A debate has arisen over the use of project labor agreements (PLAs) on the construction of six new schools in Prince George’s County. However, PLAs, which require union construction crews, are not the solution for Prince George’s County.
PLAs are government mandates that exist exclusively as a method for public officials to steer tax dollars to organized labor.
Most local businesses, particularly those owned by racial minorities, cannot work on projects covered by PLAs. These businesses risk financial ruin in the form of exorbitant pension withdrawal liabilities by agreeing to the terms of PLAs. Consider the case of a trucking company in New Jersey that unwittingly agreed to work on a PLA project and, years later, was hit with a demand from the union’s pension fund for $700,000 — more than twice what the company earned on the project.
The National Black Chamber of Commerce has long opposed PLAs because they “greatly reduce the number of minorities, women, and minority businesses working on a project.” In Prince George’s County, more than 40 Black-owned businesses recently objected to the proposal to mandate a PLA on all six school construction projects.
PLAs discriminate against local workers. About 90 percent of Maryland workers are not in a labor union, which is an option that is readily available to them at a local union hall. If these workers were to work on a PLA project, they would be required to transfer about 19 percent of their take-home pay to insolvent union pension funds for which they stand no chance of vesting in. Not surprisingly, unions keep these funds rather than returning them to workers after their work on the PLA project is complete. Imagine being asked to part with nearly a fifth of your paycheck under the contrived benefits of “alleviating coordination challenges” or “raising quality standards.”
Finally, PLAs severely limit competition to a few unionized contractors in the awarding of public contracts. This lack of free and open competition significantly drives up costs. A study by the nonpartisan Rand Corp. found that the Los Angeles City Council’s decision to require a PLA on the development of 10,000 units of affordable housing resulted in 800 fewer housing units and increased the costs of the project by 14.5 percent. Think about that. Eight hundred fewer families in Los Angeles will receive affordable housing because of the City Council’s decision to steer contracts to unionized contractors.
Prince George’s County can do better than PLAs.
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