Union Shop, Merit Shop, and America’s Way Forward

If you’ve read this month’s feature, our Code & Regulation Roundup, you know that a lot of the federal infrastructure money coming down the pipeline (from the Inflation Reduction Act, the CHIPS and Science Act and the Infrastructure Investment and Jobs Act) will require Project Labor Agreements (PLAs).

PLAs are collective bargaining agreements that are—as far as I’ve been able to research—unique to the construction industry. Simply put, they are agreements between project owners/employers and labor unions that cover all contractors and sub-contractors (which includes the MEP contractors) on a job. The employer gets no-strike, no-lockout clauses and arbitration procedures in the case of conflict. The union gets a guaranteed wage and benefits package, and (typically) gets to be the sole supplier of skilled labor for the job through their union hall.

Meanwhile, open shops or merit shops—where workers might or might not be union members—usually don’t get a chance to bid on those same government-funded jobs, a practice which merit-shop association Associated Builders and Contractors has called discriminatory, unfair, anti-competitive, wasteful and a good deal else besides.

Two important things to note.

First, workers covered under PLAs do not have to join unions to work on construction sites or to get referred to construction jobs via hiring halls. Also, it is illegal for unions to discriminate against non-union workers when making hiring hall referrals.

Second, PLAs only apply to large-scale construction projects where the total cost to the federal government is estimated to be $35 million or more.

Given those two points, this would seem to be a concern for management, and not for the rank-and-file. However, seeing as how this is federal money and we’re all of us taxpayers around here, the question remains: is this really the best use of our money? Do PLAs result in better outcomes and/or lower prices for the work completed?

The answer (surprise!) depends on who you ask. ABC notes that only 10% of workers in the United States belong to a union, which means PLAs effectively remove 90% of the workforce from the bidding process. According to their research, excluding the most effective, efficient and local businesses can add from 12% to 20% to the cost of projects.

The Department of Labor’s PLAs resource guide states that, to the contrary, PLAs save money by streamlining administration, delivering highly skilled workers that perform higher quality work, and by heading off labor disagreements before they can begin, preventing costly delays.

It seems evident (to me, anyway) that while the Biden Administration can make a strong fiscal case for PLAs, it is also clearly throwing its weight behind unions for political reasons. White, blue-collar men without college degrees have been leaving the Democratic party for decades. Union workers fit that demographic to a T, and shoring up support with unions is seen as a way to win those voters back.

But it’s unclear if that effort is bearing any fruit. On September 16th the International Brotherhood of Teamsters—still perhaps the most powerful union in the US—issued a release saying, “The union’s extensive member polling showed no majority support for Vice President Harris and no universal support among the membership for President Trump,” and as a result have refused to endorse either candidate.

What’s the right way forward? Right now, there are a number of lawsuits involving PLAs in progress, so the final say will probably be with the courts. Personally, I’m for whatever gets more money in the hands of the people who are actually doing the work. I just can't see if PLAs are the best way to make that happen.