Taxpayers wanting to understand why government projects cost so much should look no farther than project labor agreements.
These agreements, at their core, amount to organized labor protection agreements because the provisions are such that they virtually guarantee union contractors will build the projects.
Given the Democratic party’s allegiance to its biggest benefactors—public employee unions and other organized labor—requiring these agreements repays the unions for their financial and boots-on-the-street support.
What these agreement do it drive up costs. Federal and state contracts have been covered for years under the federal Davis-Bacon Act and its California sister. These are union friendly without regard to the taxpayers. Typically prevailing wage adds at least 20 percent in costs.
As the construction trades have increasingly shifted to non-union or merit shops, those operators have learned to compete effectively while paying union-level wages. The difference is the staffing levels that naturally are large in the union shops and much leaner in the others. Studies have demonstrated that labor agreements add 10 to 15 percent to the costs.
For example, a plumbing job involving an 8-person crew averages $100.87 with union work rules and $77.06 for the merit shop when paying union scale.
Two recent sad examples:
• The already hugely controversial scam project called the high-speed rail that will start with a line in the San Joaquin Valley—that, with all due apologies—would run from nowhere to nowhere. The state’s congestion issues are in its major metropolitan areas. A line that was built in the Bay Area or the broader Los Angeles basin could have a positive effect even if it went no farther. This is a $70 billion project with about $6 billion in identified funding and a voter-approved bond measure that says no taxpayer subsidy. Buy that and I have some fine beach front property for you—located in the Mohave Desert. So, let’s pile on additional costs instead of shaving costs to save every dime.
• The Wall Street Journal reports that the federal funds going to the Project Sandy restoration also will include project labor agreements. In 2009, President Obama signed an executive order directing the use of agreements on contracts of more than $25 million. It’s notable that a pure blue eastern state like New Jersey (albeit with a Republican governor) has less than 25 percent of its construction industry in organized labor. So, this forces 75 percent of the work force to be employed through union halls and pay the union dues instead of working for a private contractor who may compete within the Davis-Bacon regulation, but without the union staffing requirements. For those with a bit of memory, union work rules are where the term “feather bedding” arose.
For way too long, pols have done these sweetheart that amount to nothing more than political patronage at the taxpayers’ expense.