- The Washington Times - Friday, March 13, 2009




The president and congressional Democrats argue the $800 billion stimulus package will in part help the economy by improving U.S. infrastructure. They also plan to spend more on infrastructure in this year’s pending $400 billion budget.

Who they ask can possibly argue with having better roads, more public transit, newer bridges, etc.? What they won’t tell you is that these are also big payoffs to their allies at taxpayer expense.

Ever read a federal contract or grant? There are often as many strings attached as dollars. Many of these requirements may be appropriate public policy decisions for spending government money, but they obviously come at a cost. For example, it’s pretty much a given that few government construction projects come in on time or under budget. Look at the U.S. Capitol Visitor Center - four years late and $350 million-plus over budget.

One of the requirements of government construction contracts is payment of “prevailing wages” under the Davis-Bacon and Related Acts. First passed in 1931, it generally applies to construction contracts with the federal government amounting to more than $2,000, and was expanded by the Democrats to cover virtually everything in the recent stimulus package.

The purpose of these so-called prevailing wages is to exempt labor costs from the government’s obligation to take the lowest bid. That way higher cost unionized contractors can get the job. It has also been noted that the law may prevent small businesses and/or less-skilled workers - notably minorities - from working on federal contracts.

Who decides what a prevailing wage is? Answer: the federal government, based on unscientific voluntary surveys often only filled out by labor unions and unionized contractors. Also, the law requires the government to enforce prevailing local work practices. These work rules restrict when and how work can be performed - e.g., no drywall laborer can move a pipe and no carpenter can paint. The rules can be complex and some are designed to create “make-work” jobs - a practice known as featherbedding.

Often only unionized contractors know what the rules are since they may be based on private side agreements or even unwritten. If a nonunion contractor doesn’t know the rules and they’re not included in the government contract, contractors are still required to comply and can be punished if they do not.

Economists may differ on the increased costs to taxpayers, but conservative estimates suggest inflated labor costs of more than 20 percent in many parts of the country (some estimates suggest 40 percent or more). So, the taxpayers accumulated at least 20 percent more debt than needed in the infrastructure stimulus to subsidize union bosses and discriminate against small businesses, nonunion contractors and/or minorities. I’m not sure that’s the change voters were looking for.

But wait, there’s still more being done to benefit organized labor bosses at taxpayer expense. President Obama has separately issued an executive order requiring what are known as project labor agreements (PLAs) for major construction projects - which is initially anything more than $25 million and likely will be expanded after being “studied” by new Labor Secretary Hilda Solis. PLAs require government contractors generally to grant union officials monopoly bargaining privileges over all workers, including nonunion workers; use union hiring halls exclusively for hiring workers; force workers to pay union dues even if they are nonunion to keep their jobs; and pay above-market prices and abide by the potentially wasteful work rules discussed above.

In essence, a PLA requires unions to agree not to strike and in exchange employers agree to give unions everything they want with the taxpayer ultimately footing the bill.

The Big Dig in Boston was subject to a PLA. Initially estimated at $6 billion, the project will cost at least $22 billion according to the Boston Globe, and not be paid off until 2038. This administration apparently wants to replicate that “success” nationally.

Oh and by the way, any nonunion workers who do get hired on these projects become the equivalent of indentured servants. They have to contribute to the unions’ pension and/or health plans even though they aren’t union members, but the vesting period for benefits is more often than not going to be longer than the project (e.g., five years at 1,000 hours per year for some pension plans). So President Obama’s order requires nonunion workers to contribute to union-controlled plans and get nothing out of it - unless of course they join the union permanently.

Just think what else may be in that 1,000-plus pages of “stimulus” that was supposed to be about rejuvenating the economy or in the pending additional $400 billion 2009 budget. I for one would prefer the president and the Democrats in Congress not use tax money and federal power for political payoffs and certainly not fleece nonunion construction workers in the process.

Nicholas C. Geale is the former senior counselor to the deputy secretary at the U.S. Department of Labor.

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