How PLAs Benefit LB's Economy

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How project labor agreements benefit Long Beach's economy

January 21, 2010

By Gary Hytrek, Press Telegram

An irresistible and recurring theme in the conservative repertoire is condemning unions and regulation for any economic malaise. California has become an ungovernable "unionocracy," according to George Will (Comment, Jan. 10), due to "liberalism's mania for micromanaging life." True to form, last week's editorial in the Press-Telegram asserted that project labor agreements are emblematic of this "micromanaging" and are simply mechanisms for unions to promote their own interests and for certain politicians to line up campaign financing.

Two questions are raised by these arguments. First, what precisely is a PLA? Second, is economic growth hindered by regulation and unionization?

California has a long history of utilizing PLAs as a tool to guarantee local investment in construction projects, beginning in 1938 with the construction of the Shasta Dam. Project labor agreements are collective bargaining agreements used in both public and private projects. That means basic terms and conditions for labor-including wages, health insurance, and workers' compensation - are established in advance. Unions do not lead or dominate in drafting the PLA. And PLAs neither restrict bidding solely to union contractors, nor require that workers be union employees.

Furthermore, PLAs raise wage standards for workers and their families, reduce cost overruns, and contribute to higher quality projects. They contribute to labor peace by obliging workers to refrain from costly strikes. Employers gain by having access to a highly trained workforce. Taxpayers benefit by reduced pressure on public spending. The building trades unions, for instance, have portable health care for their members, paid for by an employer-funded trust fund, which can result in fewer construction workers seeking public assistance. Safety training, generally mandated in all PLAs, reduces workers' compensation claims by 12 percent and, for workers under 25 by 42 percent.

What about project costs? PLAs require contractors to pay higher wages, "which is one of the reasons a PLA can drive up costs," according to the Press-Telegram. Yet there is no solid data from any study to prove PLAs cost more, according to the Boston Globe. As the Globe pointed out, the increased-cost claim is "based on a 2003 Beacon Hill Institute study that . . . had to be completely revised in the wake of a stinging critique challenging the accuracy of the data, methodology, and conclusions."

In contrast, research by the Public Policy Institute of California show that higher wages reduce poverty and generate more full-time employment. And higher wages, according to studies by the Brookings Institution, lead to lower employee turnover and higher worker morale that in turn improves productivity. There are also positive ripple effects of higher wages, meaning that whole communities benefit when wages rise. According to the non-partisan Los Angeles Economic Roundtable, raising the basic pay to $12 an hour for workers in the major downtown Long Beach hotels alone would generate more than $7.5 million in new household spending and over 80 new local jobs each year in Long Beach.

Finally, is unionization incompatible with competition and economic growth? The evidence is clear: Many European social democracies have considerably higher rates of unionization than the United States, yet are also considered by Forbes to be among the most competitive countries in the world. In fact, according to data from the World Bank, these countries have growth rates higher than the U.S. while enjoying union density rates from 20 percent of the workforce in the Netherlands to 71 percent in Sweden, compared to a paltry 11 percent in the United States.

Here's a novel thought: Let's stop making unions and regulation scapegoats and have a serious discussion about how to solve the economic problems facing Long Beach and California.

Gary Hytrek is associate professor of sociology, California State University, Long Beach. He is the author of "From Ford to Gates: How Globalization is Transforming Patterns of Stratification in the United States."

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