From Peace to Absurdity – The Emergence of Cost Thresholds and Multi-Project Coverage for Project Labor Agreements in California: Shifting the Purpose from Labor Peace to Cutting Competition

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The California Construction Compliance Group has published From Peace to Absurdity – The Emergence of Cost Thresholds and Multi-Project Coverage for Project Labor Agreements in California: Shifting the Purpose from Labor Peace to Cutting Merit Shop Competition. This is the first study ever published about project cost thresholds for Project Labor Agreements.

From Peace to Absurdity – The Emergence of Cost Thresholds and Multi-Project Coverage for Project Labor Agreements in California: Shifting the Purpose from Labor Peace to Cutting Merit Shop Competition

From the 1930s to the 1980s, a few federal government agencies and large private corporations used Project Labor Agreements (authorized under the National Labor Relations Act) to prevent labor disputes from delaying a small number of huge multi-year, multi-trade construction projects. The National Labor Relations Act implicitly and then explicitly authorized Project Labor Agreements in the context of a law meant to prevent commercial disruption resulting from labor disputes, which were routine in the mid-1930s and during the following four decades.

From the 1930s until the 1970s, trade unions dominated the construction workforce for major projects in the United States and in California. A fundamental change in the construction industry occurred in the early 1970s, when the percentage of the American and California construction workforce that belonged to a union began to decline precipitously. By 2012, the unionized percentage of the construction workforce had dropped to 13.2% in the United States and 15.9% in California. As unionization declined in construction, so did labor unrest.

Nevertheless, the number of government-mandated project labor agreements in California has skyrocketed in the past 20 years, as courts have upheld the right of California governments to require contractors to sign such agreements. A 1999 California Supreme Court decision allowing the San Francisco Airport Commission to mandate a Project Labor Agreement was the moment at which California’s construction trade unions severed Project Labor Agreements from their original intention to preserve labor peace within the context of the National Labor Relations Act.

Local governments began requiring their contractors to sign a Project Labor Agreement with unions simply because a contract was funded in part by bond sales authorized by one specific ballot measure. School boards imposed Project Labor Agreements on multi-project programs for which specific projects were not even identified. Most significantly, Project Labor Agreements – once reserved for the very largest projects – were now negotiated and approved to cover very small contracts such as bathroom renovations and bird, weed, and dust control.

Instead of being a construction management tool, Project Labor Agreements are now a political tool to protect market share for construction unions and their unionized employers from the competitive efficiency and productivity of merit shop contractors.

Government-mandated Project Labor Agreements applied to $20,000 bathroom renovations for compliance with the Americans with Disabilities Act are absurd. As the Sonoma County Board of Supervisors recognized at its September 18, 2012 meeting to discuss a Project Labor Agreement policy, a $25 million project cost threshold may serve as a reasonable level to consider a government-mandated Project Labor Agreements.

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