A fair approach to construction influx
WITH Shire Pharmaceutical's recent announcement of a $394 million expansion in Lexington, growing consensus around a $500 million bond authorization for the Commonwealth's life sciences industry, and the prospect of three new resort casinos, Massachusetts is likely to see a lot of new construction in the coming months and years. That's good news - unless the vast majority of the Commonwealth's construction industry is excluded from participating.
Construction unions will no doubt lobby to put project labor agreements in place for the new projects. Under such an agreement, owners agree to use exclusively union labor in return for the unions' pledge not to strike.
New data from Unionstats.com highlights one of the shortcomings of project labor agreements. It shows that the unionized portion of the Massachusetts construction industry fell from 20 percent in 2006 to around 16 percent in 2007. Their finding corroborates the one arrived at by the Patrick administration's Department of Labor and Workforce Development. According to an official there, "the percentage of construction industry union members. . . might fall in the 15-17 percent range."
The dearth of union construction is at the heart of why the labor agreements are such a bad idea. It's important for the Commonwealth to maximize return on investment when it spends taxpayer dollars to spur economic development. More competition means lower prices and better quality. Excluding over five-sixths of the industry simply because of labor affiliation has exactly the opposite effect.
In recent years, the merits of competition have been demonstrated numerous times in Massachusetts. In 2006, Fall River announced it would build four new schools using a project labor agreement. But after two rounds of bids, prices were still 25-75 percent over budget. When the city rebid the project without an agreement, costs came down 15 percent and the number of bidders nearly doubled.
When Worcester and Lowell each needed new parking garages, Worcester went the project-labor-agreement route and Lowell decided to open competition to all qualified bidders. For the same $21.5 million, Worcester got a 500-space parking garage and Lowell will get one with 900 parking spaces.
A 2006 Beacon Hill Institute study confirmed what common sense tells us. Its review of school construction in Massachusetts found that project labor agreements raised the price tag by at least 12 percent, a differential that can only rise, given that the reduction in union construction workers will yield fewer bids on projects using such agreements.
And while unions will try to say that the savings come on the backs of workers, all the companies working on those school projects - both union and open shop - were subject to the prevailing wage laws that govern public construction in the Commonwealth.
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The unions claim the agreements promote higher-quality construction. But the shoddy work that plagues the Big Dig - which was built using a project labor agreement - belie that claim.
Although open shops represent the vast majority of the state construction industry, open-shop firms make no effort to exclude the union firms and workers with whom they routinely work side-by-side. When a project is bid without a project labor agreement, all contractors - union and nonunion - can participate.
But unions take a different approach. Under the project labor agreements they advocate, the open shop workers that make up nearly 85 percent of the industry are locked out.
New investments aimed at boosting the state economy will result in a surge of new construction. Allowing all qualified bidders to compete for the new jobs brings important benefits for the Commonwealth. Companies like Shire will get better quality at a lower price, and more of our construction workforce will be on the job, even as the tide of recession rolls across Massachusetts.
Greg Beeman is president of Associated Builders and Contractors of Massachusetts.
