A Project Labor Agreement (PLA) is a project management tool designed to ensure “on time, on budget” results for a given project through a streamlined labor relations policy. PLAs improve efficiency by coordinating the work of the multitude of subcontractors and craft workers engaged on a specific construction project. PLAs have been used for generations on successful public and private construction projects.
PLAs are designed to benefit everyone involved.
Union and nonunion workers benefit because their wages and benefits are defined and protected at local standards.
Union and nonunion contractors benefit from the assurance of a level playing field and a guaranteed skilled workforce.
Lenders and insurance companies benefit because, with skilled workers and protection from delays due to labor disputes, their investments are safer.
Communities benefit because many PLAs provide recruiting, hiring and training for disadvantaged workers and local residents.
But construction owners and taxpayers benefit the most because PLAs help to ensure greater efficiencies on construction projects that involve many subcontractors and large numbers of craft workers from various trades. They ensure a steady flow of safe, productive and highly trained construction labor through nationwide referral systems; and they establish mechanisms for avoiding and resolving disputes. Public and private PLA construction projects are known for coming in on time and on budget.
Why PLAs work:
Put simply, PLAs help to ensure greater project efficiencies while protecting workers’ wages and working conditions. PLAs ensure greater coordination among significant numbers of subcontractors and craft professionals through streamlined project management and the reliable supply of safe, productive and highly trained craft workers.
By harmonizing work rules and schedules, and through a formalized tripartite approach to project management involving the owner, the general contractor and labor, PLAs ensure greater project efficiency and productivity. All of this reduces costs.
PLAs help support a massive network of joint labor-management training and apprenticeship programs that enables workers to acquire the skills they need to satisfy the demands of owners and contractors in an increasingly complex and technical industry, while also ensuring those same workers receive pay and benefits commensurate with a solid and stable life in the American middle class.
Today, the affiliates of North America’s Building Trades Unions and their signatory contractors jointly invest more than $1 billion annually in private-sector funding to operate a nationwide training and education infrastructure that involves more than 1,600 training centers across the United State. These joint labor-management programs account for 70% of all graduates from registered construction apprenticeships.
PLAs have been used successfully for generations.
PLAs have been used the public and private sectors for nearly a century.
PLAs first were used on the big public works projects of the 1930s. Today, the Tennessee Valley Authority, the Department of Energy, the Southern Nevada Water Authority and the Los Angeles Unified School District are just some examples of public-sector owners that successfully use PLAs for construction projects because they promote efficient and quality construction.
Driven primarily by cost efficiency, use of PLAs in the private sector has grown even more than on public projects. Leading Fortune 100 and 500 companies, including Toyota, Walt Disney, ConocoPhillips, and the recently completed Freedom Tower project in New York City have used PLAs successfully. PLAs have been used in the public and private sectors for so long because they work.
Prevailing wage laws set wages and fringe benefits for workers – union and non-union – for state-funded projects.
Prevailing wage laws, both federal and state, were enacted for two reasons. The first was to ensure that skilled construction workers employed on public works projects would be paid at least the wages and benefits that “prevail” in their local communities. The second reason was to make sure that unscrupulous contractors would not import unskilled or low skilled workers from other parts of the country who would undercut the local workforce by working for lower pay.
The maintenance of the prevailing wage has resulted in the preservation of a highly skilled workforce in the construction industry. Comprehensive and demanding apprenticeship programs, made possible by a stable wage, have been set up by the construction unions. The graduates of those programs are highly trained workers who are fast, efficient, and safe.
How Prevailing Wage is Determined
The prevailing wage rate is determined by surveys sent to contractors in all trade classifications, such as carpenters, plumbers and electricians. The purpose of the survey is to collect information on current total marketplace wages (take home pay) and fringe benefits (such as health care, retirement, etc.) being paid in each county to tradesman working on private and public construction projects.
The Prevailing Wage for each trade classification is established through these surveys and is set for each county in Delaware. The Delaware Department of Labor attempts to give each contractor, union and nonunion, equal opportunity to be included in the final survey database. Surveys are sent to more than 25,000 contractors. An individual or a union may also send in data to be recorded on the survey. The survey, conducted in January and February of each year, covers wages paid during the previous July through December. Thus, the Prevailing Wage rate is often one-year behind current market wage rates.
The following are examples of how prevailing wage is calculated:
Through survey results, if more than half of the workers (50% +1) are paid at the same rate, that rate shall be the prevailing wage rate for that classification of work. For example:
Workers Rate of Pay [including the value of benefits]
$1,665.50 ÷ 100 workers equals $16.65. Thus, the prevailing wage rate for that particular trade classification in a particular county is $16.65.
This method establishes the construction market rates for the area for each category of trade classifications.
Additionally, individual unions representing the different categories of construction trades negotiate directly with construction companies, often through the Delaware Contractors Association. This collectively bargained wage and benefit agreement, whose term ranges from three to five years, also enters into the Delaware Department of Labor survey calculation of the Prevailing Wage.
More than half of the unions do not prevail in all categories, so the survey is done until they prevail for two consecutive years.
The surveys are open to the public and there is a two-week challenge period available.
Benefits of Prevailing Wage
Opponents argue that prevailing wage rates drive up construction costs, a simplistic view that equates higher wages with higher overall construction costs. Wages and benefits are only about one-fourth of overall project costs – and that percentage has been falling. Concurrently, soft costs in construction – fees associated with architectural, engineering, financing, legal services and post-construction expenses – account for 15% – 20% of overall project costs and are rising.
Prevailing wage requirements help ensure that competition among contractors in the bidding process is focused on areas of overall cost efficiency, high productivity and innovative methods. The most qualified and responsible contractors will find other cost-saving measures before reducing wages and benefits of his or her work force. A contractor who has a good safety record will save on insurance costs, workers compensation rates, and legal fees. A contractor who pays his vendors and suppliers on time has better rates on material, supplies and equipment rentals. Competitive contractors use labor-saving technology and more innovative work practices to reduce unit labor and per-square-foot costs. Contractors who manage a job well make fewer mistakes, waste less material and have little-to-no punch-list items. A contractor who is competitive in all of these areas will be the most qualified and responsible to work on taxpayer-funded projects.
Right to Work
What is “Right to Work” (RTW)?
“Right to Work” is legislation that limits the reach of private and public sector unions. And, it can come in many forms. It can allow for the elimination of “cost of representation” fees for non-members (Agency Fee/Fair Share), and at worst it can eliminate your right to collectively bargain. “Right-to-work” laws are propagated by those seeking to weaken unions, and despite the name, the laws actually limit rights.
Is RTW Coming to Delaware?
“Right to Work” legislation can come in many forms. There is current legislation in Delaware that would create RTW zones (SB54), allow counties/municipalities to create their own zones (HB87), and even repeal collective bargaining (HB86).
How Does RTW Affect Workers?
The average worker in states with RTW laws makes $5,971 (12.2%) less annually than workers in states without RTW
RTW states are less likely to have job-based health insurance than in non-RTW states and pay a larger share of their health insurance premiums
The rate of workplace deaths is 54.4% higher in states with these laws, according to the Bureau of Labor Statistics
Poverty rates are higher in states with RTW laws compared with poverty rates of 1states without these laws