Project labor agreements on federal projects are not a good idea

While not as prominent as the push for union card check elections, anti-competitive Project Labor Agreements are a significant part of President Obama's pro-labor agenda. Last February the President signed an executive order encouraging the use of union-only projects on efforts valued over $25 million. The problem is that PLAs are costly and counterproductive.

A new BHI report, Project Labor Agreements on Federal Construction Projects: A Costly Solution in Search of a Problem reviews the rationale for PLAs on federal projects and finds it wanting.

BOSTON, MA – A new study released today by the Beacon Hill Institute (BHI) finds that Project Labor Agreements (PLAs), which will be permitted under an executive order from President Obama, will significantly increase construction costs on federal projects while doing nothing to protect the interests of federal taxpayers. The executive order reverses a prohibition on PLAs that was in effect during the Bush Administration.

The purpose of the BHI study, which is entitled Project Labor Agreements on Federal Construction Projects: A Costly Solution in Search of a Problem, was to determine whether the reversal of this prohibition is in the interest of federal taxpayers.

PLAs are agreements with contractors that establish the rules to be followed by firms that bid on construction projects. PLAs typically require a contractor to hire workers though union hiring halls, require non-union workers to pay dues for the length of the project and force contractors to abide by union rules on pensions, work conditions and dispute resolution.

In February, President Obama issued Executive Order 13502, which allows executive agencies to require contractors to use PLAs on federal construction projects costing $25 million or more. The federal government’s deadline for accepting comments on the order is September 23, 2009.The purpose of a PLA is to assure labor “peace” during construction projects.

But a review by BHI of federal construction projects during the Bush Administration found no instances of labor disputes that resulted in significant project delays or increased costs.“Our examination of the record produces no evidence of any systematic connection between the absence of a PLA, on the one hand, and cost overruns or delays caused by labor disputes, on the other,” said David G. Tuerck, one of the authors of the study and Executive Director of the Beacon Hill Institute. Therefore, the justifications offered by the Obama Administration for reinstating PLAs are not supported by the evidence.

The full report can be obtained here.

A veritable list for economics studentts

Something for everyone on this very useful list of the 100 Best Blogs for Economics Students.

My favorite is Marginal Revolution.

If it walks like a duck...

CHRISTIAN SCIENCE MONITOR:

'You get into a lot of semantics here,” says Eric Toder, an expert at the nonpartisan Tax Policy Center in Washington. But he says if money is owed to the IRS, “I supposed you would call that a tax."

Mass. foreclosures on the decline - Boston Business Journal:

On the mend?

BBJ: "Mass. foreclosures on the decline."

That's a little more than spare change

The president's cap-and-trade idea will hurt working families

The Obama administration has privately concluded that a cap and trade law would cost American taxpayers up to $200 billion a year, the equivalent of hiking personal income taxes by about 15 percent.

A previously unreleased analysis prepared by the U.S. Department of Treasury says the total in new taxes would be between $100 billion to $200 billion a year. At the upper end of the administration's estimate, the cost per American household would be an extra $1,761 a year.

A second memorandum, which was prepared for Obama's transition team after the November election, says this about climate change policies: "Economic costs will likely be on the order of 1 percent of GDP, making them equal in scale to all existing environmental regulation."

Why Richard Epstein is a genius

Separating the heat from the light, Richard Epstein praises his University of Chicago colleague and Obama appointee Cass Sunstein before intellectually burying him.

"Sunstein is by any fair account the most prominent, versatile and influential left-of-center legal academic in the U.S. His nomination has been supported, sensibly enough, by The Wall Street Journal, which also sees him correctly as one of the more conservative players in the Obama administration. But apparently, its wise counsel did not slow down key Republican senators who held up his nomination on at least three separate occasions, in part because of their worries that his view on hunting and animal care make him an extremist on animal rights.

Regrettably, they seem more influenced by the caricature of his position on the American Conservative Union Web site and Glenn Beck's brutal hosing this past July that also denounced Sunstein for his passionate support of Franklin D. Roosevelt's Second Bill of Rights. This sad tale has been well recounted by David Weigel in the Washington Independent. Therefore, it is perhaps no surprise that Sunstein's was confirmed was by the embarrassingly narrow vote of 57-to-40.

These unseemly outbursts of ignorant incivility have ripped at our country's frayed political fabric. One oft-neglected cost of these hysterical tactics is that they discredit ordinary academics, like myself, who strongly disagree with the views that Sunstein has so consistently and elegantly defended. Quite simply, it is to be drowned out by the childish arguments of my supposed allies. The correct political stance is to give President Obama wide latitude in choosing his subordinates, and then to dispute them on the key substantive issues.not"

But of course then there are the problems with Sunstein's long-nourished fantasy, a Second Bill of Rights, rounding out FDR's expansive use of government to drown out the fear from wants far and wide.

... it is Roosevelt's treacherous transformation of human aspirations into enforceable legal rights. There are two enormous gaps in that chain of reasoning. First, it does not specify the persons who must bear the correlative duties to this expanded set of rights. Nor can we duck this problem by imposing the obligations on the state or government, which consists, of course, of all those original right bearers in a different capacity.

So in the end we can't maintain the universality of Roosevelt's claim: We have to distinguish between those of us who count as "the people" and everyone else, those who don't really count at all. If we all have the rights to decent jobs, then workers have the right to form unions, regardless of the consequences to employers, shareholders and the public at large. If farmers have the right to a decent living, the rest of us have to suffer Roosevelt's deadly double of agricultural subsidies and state-sponsored crop cartels.

A second difficulty is as acute as the first. Who fills in the content of the right by telling us what counts as a decent price or a remunerative wage? In a world of major uncertainty, these questions have no fixed answer. But in a political setting, we devised schemes then to assure living wages to autoworkers, only to see Roosevelt's rickety structure comes crashing down on our heads. But do we learn humility from failure? Of course not, if we think that now is the time to implement a regime of positive rights to health care--oops, to health care insurance--funded by punitive and self-destructive taxes on the rich.

In short, there is no way to translate Roosevelt's--or Sunstein's vision--into sustainable social practices. But that's just what the First Bill of Rights can do with its bloodless protection of private property and freedom of contract, speech and religion. Now we can specify the correlative duties with precision: keep off the property of others, and don't meddle in their agreements. Follow these rules and you can stimulate investment and reward hard labor. By keeping our aspirations modest, we can keep our achievements high--which is why we don't want to undermine the first Bill of Rights by adopting the second.

When will people learn that there are only negative rights, not positive rights and the U.S. Constitution derives its power from the former, not the latter?

Association Health Plans hold the answer for small business

Is it time for Association Health Plans? GLOBE: Relief in state health plan sought

President Obama’s vision for overhauling the nation’s health care looks remarkably like the landmark plan Massachusetts launched three years ago, but in one striking difference he would exempt many small businesses from having to contribute to workers’ insurance coverage.

For those small businesses that do provide insurance, Obama’s plan would offer tax credits to offset costs and would create an exchange where employers could buy coverage at competitive prices - two key things Massachusetts has not done.

The differences underscore a sore spot for many small business owners in Massachusetts, who have been lobbying for relief under the state’s law, saying insurance has become unaffordable.

Obama said in his speech to the nation Wednesday night that his overhaul would exempt 95 percent of small businesses - those with fewer than 50 workers - from having to pay for workers’ health insurance.

But in Massachusetts’ overhaul, businesses with the equivalent of 11 or more full-time workers must offer coverage or pay a penalty - a requirement that has chafed at many small business owners who say they lack the buying clout of big businesses to bargain for cheaper insurance rates. Small business owners say they have had to shoulder double digit annual increases in their premiums in recent years, typically higher than the 7 percent to 9 percent increases larger businesses have faced.

A 1996 state law prohibits small businesses from negotiating as a group.

Yesterday, Governor Deval Patrick said publicly for the first time that he backs efforts to change that law.

“That [law] is wrong in my view, and it needs to be changed,’’ Patrick said in a conference call with reporters.

Pending legislation would allow businesses with 50 or fewer employees to form a nonprofit consortium to bargain for cheaper rates.

Back in 2005, the institute release a study highlighting the benefits of allowing small businesses to develop association health plans.

It found that

- a small group purchasing pool has the potential to: provide coverage to an estimated 10,258 firms, of which 4,273 did not previously offer insurance;

- extend coverage to 83,575 enrollees, of which 24,822 were previously uninsured workers and their dependents;
reduce the number of uninsured workers by 14,687, and

- reduce the burden of uncompensated care by $47.6 million

However, such plans were met (and will continue to be met) with resistance from large insurance companies in the Bay State.

Press release June 28, 2005

Here is the full study.

Herbert Spencer's Bad Rap

A closer look: Herbert Spencer reconsidered.

Bad news on the poverty rate

It was bound to happen:

U.S. poverty rate hits 11-year high.

It's almost official: Recession over

Jay Fitzgerald reporting on the Federal Reserve's Beige Book release highlighting slight economic improvement, particularly in New England.

The Boston district is seeing minor economic gains in a number of sectors.

“Retailers, manufacturers, and software and IT service providers, while still reporting mixed results, are more confident about their companies’ and the economy’s eventual recovery,” the report said.

A sign that some businesses might be ready to start hiring, at least part-time workers, would be found in interviews with temp firms, the report said. “Staffing firms cite an uptick in activity,” the report said.

The number of residential homes sold has increased, though overall prices continue to fall, the report said. One big sore spot is commercial real estate, which remains “very soft.”

Clunker!

On the hook: "Taxpayers face heavy losses on auto bailout". Can't say we are surprised.

Dropping to number 2!

Should we worry? World Economic Forum: U.S. drops to second in competitiveness index.

Switzerland knocked the United States off the position as the world's most competitive economy as the crash of the U.S. banking system left it more exposed to some long-standing weaknesses, a report said on Tuesday.

The World Economic Forum's global competitiveness report 2009/2010 showed economies with a large focus on financial services such as the U.S., Britain or Iceland were the losers of the crisis.

The U.S. as the world's largest economy lost last year's strong lead, slipping to number two for the first time since the introduction of the index in its current form in 2004.

"We have been expecting for some time that it may lose its top-position. There are a number of imbalances that have been building up," said Jennifer Blanke, Head of the WEF's Global Competitiveness Network.

"There are problems on the financial market that we were not aware of before. These countries (like the U.S. and Britain) are getting penalized now," she said.

The end of the recession?

BRIAN WESBURY:

"Today’s data should end, once and for all, any notion that the US is still in recession."