By Dominick Mondi
On Nov. 29, Gov. Chris Christie announced that the state would embark on a $300 million renovation of the Statehouse in Trenton that would be completed before the end of his term in January 2018.
Hundreds of media outlets have shared the news, and many of us can attest to the fact that renovations to this historical building are sorely needed. What most readers do not know, however, is that this project is currently subject to New Jersey’s prevailing wage laws, which assure that all contractors working on it will be paid premium wages.
The “prevailing wage” amount is the hourly wage, with usual benefits and overtime, paid to a construction trade worker while working on a publicly funded construction project. States determine the value of projects above which these wages must be paid. New Jersey’s threshold rates are extremely low – $2,000 for school districts and $15,444 for municipalities.
These prevailing wage thresholds were established more than a century ago. So, instead of jobs being completed for the lowest possible cost, contractors are being forced to pay inflated wage rates as a result of the out-of-date limits. This ends up costing New Jersey’s taxpayers significantly more to fund these types of projects.
Perhaps more significantly, this Statehouse project could also become subject to a costly project labor agreement (PLA) under a law passed in 2002, allowing PLAs to be applied to any public project over $5 million.
PLAs are pre-hire collective bargaining agreements with one or more labor organizations that establish terms and conditions of employment for specific construction projects. This effectively requires that contracts for public construction projects are awarded almost exclusively to union firms, and ends open, fair and competitive bidding on these jobs.
According to recent state Department of Labor data, PLAs increase costs by more than 30 percent. In addition to artificially driving up costs, PLA’s effectively exclude 80 percent of New Jersey construction workers — those who are not represented by a trade union. The labor department reports also states that PLA projects tend to take longer than those not subject to PLAs.
Our organization, the New Jersey Chapter of Associated Builders and Contractors, agrees that the Statehouse, the third oldest active state capitol building in the country, is an important piece of architecture and that it should be preserved and maintained. However, there should be no project labor agreements on the Statehouse renovation.
This is not only a high-cost, high-profile public construction project, it is also a highly specialized historical restoration. Bid specifications for this project should include specific criteria for contractors with experience working on these types of projects.
To be fair and allow for competitive bidding, the State of New Jersey should cast a wide net to find the best qualified contractors, and not self-impose unnecessary and costly limitations. All New Jersey contractors, regardless of labor affiliation, should have the opportunity to bid and work on this historic restoration.
While some argue that PLAs help to create jobs, these agreements really create unemployment for New Jersey residents. In addition, construction unions often do not place qualified local and/or diverse residents on local jobs. In 2013, the federal Bureau of Labor Statistics reported that more than eight of 10 U.S. construction workers are not unionized, nor are the vast majority of minority contractors.
Associated Builders and Contractors (ABC) represents more than 21,000 “merit shop” (non-union) contractors nationwide and is comprised of 70 chapters across the country. Association members promote free enterprise by advancing the most qualified and lowest construction industry bidders, regardless of labor affiliation, through education, advocacy and business services.
Non-union contracting companies can be referred to as merit shop contractors because these companies have chosen to perform hiring, promotion, salary adjustments, bonuses and termination based on an individual’s ability to accomplish the tasks assigned by his or her employer. Unionized contractors use seniority as a key factor in making the same decisions.
If a project labor agreement is applied to the Statehouse project, it would essentially be saying, “Local non-union workers need not apply.”
Dominick Mondi is president of the Associated Builders and Contractors (ABC) New Jersey Chapter, which is based in Mount Laurel Township.
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