The Legislative Attack on American Wages and Labor Standards

June 8, 2017 - CLDC

One of Gov. Rauner's first executive actions in 2015 was to overturn many of Gov. Quinn's executive orders protecting workers and wage standards including one that encouraged state agencies to use PLAs (project labor agreements). Gov. Rauner has also repeatedly advocated for state policy that would ban PLAs, repeal the Prevailing Wage Act, and has taken illegal actions through the IL Department of Labor to dismantle prevailing wage by failing to post updated wage rates and refusing to investigate claims. The current budget impasse is a result of his refusal to give up on these ideas and the Democratically controlled legislature's staunch refusal to bargain away workers' rights and protections.

Arguably one of the best pieces written to date, this 2013 report from the Economic Policy Institute provides important context for Governor Rauner's agenda. The so-called "reforms" he is demanding in exchange for signing a state budget are part of a national legislative agenda backed by wealthy corporate interests to weaken labor standards across the board and fundamentally shift the balance of power between employers and workers. This excerpt from the 2013 report is a case study of why corporations and billionaires like Bruce Rauner are so determined to eliminate Project Labor Agreements (PLAs) and repeal prevailing wage laws.

The Legislative Attack on American Wages and Labor Standards, 2011–2012
Report • By Gordon Lafer • October 31, 2013
(View the entire report here:

Case study: An offensive aimed at both union and non-union private-sector workers—Lowering labor standards in the construction industry

In addition to the “right to work” assaults on private-sector unions as a whole, the past two years have brought a series of attacks aimed specifically at lowering labor standards in the construction industry. Although these are often framed as attacks against unionized workers, the actual legislative proposals aim at non-union as well as union workers.

Construction plays a critical role in the U.S. labor market as one of the most important sources of skilled, decently paying jobs that do not require a college degree and that cannot be shipped abroad. In addition, construction is projected to be one of the fastest-growing industries during the current decade, second only to health care.90 Efforts to lower wages, benefits, and working conditions in this industry are likely to have far-ranging impacts on working- and middle-class communities across the country where—particularly as manufacturing jobs have disappeared—construction is an increasingly critical source of work for those looking to support their families at a minimally decent living standard.

The organizations representing anti-union construction owners and investors—including the Chamber of Commerce, Business Roundtable, and Associated Builders and Contractors—have sought for decades to lower labor standards and diminish workers’ bargaining power in the industry.91 The elections of 2010 and subsequent state fiscal crises provided a political opening for advancing these longstanding goals. For the past two years, these organizations have focused on restricting or prohibiting both project labor agreements and prevailing wage laws.

Project labor agreements
A project labor agreement (PLA) is an agreement established at the start of large, complex construction projects involving multiple types of contractors that sets the terms of employment for all contractors’ employees. PLAs were first used on the big public works projects of the 1930s. At Grand Coulee and Hoover dams, project managers sought to avoid a potentially endless series of labor negotiations as one contract after another came up for renewal, causing expensive delays and generating a steady threat of strikes. The elegant solution to the problem was to put all workers under a single, umbrella contract that was tailor-made for that specific project.92 In recent years, government agencies have also negotiated cost-saving concessions, such as no-strike clauses or reduced premium pay, as part of the terms of a PLA.

Any contractor—union or non-union—can work on projects under a typical PLA, as long as it abides by the established terms of employment. For example, 30 percent of the contractors on Boston’s Central Artery/Tunnel project—the “Big Dig”—were non-union.93 Generally, workers are hired for these projects through a union hiring hall, but both union and non-union workers may be hired through the hall, and non-union contractors are often specifically authorized to bring their core employees with them onto a PLA project. Nevertheless, because they perceive that PLAs benefit unions, non-union contractors generally want the law to prohibit PLAs.

PLAs ensure a steady flow of highly trained construction labor, and agencies typically look to them as a mechanism for achieving cost savings on complex projects. New York State’s School Construction Authority, for instance, was estimated to have saved $44 million over a five-year period through the use of PLAs.94

PLAs also often serve as a mechanism for boosting local hiring and community development. Over the past two decades, more than 100 PLAs have been implemented that include requirements for local hiring, establishment of local apprenticeship programs, and preferential job access for women and minorities.95 One such example is the construction of Nationals Park in Washington, D.C., which was built under a PLA, was completed in record time, and achieved the distinction of being the first professional sports facility certified as “green.” Roughly 600 District of Columbia residents worked on the ballpark project, and 91 percent of all new apprentices brought onto the job were District residents. Thus, the PLA enabled the District to leverage its construction dollars into nurturing the city’s skilled workforce of the future. Further, the Nationals Park PLA fostered a commitment of over $200 million in contracts to local, minority-owned firms. None of this would have occurred without a PLA.

PLAs are not limited to the public sector; a significant number of private corporations—including Boeing, Disney, General Motors, Inland Steel, ARCO, Pfizer, and Yale University—have chosen to use PLAs because they see them guaranteeing high quality craftsmanship and timely, safe, and cost-efficient construction.96 Toyota has used a PLA on every plant it has constructed in the United States.97

Despite these advantages, 10 states passed laws outlawing or restricting the use of project labor agreements in 2011–2012.98 PLAs have never been required by statute; rather, they are an available option that state agencies may use if desired.99 Each of the bills passed, then, does not overturn a government mandate but, on the contrary, imposes one by prohibiting public agencies from using PLAs even if those responsible for the project think a PLA is warranted. Furthermore, the statutes adopted in the past two years generally prohibit local governments—towns, counties, school districts, and other local entities—as well as states from using PLAs. For example, Arizona’s SB 1403—passed with strong support from the state chapter of the Associated General Contractors—prohibits any public entity from using PLAs.100 Many of these laws mandate harsh penalties for violations—public agencies in Idaho, for instance, face fines of up to $100,000 for using PLAs. Thus, legislators have stripped from both state and local officials the right to use one tool of construction management that private corporations as well as public agencies have historically found to increase efficiency.

Hypocritically, the ALEC-affiliated Associated Builders and Contractors attacks laws that enable PLAs, such as one in California that prohibits local government bans on PLAs, because they “interfere with local control” even as ALEC and ABC promote bans on PLAs that constitute much greater interference with the rights of local governments. The real issue is hostility to collective bargaining as a route to higher wages.

The attack on prevailing wage laws
Prevailing wage laws were first adopted by state legislatures in the late 19th and early 20th centuries as a means of guaranteeing that publicly funded construction does not undermine wage standards in local communities.101Thirty-two states plus the District of Columbia now uphold some form of prevailing wage law.102

Such laws require that states survey construction employers to determine the wages and benefits provided for various skilled occupations. The typical rate for each occupation is deemed the “prevailing” wage for that local area. Publicly funded construction projects are then required to pay these wage levels to all workers employed on the project.103

Prevailing wage laws in no way require that work be performed by union members or under a union contract. Rather, by establishing a level playing field regarding employee compensation, such laws encourage a constructive competition—based on high skills, effective management, and business acumen—rather than a destructive competition based on cutting wages to the lowest level possible.

Perhaps unsurprisingly, non-union contractors whose primary competitive advantage lies in low wage rates have long advocated the repeal of prevailing wage laws. In 2011–2012, five states passed laws that significantly scaled back prevailing wage standards, ranging from complete repeal to modifying the extent of the law’s coverage or the method of calculating mandated wage rates.104 In Louisiana, Arizona, Iowa, and Idaho—all states that have no prevailing wage laws—legislators adopted statutes proactively prohibiting cities, counties, or school districts within the states from adopting their own local wage standards.105

Even where prevailing wage laws were modified rather than repealed, this action appears to have been taken as a first step toward the ultimate goal of repeal. ALEC’s explicit goal is to abolish all prevailing wage laws in all jurisdictions, and it promotes model legislation to that end.106 Where that is not politically possible, however, the organization embraces half-measures as steps along the way toward the end goal.107

For example, Wisconsin retained its prevailing wage law, but legislators in 2011 raised the threshold at which wage requirements apply, insisted that private projects built with public funding are not required to pay prevailing wages, and prohibited localities from enacting their own wage standards—including retroactively striking down a Milwaukee ordinance that established local prevailing wages and gave local contractors preference in bidding on large projects.108 The broad pattern of legislation across the states suggests that such half-measures do not constitute true alternative policy solutions, but merely rest stops and halfway houses on the road to a future where construction workers will bid against each other, with no wage floor and no public standards defining fair pay.

Economic impact of repealing prevailing wage laws
It is critical to note that prevailing wage laws are not strictly a union issue. They benefit both union and non-union employees as well as their broader communities, as affected workers’ increased purchasing power leads to expanded consumer demand in the local economy.109

There is no central data source that measures the share of state and local construction performed by union and non-union workers. Data from the Bureau of Labor Statistics show that, in the states with prevailing wage laws, unions represent an average of 18.8 percent of the construction workforce. This estimate is likely low because it includes administrative and managerial employees employed by firms in this industry. The union share of actual construction workers is thus likely closer to 25 percent. As a conservative estimate, one might project that unionization on public works is double the rate in the industry as a whole, which would mean that 50 percent of publicly funded construction work in these states is done by non-union workers.110

Collectively, the states with prevailing wage laws include a total of just over 800,000 unionized construction workers.111 If prevailing wage work were equally spread out across this workforce, along with an equal number of non-union workers, this would mean that state prevailing wage laws affect over 1.6 million construction workers across the country—half union, half non-union. Based on estimates from the conservative Mackinac Center, whose report serves as one of corporate advocates’ primary measures of prevailing wage impacts, the effect of these state laws would be to increase annual earnings by over $2,800 for each of those 1.6 million workers.112 Thus, if the Mackinac Center’s methodology is accurate, those who call for repeal of prevailing wage laws are advocating a wage cut amounting to nearly $3,000 per year for hundreds of thousands of non-union as well as union construction workers, spread all across the country in communities that look to this industry as a key source of decently paying jobs.

If attacking prevailing wage laws is not simply an anti-union strategy, what explains the vehemence of corporate lobbies’ activism on this issue? The campaign to dismantle prevailing wages doubtless reflects non-union contractors’ desire to drive higher-wage competitors out of business. In addition, prevailing wages threaten to raise the economic expectations of the non-union workforce. One conservative think tank explains that “many contractors who are paying market wages to their employees are reluctant to bid on public works construction projects. It is difficult to explain to an employee why he or she is making more money one day working on a public works project than the next day, doing exactly the same work on a private job.”113 The difficulty is doubtless increased by employees’ realization that union workers get paid the higher wage every day of the year, while they—as soon as the public works project is over—will go back to earning much less. By eliminating prevailing wage laws, non-union employers may hope to muffle their own employees’ demand for improved treatment.

In addition, the attacks on PLAs and prevailing wage laws must be seen in the context of broader efforts to dismantle labor market protections for both union and non-union employees in the construction industry—beginning with eliminating state licensing requirements for electricians and plumbers. Licensing requirements limit the supply of skilled labor and enable licensed tradespeople to command higher wages. Thus, ALEC promotes the “Professional Licensure and Certification Reform Act,” which bans occupational licenses that “protect a particular interest group from economic competition.”114 The organization—whose membership includes the Associated Builders and Contractors—likewise argues that occupational licensing violates “the fundamental civil right… [of] individuals to pursue a chosen business or profession”; ALEC’s “Economic Civil Rights Act” prohibits any and all occupational licenses unless they are “demonstrably necessary … to legitimate public health, safety, or welfare objectives.”115

Finally, the Associated Builders and Contractors and Associated General Contractors are both members of the Chamber of Commerce–sponsored “Essential Worker Immigration Coalition” (EWIC), which advocates for the right of construction contractors to import large numbers of temporary “guest workers” to serve as a low-wage construction workforce. In testimony before Congress, the EWIC specifically identified construction as one of the key industries in which, contractors claim, they cannot find sufficient domestic labor.116 The danger of this proposal is not the presence of immigrant workers in the construction industry, but that immigrants would be forced to work under conditions of intimidation and without the labor rights afforded citizens. The proposal favored by EWIC would import temporary workers with a visa not to the United States but to a specific employer—who could deport employees at will. Under such conditions, wages in the construction industry would be driven down by locking low-wage immigrants into a legal status where they will be afraid to ever complain, write a letter to the editor, speak to a politician, organize a protest, or join a union. They are thus more likely to accept wages and working conditions that citizens would not tolerate, and in this way will serve to depress labor standards across the industry. Therefore, as with the attacks on public-sector employee unions, it appears that the assaults on union standards in the construction industry are not part of an agenda to improve life for non-union workers, but are rather the leading edge of an agenda that, if fully realized, would drive down labor standards for millions of non-union employees across this industry.