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Associated General Contractors, the trade group that represents more than 800 Oregon construction firms, pushed back hard today on an executive order Gov. Tina Kotek issued just before the holidays.
That order requires that construction projects that receive state funding and for which labor is more than 15% of total costs include project labor agreements.
Such agreements require the general contractor to engage in collective bargaining with labor unions and establish apprenticeship programs, pay into benefit trusts, and adhere to minority-contracting requirements.
Kotek said project labor agreements are in the public’s interest and will result in higher quality, lower costs and more timely completion and will help train a skilled workforce.
“Oregon will soon embark on multiple large-scale infrastructure projects across the state. With these projects, we have a generational opportunity to lift up Oregon workers and reinforce public trust in our ability to do big things, and do them well,” Kotek said Dec. 19. “With the broad use of PLAs across state projects, Oregonians will know that public dollars are spent efficiently and benefit the communities in which they’re spent.”
But AGC executive director Mike Salsgiver took issue with the governor’s reasoning—and noted that she issued her order without consulting his organization, which represents a broad spectrum of contractors, from the state’s largest builders to mom-and-pop operations. He says AGC is not opposed to all project labor agreements; it objects to Kotek requiring them in all instances that meet what AGC believes is a modest threshold.
“While we respect the right of workers to organize and collectively bargain, mandating union-only agreements on every major project adds costs, reduces competition, and shuts out small minority and emerging contractors who are vital to Oregon’s economy,” Salsgiver said.
Although many of the contractors who erect large buildings or work on publicly funded projects, such as the renovation of the state Capitol or Portland International Airport, are union shops, Salsgiver says many of the firms that build highway projects are non-union.
“About 80% of the contractors on the highway side are non-union,” Salsgiver adds.
That’s a big deal because the Oregon Department of Transportation has an ambitious slate of projects on the drawing board. And although that agency is currently in dire financial trouble, it will be asking the Legislature for a major funding increase in 2025.
Salsgiver disputes Kotek’s assertion that project labor agreements result in cost savings. “This order comes at a time when our state faces an infrastructure funding crisis,” he said. “Project labor agreements inflate project costs, meaning taxpayers will get less for their money, either through higher taxes or fewer completed projects Oregon needs smart solutions, not mandates that create more barriers for businesses and workers.”
He cited studies to buttress his claims.
A least one West Coast governor agrees with AGC. In September, California Gov. Gavin Newsom vetoed a bill that would have mandated some project labor agreements, writing in his Sept. 29 veto letter, “While I am generally supportive of [project labor agreements] as an option for public works projects, the new requirements proposed in this bill could result in additional cost pressures that were not accounted for in this year’s budget.”