Unions Win Public-Contract Row

THE WALL STREET JOURNAL
April 14, 2010


The Obama administration is set to issue a rule Tuesday that will allow federal agencies to require that contractors on large-scale public construction projects agree to union representation for workers.

The executive order, which will become effective next month, is the latest in a series of moves by the administration that are favorable to unions, whose members could play a critical role in the upcoming midterm elections as Democrats try to hang on to seats in Congress.

The rule doesn't mandate that federal agencies require contractors to bargain with unions on all jobs, but it clears the path for government agencies to make such agreements a requirement for contractors on jobs costing $25 million or more.

Labor unions applauded the new rule but builders decried it.

The order encourages the use of project labor agreements in order to promote efficiency in federal procurement.

Building trade groups said pushing contractors to agree to such agreements with unions could drive up the costs of public construction by nearly 20% and discriminate against what they said are more than the 85% of the U.S. construction workforce members who choose not to join a union.

"Anti-competitive project labor agreements are special-interest kickback schemes that end open, fair and competitive bidding on public projects," said Jim Elmer, National Chairman of the Associated Builders and Contractors and president of James W. Elmer Construction Co. in Spokane, Wash. "We will exhaust every opportunity to challenge this policy, which is effectively a federal government endorsement of union set-asides."

Terry O'Sullivan, president of the Laborers International Union of North America, said the rule "is progress in encouraging the use of family-supporting project labor agreements, which help make sure that taxpayers get the best and most for their money and which help support local communities and workers."

Policies designed to promote union representation on federal construction projects were last in effect during the Clinton administration. President George W. Bush in 2001 issued an executive order prohibiting federal agencies from requiring such agreements.

Jared Bernstein, a White House economist, said in a blog post Monday that 21 of 25 major Department of Energy construction projects were covered by project labor agreements as of last summer. "The use of a Project Labor Agreement can provide structure and stability to large construction projects," Mr. Bernstein wrote. Such agreements can help ensure that workplace safety and health rules and other federal regulations are followed, he wrote.

Under the agreements, unions will get the ability to bargain up-front over wages, hours and work rules. In return, they must agree not to strike or engage in similar work disruptions, according to the rule.

This is the latest win for unions in their tug-of-war with employers. Unions recently welcomed Mr. Obama's recess appointment of former union lawyer Craig Becker to the National Labor Relations Board after the nomination failed to win enough Senate votes. But unions have expressed frustration that their most important legislative priority, a bill that would ease unionization, is stalled in Congress. Unions are also looking to the executive branch to act on its own, independently of Congress, on other labor issues.

In his blog post, Mr. Bernstein said federal encouragement of these agreements are widely used on state and local levels and in private construction projects. In its rule, the administration notes that the Supreme Court has upheld the use of such agreements in the past.