. 4-5. (Hereafter cited as GAO, Project Labor Agreements.)
6 Dunlop, Project Labor Agreements, p. 2.
7 GAO, Project Labor Agreements, pp. 6, 10
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Labor
regulations governing safety and health, equal employment opportunity, labor and
employment standards, and other matters.$
On July 10, 2009, Peter Orszag, Director of the Office of Management and Budget (OMB),
issued a memorandum requesting agencies to submit quarterly reports identifying all contracts
awarded for large-scale construction projects and whether or not a PLA was required on the
prof ect.9
On April 13, 2010, the Administration issued final regulations that implement President Obama's
EO. The regulations went into effect on May 13, 2010, and they include general requirements for
PLAs. A PLA shall
• bind all contractors and subcontractors on a construction project to comply with
the PLA;
• allow all contractors and subcontractors to compete for contracts and
subcontracts whether or not they are otherwise a party to a collective bargaining
agreement;
• contain guarantees against strikes, lockouts, and similar job disruptions;
• provide binding procedures for resolving labor disputes that may arise during the
term of the PLA;
• provide other mechanisms for labor and management cooperation on matters of
mutual interest and concern, such as productivity, quality of work, safety, and
health; and
• include any additional requirements that an agency deems necessary.
The final rule encourages agencies to consider PLAs early in the acquisition process. The rule
states that an agency may specify the terms and conditions of a PLA. In addition, the final rule
identifies several factors that agencies may consider when deciding whether to use a PLA. These
factors are:
• the construction project will require multiple contractors or subcontractors who
employ workers in multiple crafts or trades;
• a shortage of skilled workers exists in the area of the construction project;
8 President Barack Obama, "Use of Project Labor Agreements for Federal Construction Projects," Federal Register,
vol. 74, February 11, 2009, pp. 6985-6987. President Obama's EO revoked EOs issued by President George W. Bush
in February and April 2001. On February 17, 2001, President Bush signed Executive Order 13202. The order said that
federal agencies could not "require or prohibit" construction contractors from entering into PLAs. The EO did not
prevent contractors from voluntarily entering into PLAs; President George W. Bush, "Preservation of Open
Competition and Government Neutrality Towards Government Contractors' Labor Relations on Federal and Federally
Funded Construction Projects," Federal Register, vol. 66, February 22, 2001, pp. 11225-11226. On April 6, 2001, the
EO was amended to allow PLAs to continue if they were in effect on the date that EO 13202 was issued; President
George W. Bush, "Amendment to Executive Order 13202, "Preservation of Open Competition and Government
Neutrality Towards Government Contractors' Labor Relations on Federal and Federally Funded Construction
Projects," Federal Register, vol. 66, April 11, 2001, pp. 18717-18718.
9 Peter Orszag, Office of Management and Budget, Memorandum for the Heads of Executive Departments and
Agencies, M-09-22, July 10, 2009, available at http://www.whitchouse.gov/omb/assets/memoranda fy2009/m09-
22.pdf.
Congressional Research Service
Labor
• a project will last an extended period of time;
• PLAs have been used on comparable public or private projects in the area;
• a PLA will promote the agency's long-term program interests, such as training
workers to meet the agency's future construction needs; and
• any other factors that an agency thinks are appropriate.10
Advantages and Disadvantages of PLAs
Proponents of PLAs argue that the agreements have several advantages, including the
following:11
• A PLA provides uniform wages, benefits, overtime pay, hours, working
conditions, and work rules for work on major construction projects.
• A PLA provides contractors with a reliable and uninterrupted supply of workers
at predictable costs for wages and benefits. PLAs prohibit strikes and lockouts.
Because local unions are generally members of a national union, a union can
recruit workers both locally and nationally.
• A large project is easier to manage if there is a PLA. Instead of dealing with
several unions that may have different wages and benefits and whose contracts
may have different expiration dates, contractors must deal with a single collective
bargaining agreement.
• Because labor costs are predictable and because a PLA makes it easier to manage
a large project, a PLA helps ensure that a project will be completed on time and
on budget.
• A PLA may help train workers by requiring contactors to participate in
apprenticeship and training programs.
• A PLA can improve worker safety by requiring contractors and workers to
comply with project safety rules.
Opponents argue that PLAs have several disadvantages:12
• PLAs can increase costs. Because a PLA sets standard labor costs and work rules,
nonunion contractors cannot win bids based on lower costs. Nonunion
10 Department of Defense, General Services Administration, and the National Aeronautics and Space Administration,
"Use of Project Labor Agreements for Federal Construction Projects," Federal Register, vol. 75, April 13, 2010, pp.
19168-19179.
11 Dunlop, Project Labor Agreements, pp. 15-17. U.S. Senate, Committee on Health, Education, Labor, and Pensions,
Examining if Project Labor Agreements and Their Use of Public Funds are Really in the Best Interest of Taxpayers,
Hearing, 106d Cong., 2nd Sess., June 5, 2000 (Washington, DC: U.S. Government Printing Office, 2000), p. 46.
12 Herbert R. Northrup and Linda E. Alario, "`Boston Harbor'— Type Project Labor Agreements in Construction:
Nature, Rationales, and Legal Challenges," Journal of Labor Research, vol. 16, Winter 1998, pp. 1, 9, 12-14, 17-19;
Maurice Baskin, "The Case Against Union -Only Project Labor Agreements on Government Construction Projects,"
Journal of Labor Research, vol. 16, Winter 1998, p. 117.
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Labor
contractors may choose not to bid on projects that are covered by a collective
bargaining agreement. The result may be fewer bids and higher costs.
• If a PLA requires contractors to hire workers through a union hiring hall,
contractors may not be able to use their own workers.
• If a contractor is able to use his own workers, the workers may have to join a
union and pay union dues. If a contractor has to pay into a union pension plan,
the employees may not be on the project long enough to vest in the plan.
• Nonunion contractors may operate more efficient worker training programs.
Instead of apprenticeship programs of a fixed duration, nonunion contractors can
train workers for specific tasks.
• Evidence does not indicate that nonunion construction projects are less safe than
union projects.
The Economic Effects of PLAs
Opponents and proponents of PLAs disagree on the economic effects of PLAs. To some extent,
projects that use PLAs may be different from projects that do not use them, which can make it
difficult to isolate the effects of PLAs. For example, based on interviews it conducted, GAO
observed that
Proponents and opponents of the use of PLAs said it would be difficult to compare
contractor performance on federal projects with and without PLAs because it is highly
unlikely that two such projects could be found that were sufficiently similar in cost, size,
scope, and timing.13
Nevertheless, GAO summarized three studies on the effect of PLAs on project costs. The first
study was conducted by the Associated Builders and Contractors. The study concluded that PLAs
raised bids by 26% on two New York state projects. In the second study, the New York Thruway
Authority hired a consultant to negotiate a PLA for a project to refurbish the Tappan Zee Bridge.
The consultant concluded that the PLA reduced the cost of the project by $6 million (or 4.6%).
Instead of 19 local CBAs (each of which would have expired during the project), the PLA
standardized the terms and conditions of the project. The third study involved construction at the
Department of Energy's Lawrence Livermore National Laboratory in Livermore, CA. An official
from the laboratory provided GAO with documents that indicated that the project contractor
estimated that the PLA lowered the cost of the project by about 0.4%. Most of the estimated
savings were due to lower costs for overtime, shift differentials, and holiday pay, as well as the
greater use of apprentices instead of higher -paid j ourneymen. 14
More recent studies have reached different conclusions about the economic impact of PLAs. The
Beacon Hill Institute at Suffolk University in Boston has published a series of studies on the
effects of PLAs. The studies conclude that PLAs raise the costs of construction. In a study of 62
school construction projects in the Boston area from 1995 to 2003, researchers at the institute
concluded that PLAs raised the cost of construction by $16.51 per square foot (in constant 2001
13 GAO, Project Labor Agreements, p. 12.
14 Ibid, pp. 13-14.
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Labor
dollars), or 12%. The study controlled for the size of construction (i.e., square feet) and whether
the project was new construction or renovation.15
The Beacon Hill Institute also published a study in 2004 of school construction projects in
Connecticut. The study concluded that PLAs raised the cost of construction by $30.00 per square
foot (in constant 2002 dollars), or 18%. The estimate controlled for the size of the project,
whether the project was new construction or renovation, the number of stories, and whether the
project was an elementary school.16
On the other hand, a 2003 study of 92 new school construction projects in Massachusetts,
Connecticut, and Rhode Island concluded that, after controlling for several characteristics of the
projects, PLAs did not have a statistically significant effect on the costs of construction. The
study concluded that, controlling only for the size of a project (i.e., square feet), construction
costs on projects with a PLAwere $25.39 (or 15.7%) greater per square foot than on projects that
did not have a PLA. But, the study found that projects that used PLAs were larger and more
expensive than projects that did not have PLAs. After controlling for the size of a project as well
as other project characteristics, the study concluded that the cost per square foot was $13.42 (or
2.0%) higher on projects that used a PLA.17
Qualitative research has been conducted on other aspects of PLAs. For instance, a group of
researchers interviewed approximately 40 people experienced with PLAs to identify advantages
and disadvantages of the agreements. Results from such a small sample may not be representative
of all PLAs. Nevertheless, the researchers concluded that "interviewees seemed most convinced
that the greatest benefit of a PLA was in assuring timely completion of a project. Foremost, PLAs
nearly guarantee a steady flow of qualified labor." 18 One interviewee said, "Anything above five
to eight million dollars we will go to a project labor agreement because we find it a more
effective management tool.... Basically it's the labor pool, the supply of labor, [and] the quality of
15 The study included projects of $5 million or more and excluded small and large projects (defined as projects of less
than 40,000 square feet and projects of more than 400,000 square feet, respectively). The $16.51 estimate is based on
the actual cost of construction, as opposed to the bid cost, which is the initial price for a project reported by the
successful bidder. The study concluded that PLAs raised the bid cost of 126 construction projects by $18.83 per square
foot (or 14%). The study found that the effect of PLAs is smaller on new school construction than on renovations; Paul
Bachman, Darlene C. Chisholm, Jonathan Haughton, and David G. Tuerck, Project Labor Agreements and the Cost of
School Construction in Massachusetts, Beacon Hill Institute, September 2003, pp. 8-11.
16 The study included 71 projects of more than $1 million from 1996 to 2004; Paul Bachman, Jonathan Haughton, and
David G. Tuerck, Project Labor Agreements and the Cost of Public School Construction in Connecticut, Beacon Hill
Institute, November 2004, pp. 9-11, 14. The Beacon Hill Institute also published a study in 2006 of school construction
projects in New York state. The study concluded that PLAs raised the bid cost of construction by $26.98 per square
foot (or 18%). The study included 117 projects of more than $1 million from 1996 to 2005. The $26.98 estimate
controlled for size, number of stories, and whether the project was an elementary school; Paul Bachman and David G.
Tuerck, Project Labor Agreements and Public Construction Costs in New York State, Beacon Hill Institute, April 2006,
pp. 7-8, 10-11, 18.
17 Ten projects, nine of which were in Massachusetts, used PLAs. The study controlled for characteristics such as the
type of school (e.g., elementary or vocational); site preparation; whether the project was located in Boston; whether the
school included a cafeteria, auditorium, swimming pool, or science labs; the type of heating and cooling systems; and
other characteristics; Dale Belman, Russell Ormiston, William Schriver, and Richard Kelso, The Effect of Project
Labor Agreements on the Cost of School Construction in New England, School of Labor and Industrial Relations,
Michigan State University, Working Paper Series 2005, pp. 7-8, 15-16, 34.
18 Dale Belman, Matthew M. Bodah, and Peter Philips, Project Labor Agreements, ELECTRI International, 2007, p.
27. (ELECTRI International is a nonprofit organization that, among other things, funds research on issues important to
the electrical construction industry; ELECTRI International, Facing the Future of Our Industry, Report to Stakeholders
2008, Bethesda, MD, pp. 2, 18, 24.)
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the workmanship." Interviewees were also critical of PLAs, however. The main criticism was that
PLAs can increase the bargaining power of construction unions. According to the study, in areas
where a large share of jobs are covered by PLAs, construction unions may make greater demands
during negotiations over new union contracts. If one union is successful, other unions may make
similar demands.19
In short, 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 use statistical models that attempt to control for
differences in the characteristics of different projects. It can be difficult, however, to control for
factors that may affect the costs and quality of construction.20 In addition, quantitative analyses of
the effects of PLAs often do not include variables that account for the quality of the work
performed or whether the projects were finished on time.
19 Ibid., pp. 27, 31
20 Statistical models that attempt to control for differences in construction characteristics may use regression analysis,
which is based on a number of assumptions. One of these assumptions is that the explanatory variables are independent
(i.e., they are not highly correlated with each other). If any of the variables are highly correlated, the estimates may be
biased (i.e., they are not the true values). The study by Belman et al. of 92 new school construction projects in
Massachusetts, Connecticut, and Rhode Island has been criticized because some of the explanatory variables may be
highly correlated. For example, the size of a project may be correlated to the presence of an auditorium or cafeteria.
David G. Tuerck, Sarah Glassman, and Paul Bachman, Project Labor Agreements on Federal Construction Projects: A
Costly Solution in Search of a Problem, Beacon Hill Institute, August 2009, p. 28.
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Labor
Author Contact Information
Gerald Mayer
Analyst in Labor Policy
gmayer@crs.loc.gov, 7-7815
Congressional Research Service