Researchers at the non-partisan National University System Institute for Policy Research (NUSIPR) conducted a study of 551 school construction projects that cost taxpayers a combined $10.7 billion to determine what effect union-sponsored Project Labor Agreements (PLAs) may have on construction costs. The Associated Builders and Contractors of California, Cooperation Committee provided approximately 20 percent of the funding, which researchers say was used to increase the breadth of the study. As a result, the study used a far broader sample size than has previously been utilized in PLA research. A 2005 study of projects in Massachusetts, Rhode Island, and Connecticut examined 93 school projects; a 2010 New Jersey Department of Labor study reviewed 75.
“This study, the largest and most comprehensive to date, provides new insight into the fiscal impact of PLAs. Our statistical models indicate that that schools built under PLAs are likely to cost more,” said NUSIPR Senior Policy Analyst and the report’s co-author Vince Vasquez. “These findings are important for California. Over the last decade, state voters have passed more than $64 billion of school construction bonds to build thousands of new classrooms and modernize hundreds of existing facilities. California’s rapid pace of school construction activity is now matched by only a handful of other states. It is our hope that our findings inform public debate when PLAs are advanced as a costless policy tool. Our research suggests they are not. Should districts choose to adopt them, school construction costs are likely to rise significantly.”
From their data, the National University study discovered that the cost of school construction projects operating with PLAs was 13 to 15 percent higher ($28.90 to $32.49 more per square foot) than those without PLAs. For the 65 schools included in this study that were constructed with PLAs, the total cost of $1.7 billion includes as much as $200 million in unnecessary spending. This is the fourth study since 2003 that has found that school construction projects are more expensive when executed under a project labor agreement.
Knowing that the debate surrounding PLAs is highly charged, the study sponsors had an independent third party organization review the statistical methodology and conclusions. The Keston Institute for Public Finance and Infrastructure Policy at the University of Southern California performed the review and concluded that the determination was sound. t should also be noted that they do not have a position, for or against, PLAs.
“Our review determined that the analysis of the school construction data employed proven and well-accepted statistical techniques,” wrote Richard G. Little, Director of the Institute, in a letter published with the study. “In particular, we were impressed by the efforts of the research team to probe deeply into potentially confounding relationships among the variables.”
Despite the USC findings PLA supporters were quick to attack the study.
Mr. Dale Belman, who conducted the 2003 study in Massachusetts, sent a letter to the National University authors questioning their methods and conclusions. “I have read your study,” wrote Belman. “I find that your study’s conclusion is not supported by your research; that you have overlooked important factors that affect costs, and that you have misinterpreted and drawn erroneous conclusions from my work.”
However, Vasquez said that Mr. Belman was looking for causal relationships, when the study examined associated relationships.
“The scope of our research was one of association and not causation,” said Vasquez. In other words, the claim that the study didn’t prove that PLAs cause costs increases was irrelevant, because that was never the goal of the study,” said Vasquez. “That is the job of proponents and opponents of PLAs to argue.”
Indeed representatives from the building trades union went on the attack immediately, claiming that the study “cherry picked” districts for political reasons. They also alleged that the study didn’t account for differences in prevailing wage rates, building codes and weather delays.
“It looks like the anti-worker extremists at ABC have gotten too devious and underhanded for their own good,” wrote State Building & Construction Trades Council of California President Robert L. Bagelnorth. “Recently, they paid one of those right-wing propaganda outfits with a deceptively neutral name to produce a study that would show the world that Project Labor Agreements increase the cost of school construction. The study had purported to compare the costs of schools built with PLAs to those built without them, and of course, the authors did what they were paid to do: conclude that schools built with PLAs cost more.”
Non-union contractor representatives dismissed the allegations.
“The union’s sensational accusations underscore the power of the study’s findings,” Associated Builders and Contractors of California, Cooperation Committee Executive Director Kevin D. Korenthal said. “In each instance, however, they’re flat wrong. The prevailing wage and building codes across California are overwhelmingly consistent, while the sample of schools studied is the largest of any study ever conducted on the issue. Public officials will see through the rhetoric and acknowledge the fact that Project Labor Agreements waste millions. At a time when schools are being cut to the bone, union-only agreements make things worse.”
Proponents of PLAs often argue that they deliver lower costs by guaranteeing no work stoppages, by providing a framework for settling labor disputes without work stoppages, providing benefits and fixed wages for workers, and enumerating hiring preferences.
PLA opponents counter that the provisions of a standard PLA are untenable for non-union contractors, and force them to pass on projects that are attached to PLAs. All the benefits of a PLA, opponents suggest, can be achieved through a well-crafted open bid process and subsequent development agreement that establishes wage rates, local hiring preferences and no-strike provisions.