Video: David Tuerck testifies on H.R. 735

Testimony from BHI Executive Director David G. Tuerck begins at approximately 22:00 into this recording.

Text of BHI testimony in PDF is here.

More than a quarter decline in MA construction since 2007

The Boston Business Journal reports:

The Bay State’s construction sector has shed 34,200 jobs on a seasonally adjusted basis since January 2007, with some of the commonwealth’s largest metropolitan areas having lost more than a quarter of their jobs in that span.

Nationally, 317 of the country’s 337 largest metros shed construction jobs since the downturn commenced, with some markets, particularly in the southwestern portion of the country, contracting by as much as 65 percent.

In Massachusetts, construction firms employed 92,500 people on a seasonally adjusted basis at the end of January, off 27 percent from the 126,700 workers in the sector four years earlier, according to The Associated General Contractors of America.

The Boston-Cambridge-Quincy region reported the state’s largest decline in total jobs lost, falling by 15,100 positions during the period studied. That brought the area’s total construction employment to 43,100 jobs at the end of January, off 26 percent over four years.

On a percentage basis, New Bedford and Peabody tied for the state’s largest decline, sliding 30 percent. New Bedford’s drop included 800 jobs, while Peabody’s affected 1,100 positions.

What will it take to get the industry moving again?

Wall Street Journal on Obama's new PLA rule

WALL STREET JOURNAL: "We'd list more but newsprint is expensive."

Only 15% of the nation's construction workers are unionized, so from now on the other 85% will have to forgo federal work for having exercised their right to not join a union. This is a raw display of political favoritism, and at the expense of an industry experiencing 27% unemployment. "This is nothing but a sop to the White House's big donors," says Brett McMahon, vice president at Miller & Long Concrete Construction, a nonunion contractor. "We've seen this so many times now, and how many times does it have the union label? Every time."

It's also a rotten deal for taxpayers. White House economist Jared Bernstein blogged that these agreements "significantly enhance the economy and efficiency of Federal Construction projects." In fact, the carve-outs put an end to open, competitive federal bidding, which means higher project costs. They also mean taxpayers must finance the benefits and work rules of union members.

Mr. Bernstein could check all this with the Department of Veterans Affairs, which last year commissioned an independent study showing the Obama project labor agreements would likely raise the VA's construction costs for hospitals by as much as 9% in three of five markets—Denver, New Orleans and Orlando. In two others, New York and San Francisco, the study predicted a mixture of small cost increases and small cost savings.

The study reported "strong evidence to suggest that the result of a PLA [project labor agreement] that dictates work rules, double benefits, team structure and activities on non-union type contractors will be that production costs will increase—given these union-related requirements." It also rebutted a favorite liberal argument that such agreements lead to less labor strife, noting that there are "many examples for projects where there have been strikes but also no strikes—unrelated to whether or not a PLA is in place."

The Veterans study mirrors academic work showing that project labor agreements raise the costs of construction by 10% to 20%. The Beacon Hill Institute at Boston's Suffolk University in 2006 investigated the costs of building 126 Boston-area schools. It found project labor agreements raised winning bids for school construction projects by 12% and actual construction costs by 14%.

Boston's Big Dig, Seattle's Safeco field, Los Angeles's Eastside Reservoir project, the San Francisco airport, Detroit's Comerica Park—all were built under PLAs marked by embarrassing cost overruns...

Recent Beacon Hill Institute publications on Project Labor Agreements:

BHI Survey: Overwhelming majority of state voters oppose a key feature of Project Labor Agreements

Cato Journal: Why PLAs are not in the public interest

Project Labor Agreements on Federal Construction Projects: A Costly Solution in Search of a Problem

Cato Journal publishes BHI research on Project Labor Agreements

The latest issue of Cato Journal dedicated to current labor issues is now out and it includes the latest from BHI: "Why Project Labor Agreements Are Not in the Public Interest" by executive director David G. Tuerck.

New proposed sheet metal apprenticehip rules fail efficiency test

BHI Executive Director David G. Tuerck presented testimony before the state's Board of Examiners for Sheet Metal Workers. The board is considering a proposal that will increase the ratio of three (3) sheet metal workers to one (1) apprentice. Does this make economic sense?

At a hearing of the board in Springfield, BHI argued:

These changes are, by any account, a step in the wrong direction. The national unemployment rate for construction workers currently stands at 19%. The prevailing wage law creates rigidities in construction wages that already make it impossible to relieve this problem by reducing labor costs for public projects. This new regulation will simply increase labor costs and thus further aggravate the current unemployment problem in construction.

The regulation will have adverse long-run effects as well. It effectively restricts labor supply for sheet metal workers at a time when experienced workers are reaching retirement age in greater numbers than before. By attempting to shift the composition of the workforce from younger to older workers, the regulation promises ultimately to invite labor scarcities and escalating labor costs.

Entire testimony is available at www.beaconhill.org.

Responding to Project Labor Agreement proponents

The Globe published our letter to the editor responding to Marc Erlich's defense of Project Labor Agreements.

For the record, here is the letter we sent to the Globe.

To the Editor:

In his op-ed defending Project Labor Agreements (“Unions a stabilizing force,” March 22), Mark Erlich claims that that our first 2003 study of Massachusetts school building projects had to be “completely revised” following “a stinging critique of the data, methodology, and conclusions.”

The fact is that we updated that study when several additional months of investigation permitted us to double the number of schools in our sample. In the second study, we found that PLAs added 14% to the minimum project bid, rather than 17%, as in our original study.

Somehow, Mr. Erlich did not feel compelled to recognize that finding, or our finding in subsequent studies, that, for school building projects in Connecticut and New York, PLAs increased bids by 17% and 20%, respectively.

PLAs and the Prevailing Wage Law are aimed at protecting the union monopoly over the minority of construction workers who belong to unions. The effect of that monopoly is limit the number of construction projects that can be undertaken and to limit the number of construction workers who can be hired – a result that gives the lie to Mr. Erlich’s hypocritical expression of sympathy for blue-collar workers.


David G. Tuerck
Executive Director
Beacon Hill Institute
Suffolk University