BHI Weekly Dispatch: Speaking out on unemployment benefits commission & Globe editorial cites BHI

The Boston Globe channels the Beacon Hill Institute on anti-competitive, union-only Project Labor Agreements. Bravo for the Globe’s position on keeping competition open for work on the historic Longfellow Bridge.

PLAs are a top priority for unions for that very reason: They effectively keep union firms from having to compete with non-union companies. That’s so because PLAs stipulate that the workers on a job must be union members. That means non-union firms must either use union employees, and abide by union work rules, or have their own employees enroll in a union while they work on the project, and pay union dues and fees. Even then, says Beeman, firm managers can’t be certain they’ll be able to work with their own teams, which makes it difficult to develop an accurate bid for a PLA-governed project. Faced with uncertainty, most non-union firms choose not to compete for that work.

Restricting competition in that manner carries a cost. A study of Massachusetts school construction projects by the Beacon Hill Institute, Suffolk University’s market-oriented think tank, estimated that PLAs added 12 percent to construction costs. (Institute studies of school construction in Connecticut and New York found that PLAs led to even larger increases in bids or actual construction costs). Even if the effect were only half that, it would mean an extra $60 million for these two projects.

The state can’t afford to pay that kind of pointless premium. The Patrick administration should reverse this decision.

The Boston Business Journal cites BHI’s executive director David G. Tuerck on exactly why PLAs always cost the taxpayers more with a priceless peroration: “You don’t need to do a study to know the PLA does not make sense,” Tuerck said. “The Big Dig was a PLA. Case closed.”

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About Beacon Hill Institute

The Beacon Hill Institute engages in rigorous economic research and conducts educational programs for the purpose of producing and disseminating readable analyses of current public policy issues to voters, taxpayers, opinion leaders and policy makers.