Gov. Cuomo’s 2017 state budget, which he’ll present next week, is likely to call for billions of dollars in new spending on highways and bridges.
Unfortunately, taxpayers won’t get their money’s worth if the state continues to insist on rigging bids for public-works projects that all but guarantee the jobs will go to unions.
A recently completed highway project in the mid-Hudson Valley is a case study in the wastefulness of the way the state hands out such contracts. The reconstruction of the Exit 122 interchange on Route 17 was supposed to have begun soon after Cuomo first took office in 2011 — but was delayed for more than a year when the state Department of Transportation changed its already-issued bid documents to require a project-labor agreement.
Such agreements are collective-bargaining deals with trade unions that guarantee a certain percentage of jobs on a project — typically more than 80 percent — will go to their members.
On the Exit 122 job, the state discarded the lowest bid in favor of one that called for a project-labor agreement — and would cost the state an extra $4.5 million.
A judge found Albany violated state law when it put its thumb on the scale for the unions, and nullified the contract. But rather than hire the nonunion firm, the agency simply reopened the bidding process while requiring a PLA from the start.
This one received fewer bids, and none as low as the original winner’s. What’s more, the whole thing ended up costing taxpayers untold millions in extra costs as work began and was stopped during the lengthy court fight.
Proponents say the agreements save money, chiefly by negotiating efficiencies and preventing labor disruptions. Both claims are questionable.
The alleged “savings” from PLAs are based on what a union contractor’s estimated costs for a particular project would be in the absence of such an agreement, not on the lower price that might be charged by a nonunion firm.
Indeed, if those agreements actually saved money and thus lowered bids, contractors would have an incentive to voluntarily embrace them. And basic economics dictates that the more qualified bidders there are competing to complete, the less it will cost.
The project-labor agreement’s supposed guarantee against labor disruptions is also questionable. For example, unionized employees covered by such an agreement nonetheless went on strike last summer at a number of New York City construction sites, including the massive Hudson Yards development project, returning to work only after being ordered by a federal judge.
In reality, mandated project-labor deals shield unionized workers from competition by effectively disqualifying non-union firms. The inevitable result is fewer bidders and higher costs for taxpayers — millions of dollars’ worth, in the case of the Exit 122 project. The more than two-thirds of state construction workers who don’t belong to labor unions are also deprived of opportunities to compete for work in their own communities.
To be sure, mandatory project-labor agreements aren’t a new concept in the Empire State. In 1997, a year before his first re-election campaign, Gov. George Pataki issued an executive order encouraging their use on state jobs. But Cuomo, who has close political alliances with construction-trade unions, has been pushing for more of them than ever — at a time when taxpayers can least afford them.
New York is responsible for 15,121 miles of pavement and 7,688 bridges. The state also has almost twice as many lane-miles of road rated in “poor” condition as it did 11 years ago. In short, the need for added investment is clear. The question is whether the state will get maximum value for taxpayer dollars.
Cuomo is sitting squarely in the driver’s seat on this issue, because the Department of Transportation and other agencies that send out infrastructure work for bids answer directly to him. Steering the state away from mandatory project-labor agreements will benefit all New York taxpayers — and not just the small minority paying construction union dues.
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