Biden Executive Order on Infrastructure Projects Prioritizes Big Labor over Taxpayers

Last week, President Biden signed an executive order to expand the use of Project Labor Agreements (PLAs) on large-scale federal construction projects with a total estimated cost of $35 million. Government-mandated PLAs require contractors to sign a collective bargaining agreement with workers as a requirement to work on federally-funded or federally-assisted construction projects. These agreements typically require contractors to adhere to union wage scales, hire union labor, follow union work rules, and pay into union benefit plans that other non-union employees will be unlikely to tap into. PLAs are one of the more egregious labor regulations that make building infrastructure projects in the United States more difficult and expensive. 

Ahead of signing the EO, President Biden claimed that PLAs would help streamline infrastructure projects and enable the government to “get the best value for taxpayers’ dollars.” Unfortunately, the President is completely off the mark in his characterization since the use of PLAs actually raises the cost of federal construction projects. An array of academic studies indicate that these economically flawed agreements produce construction projects that are significantly more expensive. For example: a 2021 RAND Corporation study found that PLAs raised the cost of housing units by 14.5 percent; a Beacon Hill Institute analysis concluded PLAs raised the cost of school construction by nearly 20 percent in Connecticut; and a 2009 report found that PLAs on federal projects increase costs by approximately 25 percent. 

Dozens of additional research studies confirm the fact that PLAs raise the cost of construction. It’s unfortunate that President Biden is either being purposefully dishonest or is not getting accurate information on the true cost of union-mandated labor.

The White House estimates that based on FY2021 figures, this EO could affect $262 billion in federal government construction contracting, which is no small number. Taxpayers deserve to have their taxes spent in a cost-effective way to ensure each dollar’s value is maximized, not wasted or used to fund organizations which engage in political and lobbying activity.

There has never been a more important time for Congress and the Biden administration to enact significant reforms to the various facets that go into infrastructure construction, such as permitting, labor, procurement, and funding. It was for that very reason NTU could not support the bipartisan infrastructure law, since it failed to meaningfully address how our country has the most costly, bureaucratic, and slowly-built infrastructure in the industrialized world. As a result, much of the more than $1 trillion included in the infrastructure law will be wasted - and thanks to President Biden’s EO, more will be wasted in order to hire more expensive workers.

Thankfully, some lawmakers in Congress have authored a solution to overturn the misguided policy requiring PLAs on taxpayer-funded construction projects. The “Fair and Open Competition Act” has seventy one cosponsors in the House and eight cosponsors in the Senate, all of whom are Republican lawmakers. Ending or at least limiting the reach of PLAs would lower government construction costs by increasing competition and opportunities for contractors to bid on government work. NTU was proud to organize a coalition of taxpayer advocacy organizations endorsing this critical legislation when it was reintroduced towards the beginning of the 117th Congress. We continue to encourage as many lawmakers as possible to cosponsor the FOCA in order to build a groundswell of support. 

Without a doubt signing the EO was a mistake by President Biden. Perhaps when he sees the number of projects that are delayed, never built, or over budget, he will consider rescinding his order. Taxpayers and indeed all workers would benefit from that occurring sooner rather than later.