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Project Labor Agreement
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A Project Labor Agreement (PLA), also known as a Community Workforce Agreement,[1] is a pre-hire collective bargaining agreement with one or more labor unions that establishes the terms and conditions of employment for a specific construction project.[2] Before any workers are hired on the project, construction unions have bargaining rights to determine the wage rates and benefits of all employees working on the particular project and to agree to the provisions of the agreement.[3][4] The terms of the agreement apply to all contractors and subcontractors who successfully bid on the project, and supersedes any existing collective bargaining agreements.[3] PLAs are used on both public and private projects, and their specific provisions may be tailored by the signatory parties to meet the needs of a particular project.[4] The agreement may include provisions to prevent any strikes, lockouts, or other work stoppages for the length of the project.[3] PLAs typically require that employees hired for the project are referred through union hiring halls, that nonunion workers pay union dues for the length of the project, and that the contractor follow union rules on pensions, work conditions and dispute resolution.[5]

PLAs are authorized under the National Labor Relations Act (NLRA), 29 U.S.C. §§ 151–169. Sections 8(e) and (f) of the NLRA, 29 U.S.C. §§ 158(e) and (f) make special exceptions from other requirements of the NLRA in order to permit employers to enter into pre-hire agreements with labor unions in the construction industry.[6] The agreements have been in use in the United States since the 1930s, and first became the subject of debate in the 1980s, for their use on publicly funded projects. In these instances, government entities made signing PLAs a condition of working on taxpayer funded projects. This type of PLA, known as a government-mandated PLA, is distinct from a PLA voluntarily entered into by contractors on public or private work—as is permitted by the NLRA—as well as a PLA mandated by a private entity on a privately funded construction project.

Presidential executive orders issued since 1992 have affected the use of government-mandated PLAs for federal construction projects. Executive Order 13502, issued by President Barack Obama in February 2009,[7] encouraged federal agencies to consider mandating PLAs on a case-by-case basis for federal contracts of $25 million or more. President Joe Biden's Executive Order 14063, which revoked Obama's executive order,[7] requires PLAs on federal construction contracts of $35 million or more.

The use of PLAs is opposed by a number of groups,[8] who argue that the agreements discriminate against non-union contractors and do not improve efficiency or reduce costs of construction projects. Studies of PLAs have mixed results, with some studies concluding that PLAs have a favorable impact, while others find that the agreements can increase costs, and may negatively impact non-union contractors and workers.

History

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Early use

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The earliest uses of Project Labor Agreements in the U.S. date back to several dam projects in the 1930s, including the Grand Coulee Dam in Washington, the Shasta Dam in California and the Hoover Dam in Nevada.[9] Modern PLAs particularly developed from those used in construction carried out during World War II, a period when skilled labor was in demand, construction unions controlled 87% of the national market[10] and government spending on construction had increased significantly over a short period of time. These early PLAs focused on establishing standard rates of pay and preventing work stoppages.[11] PLA projects that followed included Cape Canaveral in the 1960s,[12] Disney World from 1967 to 1971 and the Trans-Alaska Pipeline from 1973 to 1977.[9][13] During this period and subsequently, the unionized share of the construction industry precipitously declined as construction users sought more open competition. By the 1980s, nonunion contractors claimed in excess of 80% of the construction work, in a wide variety of trades, with some variation in different parts of the country.[10]

Boston Harbor and executive orders

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The Boston Harbor reclamation project that began in the 1980s became the focus of debate over the legality of PLAs.[12][13] When the Massachusetts Water Resources Authority elected to use a PLA for the project that mandated union-only labor,[14] the Associated Builders and Contractors of Massachusetts/Rhode Island, Inc. challenged its legality, asserting that the use of a PLA was prohibited by the National Labor Relations Act.[15] In 1990, the First Circuit federal appeals court ruled that the Boston Harbor PLA breached federal labor law because of its union-work requirement.[16]

On October 23, 1992, while the Boston Harbor case was still in court, President George H. W. Bush signed Executive Order 12818 prohibiting federal agencies from exclusively contracting union labor for construction projects.[17] Bush's order prohibited the use of PLAs in federal construction projects.[18] The Clinton administration rescinded this order when President Bill Clinton issued Executive Order 12836 in February 1993, shortly after he took office.[19] This order allowed federal agencies to fund construction projects where contractors required a PLA.[20] One month later, in the Boston Harbor cleanup case, the United States Supreme Court unanimously upheld the use of the agreements on public projects.[6] The Supreme Court ruled that if the government was in the role of a regulator, it was not able to require PLA use under labor law preemption principles, however, it could choose to do so as a market participant without being preempted by the National Labor Relations Act.[13] The Court did not address the separate question of whether government-mandated PLAs are lawful under federal or state competitive bidding laws. The decision led to increased use of PLAs in public-sector construction projects throughout the U.S.[12][13]

In 1997, Clinton proposed an executive order stating that federal agencies must consider use of PLAs for federally funded projects.[21] Republicans staunchly opposed the move, believing it would restrict federal projects to union contractors only. Clinton abandoned the proposed executive order,[22] but issued a memorandum on June 5, 1997, encouraging federal departments to consider the use of PLAs for “large and significant” projects.[23] The memorandum required that government agencies review each project to decide whether a PLA would allow the agency to increase efficiency and reduce costs.[20]

Prohibition for federal and federally assisted projects

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On February 17, 2001, President George W. Bush signed Executive Order 13202, “Preservation of Open Competition and Government Neutrality Towards Government Contractors’ Labor Relations on Federal and Federally Funded Construction Projects”, prohibiting the use of PLA mandates for construction projects with federal funding.[24] This order stated that construction projects receiving federal funding would not be allowed to impose project labor agreements.[25] Specifically, the order declared that neither the federal government, nor any agency acting with federal assistance, shall require or prohibit construction contractors to sign union agreements as a condition of performing work on federally funded construction projects.[24] The order allowed any PLAs that had previously been agreed to continue, and did not affect projects that did not receive federal funding.[26] Bush's order revoked the previous executive order affecting PLAs, Clinton's order 12836, which revoked the executive order issued by President George H.W. Bush in 1992.[19] President George W. Bush issued an amendment in April 2001 (Executive Order 13208), allowing certain projects to be exempted from this order, if a project-related contract had already been awarded with a PLA requirement or prohibition at the time of the order.[27]

In August 2001, U.S. District Court ruled Executive Order 13202 invalid in a case examining the use of a PLA by Maryland for the Woodrow Wilson Bridge replacement project. The court ruled that the order was invalid as it conflicted with the National Labor Relations Act.[26] The judge issued a permanent injunction to block enforcement of the order on November 7, 2001.[28][29] In July 2002, the U.S. Court of Appeals for the District of Columbia overturned the District Court's decision and ordered the removal of the injunction.[25] Following this decision, the Department of Defense, NASA and the General Services Administration formally recognized the order in the Federal Register and implemented it in their construction bidding processes.[29]

Although the Court of Appeals decision in 2002 upheld the executive order prohibiting federal projects from using PLAs, individual states and counties were permitted to use PLAs for some public works where funding was from state and local revenue. These PLAs received opposition by organizations such as the Associated Builders and Contractors, and the Black Contractors Group.[30] A notable example of pro-PLA legislation was passed in New Jersey, which enacted a law in 2002 allowing use of PLAs for some government funded projects.[31]

PLA use since 2009

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English Wikisource has original text related to this article:

On February 6, 2009, President Barack Obama signed executive order 13502,[2] which urges federal agencies to consider mandating the use of PLAs on federal construction projects costing $25 million or more on a case-by-case basis.[32] This act served to revoke the Bush executive orders 13202 and 13208 from eight years earlier that prohibited government-mandated PLAs on federal and federally funded construction projects.[33] The Obama order states that federal agencies can require a PLA if such an agreement will achieve federal goals in economy and efficiency. According to the terms of the order, non-union contractors may compete for contracts subject to PLAs, but they must agree to the various terms and conditions contained in each PLA in order to win a federal contract and build a project.[18] A key change from the 2001 order is that by repealing the Bush orders, the Obama order permits recipients of federal funding, such as state, local and private construction owners, to mandate PLAs on public works projects of any size. However, the order does not encourage or mandate recipients of federal assistance to use a government-mandated PLA.[18]

With the February 2009 stimulus bill allocating approximately $140 billion for federal, state and local construction projects,[34][35] battles over government-mandated PLAs on public works projects from 2009 to 2011 have been widespread at the state and local government level. Government officials and legislators have clashed over using PLA mandates on projects in states including Iowa,[36] Oregon,[37] Ohio,[38] California,[39] and others.[40][41] Individual communities have voted on whether to prohibit the use of government-mandated PLAs on taxpayer funded construction projects, including ballot initiatives in Chula Vista, Oceanside,[42] and in San Diego County, California in 2010, which resulted in officials being prohibited from mandating or prohibiting the use of PLAs for government projects.[43] In 2011, contractors filed bid protests with the Government Accountability Office against government mandated PLAs for construction projects in New Hampshire, New Jersey, Pennsylvania and Washington, D.C. These protests led to federal PLA mandates being removed from project solicitations in each case.[44]

President Joe Biden's Executive Order 14063, which revoked Obama's executive order,[7] requires PLAs on federal construction contracts of $35 million or more and established a training strategy for Contracting Officers.[7] Federal Acquisition Regulation 52.222-34 provides for a contract clause for inclusion in a relevant construction contract, requiring maintenance of a PLA for the duration of the project.[45] According to the Federal Acquisition Regulatory Council's 2022 proposed rule implementing Executive Order 14063, from FY 2009 to FY 2021, federal agencies mandated PLAs on just 12 out of more than 2,000 federal construction contracts covered by the Obama order.[7]

As of March 2023, through legislation or by executive order issued by the state governor, the following 25 states have active laws banning government-mandated project labor agreements on state, state-assisted and/or local taxpayer-funded construction projects to some degree: Alabama, Arizona, Arkansas, Florida, Georgia, Idaho, Iowa, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Montana, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia, Wisconsin and Wyoming.[46][47][48][49][50][51][52] All legal challenges to these laws have failed.[53] State policies restricting government-mandated PLAs were repealed in Maine, Minnesota, Nevada and Virginia following Democratic party trifectas in state government.[54] States with executive orders, or that have enacted legislation authorizing or encouraging the use of PLAs on public projects include California,[55] Connecticut,[56] Hawaii,[57] Illinois,[58] Maryland,[59] Maine,[60] New Jersey,[61] New York, Virginia,[62] and Washington State.[63]

The Biden administration is pushing state and local governments to require PLAs on federally assisted projects via more than $250 billion worth of federal agency grant programs that give grant applicants favorable treatment if PLAs are required on taxpayer-funded infrastructure projects procured by state and local governments seeking federal dollars flowing from new programs in the Infrastructure Investment and Jobs Act, the American Rescue Plan Act and other legislation passed by Congress that authorize and fund infrastructure dollars but are silent on PLA preferences and requirements.[64] The Biden administration has also been criticized[65] for pushing PLA mandates on private construction projects receiving federal grants and tax breaks, such as pro-PLA policy contained in the U.S. Department of Commerce CHIPS Incentives Program's Commercial Fabrication Facilities[66] Notice of Funding Opportunity.[67]

On February 27, 2023, Rep. James Comer, R-Ky., and Sen. Todd Young, R-Ind., introduced the Fair and Open Competition Act (H.R. 1209  / S. 537),[68][69] legislation which promotes fair and open competition on contracts to build taxpayer-funded federal and federally assisted construction projects by restricting the use of government-mandated project labor agreements.[70][71][72] The legislation is supported[73] by a large coalition of construction and employer associations.[74][75]

Debate over use

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There has been much debate over the government-mandated PLAs, particularly for publicly funded projects.[13] The use of project labor agreements is supported by the construction unions,[76] and some political figures, who state that PLAs are needed to ensure that large, complex projects are completed on time and on schedule.[77] According to those who support the use of such agreements, PLAs enable project owners to control costs and ensure that there are no disruptions to the construction schedule, for example from strikes.[78] In particular, proponents of PLAs point to the inclusion of clauses in the agreement that agree to establish labor management problem solving committees that deal with scheduling, quality control, health and safety, and productivity problems during the project.[79] They also state that PLAs ensure that the workforce hired has received training and is of high quality.[79] The use of PLAs in large private construction projects such as the building of the New England Patriots' Gillette Stadium, are given as examples of how PLAs help project owners meet tight deadlines, according to supporters.[77] In addition to the stated benefits to project owners, supporters of PLAs also say that PLA use has a positive impact on local communities, through set goals for local hiring and provision of education.[80]

A coalition of U.S. construction and employer groups,[81] including the Associated General Contractors of America (AGC),[82] Associated Builders and Contractors (ABC),[83] Construction Industry Roundtable (CIRT), National Federation of Independent Business (NFIB), the National Black Chamber of Commerce, and the U.S. Chamber of Commerce[84] have actively opposed the use of PLAs, particularly for those mandated by lawmakers on taxpayer-funded construction projects procured by federal, state and local government. These groups have challenged the use of such agreements through litigation, lobbying, public relations campaigns.[83] Opponents of PLAs supported the Bush executive order prohibiting government-mandated PLAs, and have argued that between 2001 and 2008, when the executive order was in place, no federal projects suffered significant labor problems, delays or cost overruns attributable to the absence of PLAs.[85] Surveys of nonunion contractors suggest that government-mandated PLAs, increase costs; reduce competition; decrease economy and efficiency in government contracting; undermine investments in workforce development programs; reduce/have no impact on project safety, quality, budget or timeliness; result in worse local hiring outcomes; and decrease hiring of women, veteran and disadvantaged business enterprises and construction workers.[86] According to those who oppose PLAs, the agreements place restrictions on the hiring and working practices of contractors, and can lead to increased costs for project owners.[87]

One of their objections to PLAs is that the agreements require contractors to obey inefficient union work rules[83] and pay into union benefits plans even if they have existing benefits plans,[26][88] which can increase labor costs and expose contractors to additional uncertainty and financial risk in the form of multi-employer pension plan liabilities.[89][90] In addition, they oppose the use of PLAs to restrict hiring on projects to construction workers selected by unions through union hiring halls, stating that this does not increase the quality of worker as all those who are licensed in a craft have at least the same level of education and skill, regardless of whether they belong to a union.[77] Opponents object to clauses in typical PLAs that force contractors to replace most or all of their existing employees with unfamiliar union labor from union hiring halls because it can reduce workforce safety, productivity and diversity.[86] Research has found that the limited number of nonunion craft professionals permitted to work on construction projects subject to a government-mandated PLA suffer an estimated 34% reduction in wages and benefits unless they force their existing workforce to accept union representation, pay union dues and/or join a union as a condition of employment and receiving benefits on a PLA jobsite.[89] Opponents also claim provisions in typical PLAs require contractors to hire apprentices only from apprenticeship programs affiliated with unions, which limits investments in employer and association government-registered apprenticeship programs not affiliated with unions[91] and may exacerbate skilled labor shortages within the construction industry expected to top half a million workers in 2023.[92]

Another point of debate is the proportion of construction workers who are unionized. According to opponents, under PLAs contractors must hire their construction workers through union hiring halls,[93] and unionized workers are the majority of those who work on PLA projects, despite non-union workers making up the majority of the construction workforce.[77] Estimates of the percentage of construction workers who are non-union, cited by opponents of PLAs, are around 85%,[94] based on figures from the U.S. Department of Labor Bureau of Labor Statistics,[95] and more recent data puts this figure at a record high of 88.3%.[96] This figure has been disputed by supporters of PLAs, who state that the figures given by those in opposition to PLAs are misleading and are based on census data that encompasses too broad a concept of a construction worker.[97] According to a study by Cornell University in 2010 cited by Mary Vogel, in Massachusetts 60% of the Construction Trades is unionized.[98] Mary Vogel is the executive director of the Construction Institute, a non-profit organization dedicated to the needs of the unionized construction sector in Massachusetts. In 2021, a state's percentage of the construction workforce belonging to a construction union varied from a low of 1.8% (South Carolina) to a high of 34.5% (Illinois), with 25 states having lower unionization rates than the U.S. construction industry's average of 12.6%.

A number of politicians do not agree with the use of government-mandated PLAs for publicly funded construction projects, and have introduced bills or executive orders that prohibit using the agreements for government projects or prevent the use of public funds for projects using PLAs.[99][100][101]

Impact on cost

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A main argument has been the impact of PLAs on project cost.[102] Those who oppose PLAs state that the agreements impact competition for project bids, reducing the number of potential bidders as non-union contractors are less likely to bid due to the potential restrictions a PLA would pose.[93] According to opponents of the agreements, the reduced competition leads to higher bids and a higher cost for the project owner.[76] In addition, opponents argue that the cost may also be increased due to contractors having greater expenses under a PLA. For example, according to Max Lyons of the Employee Policy Foundation, the cost of a project under a PLA is increased up to 7%, since contractors are required to pay their employees the union wage, rather than the government-determined prevailing wage.[78] Opponents have also argued that there is evidence to show that PLA mandates add costs by forcing non-union contractors to pay into union benefit plans and their existing benefit plans.[103][89] Supporters of PLA use argue that the end cost of projects is not increased if a PLA is in place, compared to projects without such an agreement, since the agreements prevent cost overruns.[104] In response, opponents of the agreements cite examples of projects a PLA was in place and costs overran including Boston's Big Dig project, Safeco Field in Seattle, and the San Francisco International Airport.[94] An August 2021 study by the Rand Corporation found that government-mandated PLAs on affordable housing projects in Los Angeles increased construction costs by 14.5% and approximately 800 additional units (an increase of 11% more housing units) could have been produced without a government-mandated PLA policy.[105] Multiple studies examining the impact of government-mandated PLAs on school construction costs in Connecticut (2020),[106] New Jersey (2019),[107] and Ohio (2017)[108] by the Beacon Hill Institute found that PLA projects experienced increased costs by up to 20% compared to similar non-PLA school projects also subject to state prevailing wage laws, echoing findings from previous research on the cost of PLAs on school construction conducted in Massachusetts (2003), Connecticut (2004) and New York (2006).[109][110][111] In 2010, the New Jersey Department of Labor studied the impact of government-mandated PLAs on the cost of school construction in New Jersey during 2008, and found that school construction projects where a PLA was used had 30.5% higher costs, per square foot, than those without a PLA.[112] A 2009 study of PLAs on federal construction projects, carried out by Rider Levett Bucknall to determine whether PLAs should be used in the U.S. Department of Veterans Affairs' construction projects, found that costs would increase if PLAs are used for construction projects in locations where union membership is low. According to their analysis, in areas including Denver, Colorado, New Orleans, Louisiana, and Orlando, Florida, where unions do not have a great presence, use of PLAs for projects would lead to cost increases from 5% to 9%. In two cities, San Francisco and New York City, where unions have a great presence, the study predicted mixed results regarding potential cost savings ranging from small project cost increases to small cost savings.[113]

Impact on competition

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Opponents of PLAs state that the agreements impact competition for project bids, which can lead to higher costs.[78] It is argued by those who oppose PLAs, such as former ABC president Henry Kelly, that PLAs discourage if not prevent non-unionized contractors from competing for construction projects, particularly federal projects.[76] Competitive bidding statutes discourage public sector PLAs from discrimination between non-union and union contractors, as discrimination between bidders would typically represent a violation of such statutes.[114][115] Non-union contractors have been awarded contracts on public sector PLA projects, for example the Boston Harbor project.[6] In the United States Supreme Court ruling on the use of a PLA for the Boston Harbor project, it was stated that project owners are within their rights to choose a contractor who is willing to enter into a pre-hire agreement, and that contractors have a choice whether or not they wish to enter such an agreement.[6] However, in a subsequent case the Supreme Court observed the following limitation on the Boston Harbor holding, "In finding that the state agency had acted as a market participant, we stressed that the challenged action "was specifically tailored to one particular job.""[116]

PLAs often require all companies to obtain their workers from union hiring halls, though the union controlling this employee referral system may not discriminate on the basis of a worker's union or non-union status.[117] It is often the case, however, that the hired employees must join a union and pay union dues, usually for the duration of the project.[118][119] PLA opponents argue that the union control of hiring prevents a non-union contractor for using its own employees and efficient work practices.[120] The increased cost to contractors and the impact on their workers of joining a union, is said by opponents of PLAs to discourage non-union contractors from bidding on projects with a PLA.[121] For instance, a project in Ohio in 2010, to build dormitories for two schools saw an increased number of bids when a PLA was no longer required, and the bid prices were 22% lower than they had been when a PLA was in place.[119]

Local impact

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According to supporters, PLAs can be used by public project owners like school boards or city councils to set goals for creating local jobs and achieving social welfare goals through the construction projects they apply to.[4][80][115] PLAs may include provisions for targeted hiring and apprenticeship ratio provisions. According to proponents, by including requirements for a certain proportion of local workers to enter union apprenticeship programs working on the construction program, PLAs can be used to help local workers gain skills.[4] The term "Community Workforce Agreement" (CWA) may be used to describe PLAs with community-focused provisions.[122][123] Proponents state that Community Workforce Agreements re-inject the tax dollars paying for these infrastructure projects back to the communities.[80][124][125] Those who oppose PLAs have pointed to examples such as the construction of the Yankee Stadium and the Washington Nationals Ballpark, for both of which community focused agreements were in place but the goals of local hiring and resources to be provided to the community were not met.[126][127][128] According to a report for the DC Sports & Entertainment Commission, the PLA for the Nationals Ballpark failed to meet its three main goals of local workers performing 50% of journeyman hours, apprenticeships provided to city residents only, and apprentices to carry out 25% of the work hours on the project.[128] According to groups such as ABC, since the PLAs require that workers are hired through the unions and there are much fewer union workers, this can mean that meeting local hiring goals is impossible.[126]

Impact on minority contractors

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A number of women and minority contractor groups oppose project labor agreements,[84] arguing that PLAs disproportionately impact small businesses, particularly those owned by women and minorities. These groups argue that PLAs are anti-free-market and discriminatory.[129][130] In particular, groups including the National Association of Women Business Owners, have voiced their opposition to PLAs, and in 1998, there was a House hearing dedicated to the issue of minority groups' opposition to government-mandated PLAs.[131] The National Black Chamber of Commerce opposes the use of PLAs due to the low numbers of black union members in the construction industry. According to the NBCC, implementing PLAs leads to discrimination against black workers who are generally non-union workers and also prevents contractors from using casual laborers.[132][133] According to the United States Pan-Asian American Chamber of Commerce, the majority of their membership comprises small businesses that are unfairly impacted by PLAs, particularly due to increased costs and lowered employee benefits.[134]

Research and reports

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A number of studies and reports have been published, aiming at identifying the impact of PLAs. In addition to academic research, reports have been produced by government agencies and individuals on behalf of state or federal government. In 1998 the Government Accountability Office produced a report on PLAs that noted an overall lack of data but reported that both “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.” The GAO report concluded that it would be difficult to draw "any definitive conclusions" on the impact of PLAs on performance.[135] More recent reports include a favorable study of PLAs from the Cornell University School of Industrial and Labor Relations, in 2009,[4] reports produced by the Beacon Hill Institute since 2003, which conclude that PLAs increase costs of projects,[136] and an analysis published by the National University System Institute for Policy Research, which found that PLAs increased the cost of school construction in California.

In addition to studies examining the use of PLAs and their impact, reports are available detailing the history of PLA use and the arguments for and against their use. Reports examining the history of PLA use, include a 2001 California State Library report, compiled for California State Senate, which recounts the history of PLAs in California and uses case studies to examine the features of public and private PLAs.[137] In a 2001 University of Pennsylvania Journal of Law article, the author outlines the arguments on either side of PLAs and evaluates the state of the law since the 1993 Boston Harbor case decision. The article finds that while there are benefits to PLA use, they can present risks and should only be allowed on projects where they will further the goals of competitive bidding statutes, namely timely, efficient, high quality, and inexpensive construction.[138]

Reports supporting PLAs

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Studies have found that PLAs offer benefits to project owners and local communities, and do not disadvantage nonunion contractors and employees. A 2009 study by Fred B. Kotler, J.D., associate director of the Cornell University School of Industrial and Labor Relations found that there is no evidence that PLAs discriminate against employers and workers, limit the pool of bidders, and raise construction costs.[139] In a 2009 report by Dale Belman, of Michigan State University; Matthew M. Bodah of the University of Rhode Island and Peter Philips of the University of Utah, the authors stated that rather than increase cost, the agreements provide benefits to the community. According to their report, project cost is directly related to the complexity of a project, not the existence of an agreement. They found that PLAs are not suited to all projects, but some projects are good candidates for their use, such as highly complex construction projects.[140] Studies have also considered how PLAs may benefit communities through hiring locals. In a paper focused on whether PLAs for projects developed by the Los Angeles Community College District (LACCD), the Los Angeles Unified School District (LAUSD), and the City of Los Angeles met local hiring goals, the author found that the goal of 30% local hires set by the PLAs was met.[141]

Reports and studies addressing the cost impact of PLAs on construction projects have found that they may not lead to greater costs, such as a 2002 paper by the Harvard University Joint Center for Housing Studies, which states that the increased costs cited by opponents of PLAs is based on bids rather than end costs. According to the paper, a project's end costs would usually be higher than bid costs due to expenses that arise during construction.[11] In addition, a 2004 report by the Director of General Services for Contra Costa County, California reported that bids for five of eight projects subject to a PLA were lower than the architect/engineer cost estimate.[142] In 2004 a report written on the use of PLAs in Iowa states that PLA use increases efficiency and cost effectiveness of construction projects. "Public-sector PLAs on complex projects or projects where timely project completion is important have been shown to provide the performance desired by contractors and project managers, who repeatedly use them."[143] A 2009 paper concluded that there was difficulty in identifying the effect of PLAs on cost in construction of schools, due to the differences between schools built with PLAs and those built without them. The report stated that there was not any statistically significant evidence for an increase in costs for school construction.[144]

Reports on the legal considerations affecting PLAs make the case that PLAs are an effective tool for labor relations.[145] In a report in 1999, on the legality of PLAs, the authors stated that PLAs "serve as a productive and stabilizing force in the construction industry.”[146] This is supported by a UCLA study that challenged findings of the Beacon Hill Institute on PLAs, which found that in the private sector, the usage of PLAs "creates continuity and stability of the work force at the job site".[147]

Reports opposing PLAs

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An August 2021 study by the Rand Corporation found that government-mandated PLAs on affordable housing projects in Los Angeles increased construction costs by 14.5% and approximately 800 additional units (an increase of 11% more housing units) could have been produced without a government-mandated PLA policy.[105]

Multiple studies examining the impact of government-mandated PLAs on school construction costs in Connecticut (2020),[106] New Jersey (2019),[107] and Ohio (2017)[108] by the Beacon Hill Institute found that PLA projects experienced increased costs by up to 20% compared to similar non-PLA school projects also subject to state prevailing wage laws, echoing findings from previous research on the cost of PLAs on school construction conducted in Massachusetts (2003), Connecticut (2004) and New York (2006).[109][110][111] A report on PLAs by BHI, published in 2009, examined whether claims made in Obama's executive order that PLAs have a positive economic impact are correct. The report considered the findings of the institute's studies, further case studies of PLA and non-PLA projects and addressed criticisms of their previous studies and concluded that the justifications for PLA use in the executive order were not proven. In particular the report concluded that there was no economic benefit to taxpayers in using PLAs.[136]

An independently reviewed 2011 study by The National University System Institute for Policy Research analyzed the cost impact of PLAs on school construction in California from 1996 to 2008.[148] The study analyzed 551 school construction projects and is reportedly the largest study of PLAs to have been undertaken to date.[149] It found that the use of PLAs added between 13% and 15% to construction costs, which would represent a cost increase of between $28.90 and $32.49 per square foot when adjusted for inflation.[150] However, this study's conclusions were strongly disputed by Dr. Dale Belman of Michigan State University, a long-time proponent of the use of PLAs and whose prior research it referenced repeatedly, and who claimed the study misrepresented his findings. He wrote the authors: "Although your study has several serious statistical issues, at the end of the day, your results are basically consistent with those presented in my article on PLAs and Massachusetts school construction costs. The take-away from your results can be summarized as follows: When appropriate controls are included for differences in the characteristics of schools built including school type and location, building specifications, materials used etc., there is no statistical evidence that PLA schools are more costly compared to non PLA schools." The study authors point out in the report that they employed robust regression methods to account for variances in school construction materials/techniques and location. Robust regression is a statistical technique that is used in conjunction with predictive models when the data set lacks normal distribution, or when there are substantive outliers that may skew the results from a standard regression test. In a robust regression analysis, the influence of outliers is down-weighted, allowing more statistical relationships to appear in the results.

In 2010, the New Jersey Department of Labor studied the impact of government-mandated PLAs on the cost of school construction in New Jersey during 2008, and found that school construction projects where a PLA was used had 30.5% higher costs, per square foot, than those without a PLA.[112]

Earlier studies also found increased costs when PLAs were used, including a study in 2000 of a Nevada Water Authority project PLA, which found that the project cost an additional $200,000 because the true low bidder refused to sign the PLA. The project then went to a union contractor whose bid was $200,000 higher.[151] Also in 2000, a study commissioned by the Jefferson County, New York Board of Legislators examining the potential use of a PLA for the Jefferson County Courthouse Complex concluded that a PLA could result in additional costs of more than $955,000. The total estimated increase of costs for the projects, should a PLA be used, would have represented 7% of the total cost of the project.[152]

In addition to increased costs of projects, studies have found that PLAs can lead to greater costs for nonunion contractors and can lower their employees' take home pay. In 2009[103] and 2021[89] studies by John R. McGowan of Saint Louis University found that nonunion workers on government-mandated PLA projects have reduced wages, compared with what they would receive for work on a non-PLA project. In addition, nonunion employers would have to pay for additional benefits that their employees would be ineligible for and might be liable for pension fund withdrawal liability costs if the terms of the PLA mean they have to contribute to a union pension fund for the duration of the project.[103][89]

PLAs also may impact competition by discouraging nonunion bidders, according to surveys of contractors[86] and studies including a September 2001 study by Ernst & Young, commissioned by Erie County, New York. This study analyzed the impact of PLAs on public construction projects and concluded that the number of bidders was reduced for projects with a PLA, as "the use of PLAs strongly inhibits participation in public bidding by non-union contractors."[153] The Worcester Municipal Research Bureau produced a report in 2001, based on a number of studies of PLA use. The report stated that PLAs reduced the number of bidders on construction projects, and led to lower savings than would be possible where contractors are able to work under their usual arrangements for employees.[154] In March 1995, an ABC study of the taxpayer costs for Roswell Park Comprehensive Cancer Center in Buffalo, New York, assessed bids for the same project both before and after a PLA was temporarily imposed in 1995. It revealed that there were 30% fewer bidders to perform the work and that costs increased by more than 26%.[155]

In terms of wider economic impact, a November 2000 Price Waterhouse Coopers study requested by the Los Angeles Unified School District was not able to confirm whether the project stabilization/labor agreement for the district's Proposition BB construction had produced either a positive or negative economic impact.[156] In March 2006, the Public Interest Institute released a study that concludes that the PLA agreed for the construction of the Iowa Events Center project in downtown Des Moines, placed an “unnecessary burden” on local workers, businesses and taxpayers.[157]

See also

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References

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Project Labor Agreement

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A project labor agreement (PLA) is a pre-hire agreement between project owners or public entities, general contractors, and one or more labor unions that establishes uniform terms and conditions of —such as wages, hours, benefits, apprenticeships, and —for all craft workers on a specific project, regardless of prior union affiliation. These agreements typically include no-strike and no-lockout provisions to ensure labor stability and timely project completion, while requiring hiring through union referral systems and adherence to union-scale compensation, even for non-union participants who may need to join unions or pay equivalent fees. PLAs are predominantly applied to large-scale public infrastructure and federal projects valued over $35 million, where they aim to mitigate risks from labor shortages or disruptions by guaranteeing a steady supply of trained workers and standardizing costs across subcontractors. Proponents highlight benefits such as reduced delays and enhanced productivity, with some project-level analyses showing faster completion times due to coordinated workforce planning. However, PLAs remain highly contentious, as they effectively compel participation in union hiring halls and benefit structures, sidelining the approximately 90% of U.S. workers who are non-union and often excluding merit-shop contractors from bidding, thereby constraining competition. Empirical assessments of PLAs' economic effects reveal persistent , with union-aligned studies claiming neutral or efficiency-driven cost outcomes and countervailing research documenting premiums of 10-15% or more on projects like due to mandated wage floors, fringe benefits, and reduced subcontractor pools. Federal policy has oscillated, with mandates encouraged under the Biden administration for major projects but rescinded under Trump to prioritize open competition, prompting legal challenges over alleged against non-union entities. Despite these disputes, PLAs continue to shape public procurement, influencing taxpayer-funded outcomes through their structural preference for organized labor frameworks.

Core Elements of a PLA

A (PLA) is a pre-hire agreement entered into between a public or private owner and one or more labor organizations, establishing the terms and conditions of for all workers on a specific . This structure, authorized under Section 8(f) of the National Labor Relations Act (29 U.S.C. § 158(f)), allows unions to represent workers before a majority has been hired, distinguishing it from standard post-hire bargaining. PLAs typically bind prime contractors and all subcontractors to uniform labor standards, aiming to promote project efficiency and labor stability while complying with federal laws on , safety, and prevailing wages. Key provisions in a PLA include guarantees against strikes, lockouts, or other job disruptions for the duration of the , ensuring uninterrupted work progress. Effective and mutually binding mechanisms, such as expedited , address grievances promptly to minimize delays. Labor-management cooperation clauses foster joint efforts on enhancements, , workforce safety, and training programs, often incorporating opportunities to develop skilled labor. Hiring practices under a PLA generally require contractors to seek referrals from union hiring halls, prioritizing union members while permitting non-union workers to participate after exhausting union lists, subject to skill and availability criteria. Standardized wages, fringe benefits, hours, and work rules apply uniformly, derived from prevailing area rates to avoid competition based on labor cost undercutting. The agreement covers the entire project scope, from site preparation to completion, and must conform to all applicable statutes, regulations, and , including those on non-discrimination and health standards. For federal projects exceeding $35 million, as mandated by 14063 issued on February 4, 2022, these elements ensure broad applicability without granting preferences that undermine open bidding.

Constitutional and Statutory Basis

The statutory foundation for project labor agreements (PLAs) in the United States lies primarily in Section 8(f) of the National Labor Relations Act (NLRA) of 1935, which authorizes pre-hire agreements exclusively within the construction industry. This provision permits employers and labor organizations to negotiate terms covering wages, hours, and working conditions before a union secures employee support, diverging from the NLRA's general Section 9(a) requirement for certified representation. enacted this exception to address the construction sector's unique characteristics, including short-term projects, transient workforces, and the impracticality of mid-project union elections, thereby facilitating labor stability without preempting standard bargaining rules outside construction. The U.S. has affirmed the permissibility of PLAs under federal law, most notably in Building and Construction Trades Council v. Associated Builders and Contractors of Massachusetts/Rhode Island, Inc. (1993), known as the Boston Harbor decision. In this case, the Court held that a state's imposition of a PLA on a public project did not violate NLRA preemption principles, as the acted as a market participant in its proprietary capacity rather than as a regulator of private . This ruling distinguished state-mandated PLAs from federal labor policy encroachments, allowing governments to use PLAs to ensure timely completion and cost control on without federal interference, provided they do not broadly regulate industry-wide practices. Subsequent decisions have extended this logic, upholding PLAs against challenges alleging violations of competitive bidding statutes or equal protection under state constitutions, though outcomes vary by jurisdiction. Federally, executive authority derives from the President's powers under statutes like the (FAR), implemented through orders such as 14063 (2022), which mandates PLAs on construction contracts exceeding $35 million to promote labor harmony and efficiency. Prior orders, including EO 13502 (2009), encouraged but did not require PLAs on large-scale federal projects, reflecting policy oscillations without altering the underlying NLRA framework. At the state level, statutes in approximately 13 jurisdictions, often in right-to-work states, prohibit government-mandated PLAs on public projects to preserve open competition, invoking rationales tied to fiscal responsibility and non-discrimination against non-union bidders, though these face no uniform constitutional bar under the .

Distinctions from Standard

Project labor agreements (PLAs) differ from standard collective bargaining agreements (CBAs) primarily in their pre-hire nature, enabled by Section 8(f) of the National Labor Relations Act (NLRA), which permits construction industry employers and unions to enter binding contracts before any employees are hired or without requiring a union representation election demonstrating employee support. In contrast, standard CBAs under NLRA Section 9(a) typically arise after voluntary recognition or a certified confirming the union's status among the employer's existing workforce, imposing an ongoing duty to bargain in for successor agreements. This pre-hire provision in PLAs facilitates rapid assembly of skilled labor for time-sensitive projects but allows employers to repudiate the agreement upon project completion without perpetual obligations, unlike the enduring relationship in traditional 9(a) CBAs. PLAs are tailored to a single or discrete set of projects, establishing uniform terms such as wages, benefits, work rules, and that expire with the project's end, often incorporating no-strike/no-lockout clauses to prioritize timely completion. Standard CBAs, however, govern broader, ongoing operations across an employer's , geographic areas, or jurisdictions, reflecting negotiated master agreements between unions and multi-employer associations that evolve through periodic reopenings rather than project-specific customization. This project-limited scope in PLAs enables owners or public entities to negotiate directly with multiple unions upfront, binding all successful bidders—including non-union contractors and subcontractors—to the terms, whereas standard CBAs are employer-union pacts applying only to signatory firms' unionized employees. Enforcement mechanisms in PLAs extend to all on-site workers regardless of prior union affiliation, frequently mandating referral through union hiring halls while allowing limited exceptions for core employees, which contrasts with standard CBAs' focus on an employer's current bargaining unit without imposing cross-project or multi-employer uniformity. PLAs thus preempt disparate local CBA variations that could disrupt project efficiency, but they may introduce requirements like union security clauses applicable from project inception, diverging from the post-hire, election-based validation in non- standard bargaining. These distinctions, upheld in cases like Building and Construction Trades Dept. v. Associated Builders & Contractors (1993), position PLAs as a specialized tool for stability rather than a substitute for traditional union certification processes.

Historical Evolution

Origins in the 1930s and Pre-1980s Use

Project labor agreements (PLAs) emerged in the United States during the 1930s as pre-hire collective bargaining arrangements between construction owners or contractors and building trades unions, primarily to stabilize labor relations on massive public infrastructure projects amid the Great Depression's economic disruptions and high unemployment. The earliest documented federal use occurred on the Grand Coulee Dam in Washington state, where construction began in 1933 and the PLA was implemented around 1937-1938 to standardize wages, working conditions, and dispute resolution, thereby preventing work stoppages that could delay critical hydroelectric development. Similar agreements followed on other New Deal-era dam projects, such as the Shasta Dam in California starting in 1938, which employed thousands of workers and required coordinated union hiring halls to supply skilled trades like electricians and pipefitters. These initial PLAs addressed jurisdictional disputes among crafts and ensured a reliable workforce for remote, technically demanding sites, originating from employer-union negotiations rather than government mandates. By the 1940s, PLAs expanded significantly during , applied to federally funded and munitions facilities to prioritize uninterrupted production amid acute labor shortages and imperatives. For instance, agreements covered multiple shipyards where unions committed to no-strike clauses in exchange for preferential hiring and standardized benefits, facilitating the rapid scaling of naval that produced over 1,200 warships between and 1945. Post-war, through the and , PLAs persisted on large-scale endeavors like plants under the Atomic Energy Commission, including facilities at Hanford and Oak Ridge, where they mitigated risks from specialized nuclear-related trades and multi-employer coordination on projects costing hundreds of millions. Pre-1980s PLAs were characteristically "old school" in nature—tailored to sprawling, long-duration projects in isolated or technical settings, such as , seaways, and defense installations, often spanning 5-10 years and involving 10,000 or more workers. They emphasized labor peace through binding arbitration and union security provisions, but remained voluntary tools negotiated by industry stakeholders, with limited application to smaller or urban jobsites due to less acute supply constraints. Usage declined somewhat in the as construction shifted toward commercial and residential sectors with more fragmented labor markets, yet PLAs endured where project scale demanded preemptive labor to avoid overruns from , as evidenced by their in maintaining on ventures like the (1954-1959). Overall, these early agreements demonstrated utility in causal terms: by aligning incentives for labor supply and dispute avoidance, they reduced downtime on capital-intensive builds, though data from the era is sparse on precise impacts.

1980s-1990s Judicial and Policy Milestones

In the late , project labor agreements (PLAs) began facing increased scrutiny when applied to publicly funded projects, as state and governments sought to impose them to stabilize and ensure timely completion amid growing nonunion competition in the industry. One early example was the Massachusetts Authority's (MWRA) adoption of a comprehensive PLA in October 1990 for the multi-billion-dollar cleanup project, mandated by a federal consent decree following pollution violations under the Clean Water Act; the agreement required all contractors and subcontractors to adhere to union hiring halls, standardized wages, and no-strike clauses to prevent disruptions on the $3-4 billion initiative expected to span over a decade. This marked a policy shift toward proactive labor management by public owners, contrasting with prior ad hoc private-sector uses, though it immediately drew challenges from nonunion contractors alleging violations of competitive laws and federal labor preemption. The ensuing litigation culminated in the landmark U.S. Supreme Court decision on June 14, 1993, in Building and Construction Trades Council of the Metropolitan District v. Associated Builders and Contractors of Massachusetts/Rhode Island, Inc., which upheld the MWRA's PLA requirement. The Court, in a unanimous opinion authored by Justice Blackmun, ruled that the National Labor Relations Act (NLRA) does not preempt state or local governments from enforcing PLAs when acting in a proprietary capacity as market participants—purchasing construction services—rather than as regulators imposing general labor standards on private parties. This distinguished public owners from the NLRA's Machinists preemption doctrine, affirming that states retain flexibility to condition contracts on pre-hire agreements authorized under NLRA Section 8(f) for the construction industry, provided they do not dictate terms beyond their project needs. The ruling resolved ambiguities from prior lower-court challenges, such as those questioning whether public bidding statutes inherently barred union-favoring specifications, and opened the door for broader public-sector adoption without federal labor law conflicts. Post-1993, policy milestones accelerated in the , with numerous state and local entities enacting or defending PLA mandates for major infrastructure; for instance, New York City implemented PLAs for projects like the Convention Center expansion in 1994, citing labor stability benefits, while and other states saw similar requirements on transportation and environmental works exceeding certain thresholds. However, not all faced smooth implementation; some state courts specific PLAs for conflicting with local laws favoring open competition, as in early New Jersey cases where turnpike projects' agreements were invalidated for deviating from "lowest responsible bidder" statutes without sufficient justification. By the mid-1990s, federal agencies like the Department of Energy began exploring PLAs for complex sites such as , though without overarching executive policy until later, reflecting a patchwork of judicial validations and policy experiments that solidified PLAs as a tool for public owners amid ongoing debates over bidding fairness.

Federal Executive Orders and Shifts (2000-2020)

In February 2001, President issued 13202, titled "Preservation of Open Competition and Government Neutrality Towards Government Contractors' on Federal Construction Projects," which prohibited federal agencies from requiring or prohibiting project labor agreements (PLAs) on construction projects receiving federal financial assistance. This order explicitly revoked prior Clinton-era policies, including a 1997 presidential memorandum and 12818 from 1992, that had encouraged PLAs to streamline federal projects by preemptively resolving labor disputes. The rationale emphasized maintaining government neutrality in private-sector , arguing that mandating PLAs distorted competitive by favoring unionized contractors and potentially increasing costs through restrictions on hiring. Exemptions were permitted for projects with existing PLAs as of February 17, 2001, or in cases where agency heads determined that open competition could not be preserved otherwise, but the order applied broadly to contracts exceeding $1 million in value. An amendment via 13208 in April 2001 extended these neutrality provisions to federally assisted projects, such as highways and transit systems funded under laws like the Transportation Equity Act for the 21st Century, covering an estimated $147 billion in federal construction spending. This shift aimed to counteract perceived union preferences in prior administrations, promoting of contractors without preconditions tied to labor organizations. Implementation through the (FAR) ensured that solicitation documents could not condition awards on PLA adherence, though voluntary agreements between contractors and unions remained permissible. The policy reversed again in 2009 under President with 13502, "Use of Project Labor Agreements for Federal Construction Projects," issued on February 6, which directed agencies to consider requiring PLAs for large-scale projects estimated to exceed $25 million. Unlike mandates, the order promoted PLAs as tools to prevent work stoppages, delays, and cost overruns by establishing pre-hire terms for wages, hours, and across multiple trades. Agencies were instructed to weigh factors such as project size, duration, complexity, and prior before deciding on PLA use, with the policy applying to direct federal procurements but not necessarily to all assisted projects unless specified. This represented a departure from Bush-era restrictions, reflecting administration views that PLAs enhanced efficiency on major like those under the American Recovery and Reinvestment Act, though critics contended it reinstated barriers to non-union participation. From 2017 to 2020, the Trump administration did not issue an revoking or significantly altering EO 13502, leaving Obama's encouragement framework intact for federal direct contracts. Policy focus shifted toward broader of labor rules, including expansions in programs via 13801 in 2017, but PLAs continued to be evaluated on a project-specific basis without or mandate. This period saw no formalized federal push to eliminate PLA considerations, maintaining the status quo amid ongoing debates over their impact on bidding competition and project timelines.

Expansion and State-Level Adoption Post-2009

Following President Barack Obama's Executive Order 13502 on February 6, 2009, which encouraged federal agencies to consider project labor agreements (PLAs) for large-scale construction projects exceeding $25 million, several states aligned state-funded initiatives with similar labor coordination mechanisms amid the American Recovery and Reinvestment Act's infrastructure spending. In New York State, the Economic Recovery PLA, implemented in early 2009, facilitated broader application of PLAs across public infrastructure projects, covering scopes beyond traditional limits to support economic stimulus efforts. This model emphasized pre-hire union agreements to ensure workforce stability and timely completion, with New York City applying four PLAs to a $5.3 billion project initiated in 2009, projected to generate 1,800 jobs. Connecticut expanded PLA provisions through Public Act 11-63, enacted in 2011, which applied to state public works contracts entered on or after July 1, 2009, requiring consideration of labor agreements for efficiency on qualifying projects. Similarly, Massachusetts pursued project-specific PLAs post-2009, including legislative overrides in June 2021 mandating a PLA for the new Holyoke Soldiers' Home reconstruction to enforce hiring and wage standards. These adoptions in Northeastern states reflected a pattern in Democratic-controlled legislatures prioritizing union involvement for public works, often citing reduced disputes and predictable timelines, though empirical assessments varied by project scale. Concurrently, PLA expansion faced opposition, prompting 20 states to enact legislation or since 2011 restricting mandatory PLAs on state and local projects to preserve competitive bidding among non-union contractors, who comprise approximately 88% of the U.S. workforce. By 2018, 24 states had implemented such fair and open competition policies, limiting PLA mandates primarily to voluntary or local levels in remaining jurisdictions like and , where usage persisted for select without statewide requirements. This divergence underscored regional political divides, with pro-PLA states reporting case-specific efficiencies while critics highlighted potential cost premiums of 12-20% from reduced bidder pools.

Economic Analyses

Empirical Evidence on Cost Increases

A 2024 RAND Corporation analysis of 75 completed projects funded under ' Proposition HHH found that those governed by a project labor agreement (PLA) had total development costs $92,700 higher per unit—representing a 21% premium—compared to non-PLA projects, after controlling for project size, land costs, number of buildings, and year of ; this difference was statistically significant (p=0.03). The study also identified a 27% longer average completion time for PLA projects (3.17 years versus 2.5 years), which accounted for approximately half of the observed cost differential, suggesting inefficiencies in labor deployment or contracting under PLA requirements. Peer-reviewed research on school construction in , drawing from data on 70 projects completed between 1996 and 2002, initially indicated PLA-associated cost premiums of up to $28.57 per (about 17%) in basic regression models, but these estimates declined to $13.80–$13.90 per (roughly 13%)—and became statistically insignificant—upon incorporating controls for project features (e.g., mechanical systems, pools) and urban location effects like those in . Log-linear models similarly reduced the premium from 16.6% to 3.3%, leading the authors to conclude no robust evidence of cost elevation attributable to PLAs, attributing apparent raw differences to omitted project complexity factors. Non-academic but data-driven assessments, such as those from industry analyses, have estimated PLA-induced premiums ranging from 12% to 20%, often linking higher costs to reduced bidder participation by non-union firms and mandated union scales or work rules that exceed local market rates. For instance, evaluations of projects have highlighted how PLAs restrict , potentially inflating bids by limiting the pool of qualified contractors willing to comply with pre-hire union terms, though such claims are contested by studies emphasizing gains offsetting hikes. These findings underscore a pattern where raw or partially adjusted data frequently reveal cost uplifts, even if heavily controlled econometric models sometimes mitigate them.

Effects on Competitive Bidding and Project Efficiency

Project Labor Agreements (PLAs) often impose uniform wage scales, apprenticeship requirements, and hiring preferences that align with union standards, which can deter non-union contractors from bidding on projects, as these firms represent 80-90% of the U.S. in many states. This restriction limits the pool of potential bidders, potentially stifling and elevating bid prices, as fewer competitors reduce downward pressure on costs. on bidder reduction is mixed: a peer-reviewed study of 263 bids from 2007-2016, controlling for project size, location, and economic conditions, found no statistically significant decrease in bidder numbers under PLAs compared to non-PLA projects. However, in regions with lower union penetration, such as right-to-work states, PLAs have been associated with sharper declines in participation, as non-union firms face unfamiliar work rules and higher labor expenses that erode their competitive advantages. On project efficiency, PLAs frequently correlate with elevated construction costs, undermining value for public funds. A 2024 RAND Corporation analysis of ' Proposition HHH affordable housing initiative, which mandated PLAs, revealed 21% higher total development costs per unit for PLA-affected permanent projects, partly due to extended completion timelines averaging 27% longer than non-PLA counterparts. Independent estimates, such as a Beacon Hill Institute evaluation of school projects, indicate PLA mandates raised costs by nearly 20%, driven by mandated premium wages and benefits exceeding local market rates. These increments stem from rigid labor stipulations that can introduce inefficiencies, including jurisdictional disputes and restricted subcontractor flexibility, though proponents cite reduced work stoppages as an offsetting benefit. Countervailing studies, often from labor-affiliated researchers, argue PLAs maintain or enhance competitiveness and by standardizing terms and averting disruptions. For example, a peer-reviewed examination of large projects found PLAs associated with shorter completion times, attributing this to predictable labor supply and mechanisms. Yet, such findings may understate costs in non-union-dominant markets, where empirical data more consistently document net inefficiencies; a of multiple state-level implementations shows average cost premiums of 12-20% under PLA requirements, without commensurate gains. Overall, while PLAs may stabilize certain high-union environments, their broader application tends to compromise competitive and fiscal by favoring union-aligned practices over market-driven alternatives.

Workforce Utilization and Labor Market Distortions

Project labor agreements (PLAs) commonly mandate that contractors hire workers through union hiring halls and adhere to union wage scales, benefit structures, and work rules, thereby restricting participation to the roughly 12% of the U.S. workforce that belongs to unions, excluding the approximately 88% of non-union workers. This pre-hire requirement creates a labor market distortion by artificially constraining the supply of eligible labor, as non-union contractors—comprising the of the industry—are compelled either to adopt union terms, which often increases their costs by an estimated 35% due to mandated fringe benefits and dues equivalents deducted from non-union paychecks, or to forgo bidding altogether. Industry surveys confirm this effect, with 99% of non-union contractors reporting they are less likely to bid on PLA-required projects, reducing overall utilization and competitive access for skilled non-union labor. In localities with low union density, such as many rural or right-to-work states, PLAs exacerbate distortions by necessitating the importation of union members from distant urban centers, underutilizing local non-union workers who may be available but ineligible without joining a union or navigating hiring hall preferences that prioritize union loyalists. This practice not only inflates ancillary costs like travel and temporary housing for out-of-area workers but also disrupts local labor market equilibrium, as evidenced by reduced bidding from regional firms and lower employment opportunities for non-union residents, who constitute over 80% of workers in states like . Empirical analyses of public projects indicate that PLA mandates conflict with state competitive bidding laws, further entrenching these inefficiencies by steering jobs toward a narrower, union-dominated pool regardless of local availability. While some PLAs incorporate local hiring goals—such as 50% in the Oakland Army Base project, where 41% of hours were ultimately filled locally—these provisions often prioritize union-affiliated workers and fail to substantively include non-union labor, perpetuating exclusionary dynamics. A 2025 study examining PLA restrictions found that barring PLAs correlates with higher incidence and unemployment risk among construction workers, particularly union-covered ones, implying potential stabilizing effects for those within the union system; however, this overlooks the broader exclusion of non-union participants and does not address net utilization gains or losses across the full labor market. Overall, these mechanisms foster a bifurcated labor market, where PLA projects operate in isolation from prevailing non-union norms, diminishing efficient matching of skills to projects and prioritizing institutional arrangements over merit-based or locality-driven allocation.

Disparate Impacts on Non-Union and Minority Contractors

Project labor agreements (PLAs) impose requirements such as hiring through union halls, prevailing union wages, and contributions to union benefit plans, which compel non-union contractors to either restructure operations or incur substantial additional costs to participate. Non-union firms often face a 35% increase in and benefits expenses due to mandatory payments into union fringe benefit plans alongside their existing programs, effectively creating "dual benefit" burdens that erode competitiveness. Surveys of non-union contractors indicate that 98% are less likely to bid on PLA-mandated projects, reducing the pool of competitors and leading to fewer bids—such as instances where non-PLA projects attract three times more bidders and achieve 16% lower costs. This exclusion affects the 89.3% of the U.S. workforce that is non-union, limiting their access to contracts and distorting labor markets by favoring union-affiliated firms. Minority-owned contractors experience amplified disparate impacts, as 98% of African-American and construction companies operate without union affiliation, positioning them predominantly among the non-union segment disadvantaged by PLA mandates. Similarly, approximately 95% of Black-owned firms in regions like remain non-unionized, facing such as the need to navigate union apprenticeship systems or absorb compliance costs that small, emerging businesses cannot readily afford. Federal small business utilization in contracts declined by 60% between 2010 and 2020, a trend attributed in part to expanding PLA requirements that deter non-union minority enterprises from bidding. Organizations representing minority interests, including the National Black Chamber of Commerce, have argued that PLAs act as predatory mechanisms against Black-owned businesses by curtailing employment opportunities and for non-union firms. Although some PLA implementations incorporate goals for minority and women-owned enterprise (MWBE) participation, empirical analyses reveal that overall bidding from these groups diminishes due to the inherent union-centric , which prioritizes established trade pipelines over independent minority contractors. In , for instance, government-mandated PLAs have been projected to discourage small, minority-owned non-union es from competing, undermining state diversity objectives in . These effects stem from causal mechanisms where PLAs enforce uniform labor terms misaligned with the flexible, lower-overhead models prevalent among minority entrepreneurs, thereby perpetuating underrepresentation despite formal equity provisions.

Policy Debates and Stakeholder Perspectives

Pro-PLA Arguments and Supporting Studies

Proponents of Project Labor Agreements (PLAs) argue that these pre-hire arrangements promote labor stability on large-scale public construction projects by securing commitments from unions to supply skilled workers without strikes, lockouts, or jurisdictional disputes, thereby minimizing work stoppages and delays. This predictability is said to foster efficient , as standardized terms for wages, hours, and working conditions across multiple contractors reduce coordination challenges and enable owners to enforce uniform safety and quality protocols. Empirical evidence from a 2025 study of 313 public works projects in , using to control for project cost, type, and awarding agency, found that PLA projects completed 15-17% faster than non-PLA projects and were 43% more likely to finish within the following year, attributing this to reduced risks from stable labor access and harmonized work rules. Similarly, a 2017 Labor Center analysis of 263 construction projects in showed PLA projects had comparable or slightly more bidders than non-PLA ones, with low bids averaging slightly lower (though not statistically significant after controls), and case studies from the indicating fewer construction problems and on-time, within-budget delivery under PLAs. On costs, peer-reviewed research reviewed in a 2022 ICERES report, including studies on California and Massachusetts school construction, detected no statistically significant PLA-induced increases, challenging claims of 15-20% premiums by highlighting omitted factors like project complexity in non-academic analyses; for instance, Philips and Waitzman's 2021 examination of 263 California projects confirmed no effect on bidder numbers or costs. Pro-PLA advocates also cite real-world examples, such as New York City's $5.3 billion 2009 infrastructure projects saving approximately $300 million through PLA efficiencies, and Boston's 2014 energy project yielding $100 million in long-term savings via timely completion and workforce training provisions. Additional benefits emphasized include enhanced workforce development, with the Berkeley study noting PLA projects at employing apprentices across trades and potentially boosting lifetime earnings by $300,000 per trainee through structured pathways, which proponents link to higher and on-site. A 2025 research review by Every Texan further supports that PLAs facilitate competent labor pools, improve records, and maintain cost neutrality while increasing bid competition on public projects, drawing from multiple peer-reviewed sources.

Anti-PLA Criticisms and Opposing Research

Critics argue that project labor agreements (PLAs) impose higher costs on public construction projects by mandating union-scale wages, benefits, and work rules that exceed prevailing rates, often leading to bids inflated by 12% to 20% compared to non-PLA projects. A 2024 analysis of ' Proposition HHH program found that PLA requirements added 21% to total development costs, attributing the premium to restricted labor pools and union hiring preferences that limited contractor flexibility. This arises from causal mechanisms such as reduced options and mandatory contributions to union funds, which non-union firms must absorb without reciprocal benefits, thereby distorting competitive bidding. Opposing research highlights how PLAs diminish by deterring non-union contractors, who comprise approximately 85-90% of the U.S. , from participating effectively. Mandates require signatories to adhere to union hiring halls, jurisdictional rules, and programs that prioritize union members, often resulting in fewer qualified bidders and higher bid prices due to lack of downward pressure on costs. Empirical data from Associated Builders and Contractors (ABC) surveys indicate that PLA mandates harm non-union firms' hiring and development, with members reporting barriers to project access that exacerbate labor market distortions. PLAs are criticized for disproportionately excluding minority- and women-owned businesses, which are predominantly non-union and rely on merit-shop practices. The National Black Chamber of Commerce has noted that such firms, often small and local, face systemic barriers under PLAs due to union apprenticeship requirements and travel restrictions favoring out-of-state union labor over in-region non-union workers, including veterans and underrepresented groups funding the projects via taxes. This exclusion contravenes goals of diverse , as evidenced by opposition from minority contractors in cities like , where rates among such firms lag behind larger entities. Further research critiques pro-PLA studies for methodological flaws, such as failing to control for project scale, , or , which can mask true cost differentials. For instance, analyses attributing no cost increase to PLAs often overlook , where only larger, union-friendly projects adopt them voluntarily, while mandates force application to diverse portfolios, revealing inefficiencies like delays from jurisdictional disputes. These findings underscore that PLAs prioritize union interests over taxpayer value, reducing overall project efficiency without commensurate benefits in quality or timeliness.

Notable Implementation Case Studies

The Central Artery/Tunnel Project in Boston, known as the Big Dig, incorporated a project labor agreement in the early 1990s to standardize labor terms across its multiple contractors for the $2.8 billion highway reconstruction and tunnel initiative, initially slated for completion by 1998. The agreement mandated union hiring halls for worker recruitment and uniform wage scales, aiming to minimize disruptions on the complex urban site. However, the project experienced severe cost escalations to $14.8 billion by its 2007 completion—over five times the original estimate—and included eight years of delays, structural defects such as ceiling panel collapses leading to a 2006 fatality, and ongoing litigation over leaks and corrosion. Analyses from merit-shop industry groups have linked the PLA's restrictions on non-union participation to reduced competitive bidding, contributing to higher labor costs and inefficiencies amid the project's scale, though official reviews cited broader factors like design changes and unforeseen subsurface conditions as primary drivers. The Unified School District's Project Stabilization Agreement, enacted in 2000 as a PLA variant for its $19.5 billion school program, required contractors to adhere to union apprenticeship ratios, prevailing wages, and centralized hiring for over 130 new facilities built between 2001 and 2013. This framework facilitated rapid expansion to alleviate but correlated with elevated expenses: a of school projects from 2003 to 2008 found PLA implementations added $32.49 per square foot, or 15%, to costs compared to non-PLA equivalents, after controlling for project size, location, and complexity. The premium persisted in multivariate models, with proponents crediting the agreement for workforce stability and safety gains, while critics, including non-union contractor associations, argued it deterred open-shop bidders and inflated bids due to mandatory union benefits exceeding local market rates. In contrast, the New York City School Construction Authority's use of PLAs on multiple phases of its capital program, examined in a 2011 U.S. Department of Labor-commissioned evaluation, yielded reported benefits including consistent labor supply and on-schedule delivery for projects totaling billions in value from the 2000s onward. The study, based on interviews and performance metrics, concluded that PLAs enhanced productivity and quality without evident cost penalties in this context, attributing success to tailored terms allowing flexibility for local unions and contractors. However, a separate 2006 examination of New York State public projects indicated statistically higher costs per square foot for PLA-bound work versus non-PLA, suggesting variability tied to market union density and project specifics. A smaller-scale comparison from the College of Marin's community college facilities in involved three PLA projects and four without, completed between 2004 and 2016; the PLA cases drew comparable bidder numbers but averaged 3.5% lower costs per , per bid , potentially due to stabilized labor in a high-union region. This outcome contrasts with broader empirical patterns in low-union areas, where PLAs have been associated with fewer bids and 10-20% cost uplifts from restricted competition.

Biden-Era Mandates (2021-2024)

On February 4, 2022, President Biden issued Executive Order 14063, titled "Use of Project Labor Agreements for Federal Construction Projects," which established a policy requiring federal agencies to include project labor agreement requirements in solicitations for large-scale construction projects where the estimated total cost to the federal government exceeds $35 million. The order directed offerors to commit to negotiating in good faith or becoming party to a PLA with one or more labor organizations representing relevant crafts, consistent with applicable laws, before the final award of a contract exceeding the threshold. Agencies were permitted limited exceptions, such as when a PLA would substantially reduce the number of qualified bidders, for projects under small business set-asides, in cases of national security urgency, or if prior comparable projects lacked PLAs and still achieved efficiency. The executive order reversed prior Trump-era policies that had discouraged PLAs, reinstating and strengthening an approach akin to Obama-era Executive Order 13502 by making PLA use presumptively required rather than optional for covered projects. It applied to direct federal procurement contracts for , alteration, or repair, excluding those delegated to non-federal entities or involving assisted construction via , loans, or guarantees. The stated rationale emphasized promoting economy and efficiency in federal contracting by preventing labor disputes, facilitating workforce recruitment, and ensuring timely project completion, drawing on experiences from projects like the and New Orleans reconstruction where PLAs were credited with minimizing disruptions. Implementation proceeded through revisions to the (FAR). On December 22, 2023, the FAR Council issued a final rule codifying the requirements of EO 14063 as Subpart 22.5 of the FAR, mandating that agencies require PLAs in solicitations for applicable projects unless an exception applied. The rule took effect for solicitations issued on or after January 22, 2024, applying to contracts valued at $35 million or more and requiring prime contractors to include PLA terms binding subcontractors performing substantial portions of the work. Agencies were instructed to consider factors like project duration, complexity, and labor market conditions when evaluating PLA necessity, with the Office of Management and Budget issuing guidance to standardize exception determinations. During this period, the mandates aligned with broader infrastructure initiatives, such as the (IIJA) signed in November 2021, where PLAs were encouraged for projects funded under the law to ensure labor stability, though the EO provided the enforceable federal framework for direct contracts. By late 2024, the policy had influenced procurement for projects across agencies like the Department of Defense and , though compliance varied based on exception usage and ongoing debates over cost impacts.

2025 Court Challenges and Policy Reversals

On January 19, 2025, the U.S. Court of Federal Claims ruled that the Biden administration's Executive Order 14063, mandating project labor agreements (PLAs) on federal construction projects exceeding $35 million, violated the Competition in Contracting Act by restricting competition and favoring unionized labor. Judge Ryan T. Holte's decision in consolidated bid protests sided with non-union contractors, including members of the Associated Builders and Contractors (ABC), who argued the mandate unlawfully predetermined labor terms before bidding. Following the inauguration of President on January 20, 2025, federal agencies initiated policy reversals. The Department of Defense (DoD) issued a class deviation on February 7, 2025, directing contracting officers to cease requiring PLAs on large-scale construction projects, effectively exempting them from EO 14063. The General Services Administration (GSA) followed with similar exemptions for certain projects, such as land ports of entry. ABC praised these actions as eliminating Biden's "controversial" mandate, estimating they would reduce costs and broaden bidder participation. Pro-PLA groups, including building trades unions, challenged these exemptions in court. On May 22, 2025, a federal district court granted a preliminary in North America's Building Trades Unions v. Department of Defense, vacating the DoD and GSA memoranda and reinstating the PLA requirement for affected projects pending full litigation. The ruling held that unilateral agency deviations bypassed statutory processes under the (FAR) implementing EO 14063. In response, the White House issued OMB Memorandum M-25-29 on June 12, 2025, narrowing reversals by permitting PLAs on a case-by-case basis where deemed "practicable and cost-effective," rather than a blanket prohibition. This adjustment followed additional union lawsuits and aimed to balance competition concerns with project efficiency, though critics from non-union sectors, such as the Associated General Contractors (AGC), argued it perpetuated distortions in bidding. By July 2025, ongoing litigation had restored PLA mandates for some solicitations over $35 million, highlighting persistent tensions between federal procurement goals and labor policy.

Implications for Future Public Procurement

The ongoing legal and policy reversals surrounding federal Project Labor Agreement (PLA) mandates, including the U.S. Department of Defense's decision in February 2025 to drop requirements on certain large projects following successful bid protests, signal a potential shift toward reduced reliance on PLAs in public procurement. This development, coupled with injunctions vacating agency exemptions in May 2025 that reinstated Biden-era rules temporarily, introduces uncertainty but underscores growing scrutiny of PLAs' compatibility with competitive bidding principles under the . Agencies may increasingly opt for case-by-case waivers to avoid litigation risks, fostering procurement processes that prioritize over pre-hire union agreements. Economically, diminished PLA mandates could enhance bidder participation by non-union contractors, who represent approximately 87% of the U.S. workforce, thereby expanding the pool of competitors and exerting downward pressure on bid prices. Empirical analyses, such as a 2012 study on school , indicate that PLA requirements contributed to 14.5% higher costs due to restricted and elevated labor premiums, suggesting potential taxpayer savings in future non-PLA projects estimated at 10-20% on comparable . While some peer-reviewed research claims no statistically significant cost inflation—often funded by pro-union entities—these findings overlook causal factors like mandatory union-scale wages (typically 20-30% above prevailing non-union rates) and hiring hall restrictions that exclude efficient merit-shop firms, distorting market signals in public bidding. At the state and local levels, where PLA adoption varies, future procurement trends may diverge: union-stronghold jurisdictions could persist with PLAs for purported workforce stability, but competitive pressures from cost-conscious taxpayers—evident in Illinois bids rising 14% under PLA regimes without corresponding efficiency gains—may prompt rollbacks elsewhere. Federal precedents, including the Trump administration's partial narrowing of exemptions in July 2025 amid stakeholder pushback, imply that reforms will emphasize empirical cost-benefit analyses over ideological mandates, potentially integrating performance-based incentives to mitigate labor disruptions without union exclusivity. This evolution could yield more resilient supply chains, as evidenced by faster project completions in non-PLA environments where contractor flexibility reduces delays from jurisdictional disputes.

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