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Obama’s recent executive order will make many federal construction projects 12 percent to 20 percent more expensive.

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Big Labor Is Cashing in at Workers’ Expense

Obama’s recent executive order will make many federal construction projects 12 percent to 20 percent more expensive.

It’s tough being in the construction business these days.

The economic downturn has caused turmoil across all industries, but there are looming threats at the federal level that may cause construction companies to face even more economic hardship.

These threats are a direct result of political favors Big Labor’s union bosses are cashing in at the expense of the American taxpayer and those who do not belong to a construction labor union.

President Obama’s recent executive order that encourages project labor agreements (PLAs) on federal construction projects valued at more than $25 million will severely harm the economy and stifle job creation in the construction industry while directly benefiting labor unions.

Obama’s order will make many federal construction projects 12 percent to 20 percent more expensive by requiring all contractors to use union workers and apply inefficient union work rules to their existing employees. Contractors also would be required to contribute to union pension funds and other union programs from which non-union workers will never benefit.

There is a gross unfairness to this, given that skilled and qualified non-union workers who win business under a PLA would have to pay union dues just to work on federal construction projects funded by their own tax dollars.  Requiring non-union workers to reimburse the president’s most generous political supporters is something that ought to offend everyone.

This executive order is on its way to becoming a reality.  It will cost the American people dearly, considering unemployment in construction is nearing 20 percent and wasteful spending is threatening every American’s future.

The overwhelming majority of the construction industry’s workforce stands to lose from Obama’s Executive Order 13502. According to the most recent data from the U.S. Department of Labor’s Bureau of Labor Statistics, only 15.6 percent of America’s private construction workforce chooses to belong to a union.  This means PLAs would discriminate against more than eight out of 10 construction workers.

PLAs contain a variety of provisions that discourage non-union contractors from bidding on PLA projects.  For instance, PLAs require non-union contractors to pay their workers’ health and welfare benefits to union trust funds, making the companies pay for benefits twice — once to the union and once to the company plan.

Paying into underfunded and mismanaged union pension plans also exposes non-union contractors to massive pension withdrawal liabilities, which could bankrupt a contractor and inhibit its ability to qualify for surety bonds needed for future projects.

Most PLAs require non-union companies to obtain temporary workers from union hiring halls.  This means a company like mine has to exclude its long-tenured, hardworking employees from PLA jobsites and instead use unfamiliar union workers.  In other instances, non-union employers can use some of their existing employees, but they must send these workers to the union hiring hall and hope the union decides to send the same workers back to the specific jobsite.

The question begs: What is the need being addressed by President Obama’s PLA executive order?  What great market failure is to be corrected by this discriminatory intervention?  Thousands of federal construction projects, valued at $147 billion, have been constructed during the last eight years when a Bush Executive Order prohibited government mandated PLAs on federal and federally funded construction.  There were no significant failures or systemic problems that would merit this action.  

But this isn’t logic — it is politics.

If that weren’t enough, in another payoff, unions stand to gain easier unionization if the controversial Employee ‘Forced’ Choice Act is passed.  The bill takes away workers’ rights to vote via secret ballot during union elections and forces workers and businesses into government mandated contracts that are binding for two years.

Contrary to news reports, “card check” is not dead, and none of the potential “compromises” are any better.  The binding arbitration provision that allows a government arbitrator to draft a contract covering all aspects of the relationship between employers and employees remains a real threat to the entire free enterprise system.

The small businesses that make up the vast majority of America’s construction industry are not looking for special favors — we are only asking for a fair opportunity to compete.  Government intervention is only merited when it serves to preserve the free enterprise system — not just a favored group.

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Written By

Mr. McMahon is vice president of Miller & Long, a concrete construction subcontractor, and a member of the Associated Builders and Contractors.

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