Sponsor Statement for HB 457

Prohibitions on Project Labor Agreements

A Project Labor Agreement (PLA) is a publicly financed construction contract awarded exclusively to contractors who agree to recognize a designated union or unions to represent employees to be hired for that project. A PLA may also require the contractor to use a union hiring hall to recruit workers and pay union scale wages and benefits, despite having their own benefit package, - as well as adhering to restrictive work rules, job classifications and arbitration procedures.

The intent of HB 457 is to create a free, competitive and unrestricted construction market, while also reinforcing the provisions of the Alaska Employment Preference Act by providing all Alaskans with an equal opportunity for employment , regardless of any union affiliation. Fundamental to this principle is that publicly financed contracts be awarded without regard to the labor relations policy of a contractor.

According to the Department of Labor's most recent report, there are over 23,000 people employed in Alaska's construction industry. This statistic is actually low, as it does not reflect the numerous small businesses ("Mom and Pop's") which comprise a large segment of the state's work force. Of this number, according to national averages reported, approximately 15% are union members. This means that based on existing law, PLA's only guarantee employment to 15-20% of Alaska's available construction work force.

This legislation does not alter the Alaskan Resident Preference guaranteed under Title 36.10.140, and has no effect on wages and benefits earned by an Alaskan employee. The bill further ensures that industry workers will receive full compensation earned, as determined by the Alaska "Little Davis Bacon Act."

To suggest that reducing competition will lower project costs defies both logic, basic economics and common sense. A recent study has shown that one major Alaskan construction project estimate could have been reduced by 19%, if it had been bid under a free and open contracting process. In addition, it is estimated that the terms and conditions of union labor agreements account for 8.4% of labor costs right off the top of a contract. Further, a primary concern with negotiated project agreements, is that the public never quite knows if it is getting the best possible rate (bid). That's because no one can predict what the open market price would be.

Recently, two major Alaska-based utility firms amended their bylaws (with an 80% favorable vote by their membership) to exclude PLA's. The result has been lower construction costs by approximately 30% while simultaneously maintaining employee wages at union scale levels.

Individuals who make their living in the construction industry are forced under restrictive PLA's to give up their constitutional right of equal protection, the right to freedom from forced association, the due process guarantee and their right of equal access.

Ultimately, it is the responsibility of every elected official to protect the rights of every Alaskan, and to translate public opinion into law which would guarantee equal rights for every Alaskan under the constitution, rather than provide a preference for a special segment of the construction industry.