Ohio’s annual biennial budget bill includes a provision to end Project Labor Agreements in the bidding process.
Unions aren’t happy.
House Bill 64, approved Wednesday by the House, prohibits using state money on any project in which the bid specification requires or prohibits a Project Labor Agreement, wherein a governmental unit negotiates with a union for a specific project. The terms of that contract are imposed on the company that wins the bid.
PLAs allow unions to define terms of the bid when it comes certain work conditions and union participation. They often require payment of the area’s prevailing wage, which is usually the union-negotiated wage because, traditionally, it’s the highest.
Anyone who bids on a project must agree to abide by the PLA, which ensures non-union companies don’t have an advantage while bidding.
“PLAs usually mean that the non-union companies don’t get the bid,” Greg Lawson, a policy analyst with the Buckeye Institute for Public Policy Solutions, said. “This is partly because they won’t bid because they don’t want to deal with many aspects of the PLA.”
PLAs essentially limit competition in favor of “union first,” Lawson said.
The Buckeye Institute is a free-market, nonprofit, nonpartisan think tank based in Columbus.
Opponents of PLAs, like the Buckeye Institute, say they unnecessarily increase costs, especially in construction and road projects. By requiring non-union employers to abide by the same terms and conditions as union shops, PLAs eliminate any differences in wages and benefits among companies bidding on projects.
According to a report from the Buckeye Institute, PLAs can increase the cost of construction projects by 12 percent to 18 percent.
“When PLAs are dropped between rounds of bidding, bids on the same projects have come back by as much as 22 percent lower,” the report states.
But union representatives who testified during the House hearings on the budget said those higher costs ensure properly trained workers, a safe workplace and a building that meets safety regulations. This led Rep. Nickie Antonio, D-Lakewood, to go a step further and question the safety of people who enter a building after a construction project that didn’t require union workers.
In his testimony, Matt Szollosi, executive director of Affiliated Construction Trades Ohio, pointed out problems caused by what he calls contractor abuse.
“I will say our union contractors and reputable non-union contractors are having tremendous difficulty with those who engage in contractor abuse, don’t properly classify their employees as employees and are using illegal aliens,” he told the House committee. “That is the real problem. Then when the issues arise because it wasn’t’ done right the first time, you can’t find those workers. What have you saved? What have you accomplished then? Our approach is do it right the first time.”
Lawson disagreed, calling the training issue an “interesting talking point” on a “superficial level.”
“When you strip it down and analyze it, you’ll see that there are more and more opportunities for people to have access to training. Non-union workers can get training any number of places, especially in today’s information age.
“They say they’ve got trained people, and that it’s safer and it may cost you more in the short-term, but that it’ll pay off in the long run,” Lawson said. “They say they’ll get it right the first time so you don’t have bad construction, safety issues and cost overruns. The bottom line is that they’re overpaid for what they actually deliver and they use scare tactics to make people believe anyone else is a fly-by-night operation that can’t be trusted.
“Union shops are not the last thing that stands between you and someone who can’t put a screw in the wall,” he added.
But it isn’t just the work conditions and terms. Most PLAs require that all workers on the project pay union dues or fees and contribute to the union pension fund, even if they won’t benefit from it.
Szollosi told the committee non-union workers who pay the union dues to take part in their company’s project would probably not benefit from the pension, to which they were forced to contribute, unless they continued to pay dues and remain a union member until they were fully vested.
This adds to the labor costs, the Buckeye Institute report says, by increasing payments to unions rather than workers.
Mark Tucker, legal counsel for the Ohio State Building and Construction Trades Council, implied that a company’s current employees may not even work on the PLA project .
In answering a question from the House committee, he said non-union workers add their names to a list at the union hall to be re-hired for the job, but they would be behind current members, with the same skills, who are waiting to be hired.
Lawson called the PLA provision the “best single policy piece” in the biennial budget bill.
“The big thing about this is that it’s the first relatively significant labor reform that’s made it this far in the legislative process since Senate Bill 5,” he said.
S.B. 5 was a labor reform bill, which Gov. John Kasich signed and repealed in 2011 following a voter referendum led by the unions.
“All the people who’ve been belly-aching about the loss of local government funds should be supportive of it and beating on the doors of the Senate to tell them how this can save them money and give them flexibility,” Lawson said.
The bill does not prevent employers from negotiating their own PLAs; it just prevents the state agencies, and local projects using state funds, from doing so ahead of time and requiring it as part of the bid package.
Ohio would become the 23rd state to restrict PLAs — if the measure survives as the bill moves through the Senate.