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PLAs: ‘Valuable tools’ that provide value for taxpayers

Date Posted: July 3 2009

By Dale Belman
Michigan State University
Associate Director & Professor,
School of Labor & Industrial Relations

The Ingham County Board of Commissioners should approve a proposal requiring county taxpayer-funded construction projects be built using project labor agreements.

For the better part of a century, project labor agreements, or PLAs, have been used to increase safety and productivity on job sites, ensure taxpayers' investments are protected and deliver value to construction owners.

Many of the nation's most famous projects have used PLAs to ensure success, including Hoover Dam, Disney World and Cape Canaveral. Toyota Motor Corp. has used PLAs for all of its production facilities, using more than 40 million craft hours. Locally, major employers like Sparrow Hospital, the Accident Fund and Jackson National Life have all used PLAs to great success.

A PLA is an agreement between an owner, the organization that is paying for the construction and employees establishing conditions under which the work is to be done. It always includes assurances that skilled labor will be available promptly, protects against halts in construction due to labor disputes and sets the wages, benefits and conditions under which the work will be done.

PLAs often include provisions that improve project productivity and safety, provide training and employment opportunities for local residents and provide for better coordination among contractors. PLAs involving public funds provide for fair competition between union and open shop contractors and allow open shop contractors to compete successfully for projects so long as they agree to pay the wages and benefits established by the PLA.

PLAs can be controversial and have been misrepresented by various groups, particularly the Associated Builders and Contractors. For example, ABC claims that PLAs only allow unionized contractors to bid on projects. In fact, some "open shop" contractors –  those who have built their firms on high productivity and high wages - regularly participate on public PLA projects. Other contractors –  those who have built their business on low pay, poor benefits and little training – usually chose not to bid on PLA projects because they cannot pay the required wages benefits and make a profit.

In view of the social costs low-wage employers impose on the community, such as the costs of providing medical care to families when employers do not provide adequate medical coverage, the non-participation of such employers from public projects creates net social benefits.

In 2007, Matthew W. Bodah of the University of Rhode Island, Peter Phillips of the University of Utah, and I published a study examining the effects of project labor agreements. We found that:
  • PLAs do not increase a project's long-term cost.
  • Stakeholders by-and-large have a high level of satisfaction with PLAs.
  • PLAs improve scheduling, safety, training and minority employment.

Our study found that PLAs are "valuable tools for the construction industry because they can be used to create the conditions needed for a superior construction project." The Ingham County Board of Commissioners would be wise to support the use of PLAs for appropriate projects. Wisely used, PLAs will provide value to the county, both through better projects and supporting employers who pay family benefits.

(The above column appeared in the June 18 edition of the Lansing State Journal, and is reprinted here with the author’s permission).