Tag Archive for Working Partnerships USA

Studies About Impact of Prevailing Wage Laws on San Francisco Bay Area Cities Are Not Trustworthy

Union officials are livid about the continuing defiance of California’s charter cities. For example, the City of Palo Alto continues after 33 years to exercise its right under the California Constitution to maintain its own policy concerning government-mandated wage rates on municipal construction contracts and private projects receiving city financial assistance.

Intellectuals have recently intervened with scholarship meant to educate the unlearned in Palo Alto about the need to submit to the authority of the wise and venerable California state legislature. But don’t be fooled: just because people with higher degrees are churning out studies doesn’t mean these studies are reliable.

In April 2011, the union-oriented think tank Working Partnerships USA published an “Economic Policy Brief” entitled Economic, Fiscal and Social Impacts of Prevailing Wage in San Jose, California.

In response to that study, I had my own analysis published in August 2013:

Report Defending State-Mandated Construction Wage Rates (“Prevailing Wage”) As Beneficial to Taxpayers Not a Credible Tool For Decision Makers

In October 2012, the union-oriented academic journal Industrial Relations: A Journal of Economy and Society published an article entitled The Effect of Prevailing Wage Regulations on Contractor Bid Participation and Behavior: A Comparison of Palo Alto, California with Four Nearby Prevailing Wage Municipalities.

In response to that study, I had my own analysis published in April 2014:

University of Utah Study on Government-Mandated Construction Wage Rate (“Prevailing Wage”) Policies in Five California Cities: Not a Reliable Tool for Policymakers

I write about my analysis of the University of Utah study in an April 22, 2014 article in www.UnionWatch.orgJournal Article on Prevailing Wage Debunked, But Only Outside Academia

Sixteen Flaws in the Working Partnerships USA Argument for Project Labor Agreements on Community College District Construction in Santa Clara County

Effects of Project Labor Agreements on Local Business Utilizatio in Santa Clara County, California - Working Partnerships USATo attempt to formulate an economic and intellectual argument for controversial project labor agreements, a union-oriented policy organization based in San José called Working Partnerships USA released a report dated October 8, 2012 called Effect of Project Labor Agreements on Local Business Utilization in Santa Clara County, California.

How credible is the Working Partnerships USA report? The California Construction Compliance Group has published Sixteen Flaws in the October 2012 Working Partnerships USA Argument for Project Labor Agreements on Community College District Construction in Santa Clara County, my critical examination of that report.Sixteen Flaws in the October 2012 Working Partnerships USA Argument for Project Labor Agreements on Community College District Construction in Santa Clara County

While the Working Partnerships USA researchers apparently collected a great deal of data and the authors addressed some interesting questions, their report in its current form includes logical errors, false assumptions, and broad generalizations. This paper identifies at least 16 fundamental flaws in the report:

  1. The Group That Produced the Report Has an Overt Ideological Bias
  2. The Group That Funded This Report Uses the Report to Help Advance Its Own Political Interests
  3. The Report Inexplicably Excludes Construction Contracts Awarded by the Fourth Community College District Based in Santa Clara County
  4. The Report Does Not Offer Its Source Data for Evaluation
  5. The Report Does Not Accurately State What It Is Measuring
  6. The Report Lacks the “Economic” Analysis Expected of an Economic Policy Report
  7. The Report Compares Two Data Sets That Are Rather Narrow
  8. The Report Does Not Account for Variations in Sizes and Types of Contracts
  9. Time Periods Used for the Report Are Vague, Arbitrary, and Inconsistent
  10. Key Terms in the Report Are Inconsistent and Poorly Defined
  11. The Report Defines Local in an Absurd Way
  12. The Report Shows Favoritism for Certain Geographic Regions
  13. The Report Includes Distorted Estimates of Commute Distances
  14. The Report Fails to Recognize that Northern California Is a Regional Construction Market
  15. The Report Is Fattened with Non-Relevant and Unproven Statements
  16. The Report Makes Uncritical Assumptions About the Inherent Superiority of Contracts Awarded to Local Businesses

Debates over project labor agreements at California local governments tend to prioritize politics over logic. The Working Partnerships USA report – as currently written – attempts to justify a preconceived ideological concept with a logical, intellectual economic argument. In this exercise, it fails.

UPDATE: The Santa Clara and San Benito Building and Construction Trades Council had planned to use the study from the pro-union think tank Working Partnerships USA as an intellectual argument for the elected board of the West Valley-Mission Community College District to require contractors to sign a project labor agreement. At the December 11, 2012 meeting of the college board, the author of the Working Partnerships USA study expressed her distress and outrage about the unexpected and devastating analysis of flaws in her study. It remains to be seen if the board will mandate a project labor agreement on future construction.

See my three blog posts about this union lobbying effort:

Here Comes Yet ANOTHER Project Labor Agreement on a California Community College District: West Valley-Mission in Silicon Valley (November 12, 2012)

Elected Board of Community College in Silicon Valley Has December 11 Vote on Project Labor Agreement for Construction Funded by Money Borrowed Through Bond Sales (December 8, 2012)

Elected Board of Community College in Silicon Valley Has December 11 Vote on Project Labor Agreement for Construction Funded by Money Borrowed Through Bond Sales (December 13, 2012)

Board of Emeryville Unified School District Approves Union-Only Community Benefit Agreement for Idealistic Center for Community Life

Construction trade unions are getting a monopoly on building a multi-government collaborative San Francisco Bay Area project tangled up in trendy “progressive” concepts about how government should require private companies to create and operate their businesses.

As an item on the consent calendar of its “special meeting” agenda on December 17, 2012, the board of trustees of the Emeryville Unified School District approved a “Community Benefit Agreement” to be incorporated in a lease-leaseback contract signed by the prime contractor for the construction of the Emeryville Center for Community Life. This project is coordinated by the City of Emeryville and the Emeryville Unified School District and “touted as a model for the 21st century urban environment.”

Unions and other activist organizations routinely pressure local governments in urban areas of California to require developers to sign a “Community Benefit Agreement” as a condition of providing a permit or financial assistance for a project. Not surprisingly, these Community Benefit Agreements usually include a requirement for developers or contractors to sign a Project Labor Agreement with construction unions or adopt some other program (often a “First Source Hiring” program) that gives construction unions control of the work.

California has been on the cutting edge of local governments forcing developers to support union political agendas; in fact, four California regional think tanks backed by labor unions and other interests came together as the “California Partnership for Working Families” to develop a guidebook on using Community Benefit Agreements. These policy organizations are the East Bay Alliance for a Sustainable Economy (San Francisco Bay Area), Working Partnerships USA (San Jose), Los Angeles Alliance for a New Economy (aka LAANE), and the Center on Policy Initiatives (San Diego). The work of these groups to make “economic development subsidies more accountable and effective” generally goes unchallenged, as California is devoid of free market-oriented policy institutes that study state and local union interference with commerce.

The Community Benefit Agreement for the Emeryville Center for Community Life was developed by a consulting firm called A Squared Ventures, which worked with community “stakeholders” including the Residents United for a Livable Community (RULE), a group “concerned that the City has handed out tens of millions of public dollars to large developers without asking for many benefits for the community in return.” This same group has worked with the East Bay Alliance for a Sustainable Economy and UNITE-HERE Union Local No. 2850 to seek a Community Benefit Agreement for Phase II of the Bay Street project in Emeryville.

This Community Benefit Agreement for Emeryville’s Center for Community Life does not include a Project Labor Agreement, nor does the Community Benefit Agreement contain provisions that resemble provisions in a traditional pre-hire labor agreement. Instead, this Community Benefit Agreement sets employment goals for the project and simply requires the prime contractor and its subcontractors to obtain their workers through the union hiring hall dispatching process. For example, it requires contractors to “utilize name call procedures with the representative union hiring halls” to obtain workers classified as journeymen. Although it does not specifically indicate that contractors must request or obtain apprentices from union-affiliated Joint Apprenticeship Training Programs, this is apparently assumed in the additional provision that requires the prime contractor to “work with the construction trade unions to identify and implement local apprentice worker rotation opportunities” on a quarterly basis.

In addition to requiring contractors to obtain trade workers from unions, the Community Benefits Agreement requires the prime contractor to encourage Emeryville Unified School District students and their parents to attend recruitment events and meetings for a 16-week pre-apprenticeship program run by the Cypress Mandela Training Program, an organization with close ties to construction trade unions.

All of these requirements are intended to find jobs for people who live in certain zip codes in Emeryville, Berkeley, and Oakland, or within a wider “East Bay Green Corridor.”

But that’s not all. The prime contractor will be required to set up a “Learning Lab” on the job site to show students how the project achieves “environmental sustainability.” The Community Benefits Agreement requires contractors to pay the state-mandated prevailing wage to their trade workers (but that was required by state law anyway). There is a “living wage” requirement for workers not in the construction trades, based on the City of Emeryville’s living wage ordinance. The prime contractor will commit to using subcontractors and other construction-related contractors that are local small businesses.

California law allows school districts to choose “lease-leaseback” contractors using somewhat subjective “best value” criteria, rather than awarding the contract to the lowest responsible bidder. Surely the school district will chose its prime contractor based on its proposal to fulfill the requirement of the Community Benefits Agreement. A Project Labor Agreement is likely to be part of any proposals for the lease-leaseback contract.

Which developers and contractors will agree to meet these government-mandated conditions (or at least make it look like they’re going to meet these conditions)? I’m guessing a lot of the activists behind the Community Benefit Agreements expect these businesses to reduce their profit margin (and not increase the price) to fulfill these conditions for the good of the People, just like contractors allegedly have reduced their profit margins for the honor of working under the union Project Labor Agreement for the San Diego Unified School District. It will be interesting to see how the cost of the Emeryville Center of Community Life compares to other similar projects in the San Francisco Bay Area.

You are invited to go to the web site “dedicated to sharing information and encouraging an open conversation about the Emeryville Center of Community Life.” As it says, “From here you can participate in the emerging community dialog and gain access to current and background information that will help inform the exchange of ideas and allow for an authentic community engagement process.” You can share conversation and dialogue about fiscal responsibility, capitalism, free markets, profit, private property, etc.


Editorial Comments

1. I was surprised to see the provision in the Community Benefit Agreement requiring the prime contractor and the unions to rotate apprentices among various tasks, because union leaders like to claim that their apprenticeship programs provide comprehensive training for many tasks to their indentured apprentices, while non-union unilateral apprenticeship training programs exploit their apprentices by making them do the same task over and over again, in violation of their own program standards. Inclusion of this requirement suggests to me there is a problem with the scope of on-the-job training for union apprenticeship programs, at least in Alameda County.

2. Wouldn’t it be better to eliminate economic development subsidies altogether? Ask defeated California Assemblyman Chris Norby, author of Redevelopment: The Unknown Government, who was not rewarded for being alone in this position at the California state legislature. As government power has grown at the state and local levels in California, one of the easiest ways for corporations to make big money in this state is to avoid competing in the messy, insecure free market and instead feed off the compulsory tax payments of ordinary citizens and small businesses. In response, unions and other leftist groups pressure government officials to impose costly and burdensome requirements on these corporations, who in turn pass these costs along to consumers, and the cycle of crony capitalism continues at the expense of the fleeing middle class.

The Superintendent of the Emeryville Unified School District reported on April 10, 2012 that “because rent in the Bay Area is expensive and unemployment remains high, approximately 30 families in EUSD have been so impacted by the recession that they have opted to relocate to other cities.” It’s not a friendly place for ordinary families.

3. Which investors plan to buy the $95 million in bonds that 1,982 Emeryville voters authorized in November 2010 to be sold through Measure J in order to borrow money to pay for projects such as the Emeryville Center for Community Life? Interest and transaction fees for Measure J bond sales seem to be a loophole that allows the One Percent to make money off of this project. Or maybe the People’s Republic of China will buy the bonds.

Board Members of Silicon Valley’s West Valley-Mission Community College District Hear More Arguments For and Against Project Labor Agreements

According to reports from people at the scene, the usual cast of characters made the usual arguments in conjunction with the Project Labor Agreement staff report at the December 11, 2012 meeting of the board of trustees of the West Valley-Mission Community College District (in the South Bay/Silicon Valley region of the Bay Area).

First the board of trustees received a report from the district’s Vice Chancellor of Administrative Services about Project Labor Agreements, as the board had requested at its November 13 meeting. At that same November 13 meeting, the board had also directed district staff to develop a Project Labor Agreement/Project Stabilization Agreement for projects funded by bond sales authorized by Measure C. The board gave staff discretion to negotiate that agreement as it saw fit for the benefit of the district and to bring the agreement to the board for consideration by March 2013 or the soonest practicable date.

At the December 11 meeting, the Vice Chancellor of Administrative Services asked the board to define its policy objective and warned that a Project Labor Agreement could increase costs with unknown benefit to the district. He noted that construction funded from earlier bond sales (authorized by voters in 2004 as Measure H) was done successfully without a Project Labor Agreement. He also indicated his intent to negotiate a “fair” Project Labor Agreement and pick two similar projects to compare for a pilot project – bidding one with a Project Labor Agreement requirement and one without it.

Clearly the board is split on the issue, with board member Adrienne Grey pushing for the Project Labor Agreement. She complained that the Vice Chancellor’s report was inadequate and tried to rebut the 2011 study on the cost of Project Labor Agreements on California school construction from the National University System Institute for Policy Research in San Diego.

The usual crowd spoke in support of the Project Labor Agreement:

Two among the group of contractors at the meeting to oppose the Project Labor Agreement dared to speak openly against it. Also speaking against the Project Labor Agreement were Eric Christen, Executive Director of the Coalition for Fair Employment in Construction, and Nicole Goehring, Government Affairs Director of the Northern California Chapter of Associated Builders and Contractors. Ms. Goehring refuted the Working Partnerships USA study, reviewed the recent dismal bid results under the new Project Labor Agreement at Contra Costa Community College District, and reported the latest contractor labor law violations at the San Mateo Union High School District, where contractors are required to sign a Project Labor Agreement with unions.

News Coverage:

Education Desk: Project Labor Agreements for Measure C Construction? West Valley-Mission Board Hears ArgumentsThe Santa Clara Weekly – January 2-8, 2013

“I have received voluminous, voluminous material on this topic,” Board President Nick Heimlich noted drily. But that didn’t deter several dozen people who had come out specifically to address the board on the subject from making their statements.

Elected Board of Community College in Silicon Valley Has December 11 Vote on Project Labor Agreement for Construction Funded by Money Borrowed Through Bond Sales

The Northern California Chapter of Associated Builders and Contractors warns of an item scheduled on the December 11, 2012 meeting agenda of the West Valley-Mission Community College District board of trustees concerning a requirement for contractors to sign a Project Labor Agreement with unions as a condition of working on future construction. Unions are primarily targeting $350 million of work funded by the proceeds of bond sales authorized by voters in June 2012 through Measure C.

This $350 million (plus state matching grants) is borrowed money that taxpayers will pay back to bond investors, with interest.

Debates over the use of Project Labor Agreements at West Valley-Mission Community College District go back to at least 2005: Here Comes Yet Another Project Labor Agreement on a California Community College District.

To attempt to formulate an economic and intellectual argument for controversial Project Labor Agreements, a union-oriented policy organization based in San José called Working Partnerships USA released a report dated October 8, 2012 called Effect of Project Labor Agreements on Local Business Utilization in Santa Clara County, California.

How credible is the Working Partnerships USA report? The California Construction Compliance Group has just released my critical examination: Sixteen Flaws in the October 2012 Working Partnerships USA Argument for Project Labor Agreements on Community College District Construction in Santa Clara County.

While the researchers apparently collected a great deal of data and the authors addressed some interesting questions, the report in its current form includes logical errors, false assumptions, and broad generalizations. This paper identifies at least 16 fundamental flaws in the report:

  1. The group that produced the report has an overt ideological bias
  2. The group that funded this report uses the report to help advance its own political interests
  3. The report inexplicably excludes construction contracts awarded by the fourth Community College District based in Santa Clara County
  4. The report does not offer its source data for evaluation
  5. The report does not accurately state what it is measuring
  6. The report lacks the “economic” analysis expected of an Economic Policy Report
  7. The report compares two data sets that are rather narrow
  8. The report does not account for variations in sizes and types of contracts
  9. Time periods used for the report are vague, arbitrary, and inconsistent
  10. Key terms in the report are inconsistent and poorly defined
  11. The report defines local in an absurd way
  12. The report shows favoritism for certain geographic regions
  13. The report includes distorted estimates of commute distances
  14. The report fails to recognize that Northern California is a regional construction market
  15. The report is fattened with non-relevant and unproven statements
  16. The report makes uncritical assumptions about the inherent superiority of contracts awarded to local businesses