President Biden’s new policy could threaten opportunities for non-union contractors

Objections have been raised by construction officials over President Joe Biden’s newly signed executive order, which will implement new pro-union project labor agreements in order to increase union membership in the federal, public and private sectors.

The move could affect contractors looking forward to new projects coming as a result of the recently passed $1.2-trillion infrastructure bill. 

The new limitations will be placed upon “large-scale construction contracts,” defined as a contract for which the estimated cost is $35 million or more Image source: Reuters

The new limitations will be placed upon “large-scale construction contracts,” defined as a contract for which the estimated cost is $35 million or more.

If this new executive order stays in effect, it could prevent many non-union contractors from participating in new, large-scale infrastructure projects, according to Associated Builders and Contractors (ABC) representatives. 

Construction trade associations are claiming the order could increase construction costs and discriminate against most American workers, in addition to invalidating existing collective bargaining agreements.

“[The executive order] will increase infrastructure project costs by 12% to 20%, reduce competition from the best quality public works contractors and exacerbate the construction industry’s skilled labor shortage by discriminating against the nearly 9 out of 10 members of the construction workforce who choose to be union-free,” said Ben Brubeck, vice president of the regulatory, labor and state affairs branch of ABC.

He added it “will not create opportunities for all construction workers, small businesses and experienced contractors who build America safely, on time and on budget.”

Project labor agreements (PLAs) control the terms and conditions of employment of workers on specific construction projects, including pay, hours, working conditions, conflict resolution methods and banning work stoppages and strikes.

These imposed PLAs contradict previous collective bargaining agreements that were negotiated in good faith between employers and labor unions and will likely prompt many firms to think twice about participating in the bargaining process in the future, according to the ABC.

“Contractors who offer lower wages or hire less qualified workers will need to raise their standards to compete with other high-wage, high-quality companies,” the order says, according to Reuters. 

For its part, the National Utility Contractors Association (NUCA) also voiced strong objections against the executive order.

“NUCA represents both union and merit shop contractors,” said Doug Carlson, CEO. “Our members build and maintain all underground utility systems. We’re doing everything possible to combat the enduring workforce challenges facing our industry, but the Biden executive order... does nothing but make matters much worse.”

“Contractors who offer lower wages or hire less qualified workers will need to raise their standards to compete with other high-wage, high-quality companies,” the order says, according to a draft viewed by Reuters. Earlier executive action by Biden requires federal contractors in new or extended contracts to pay a $15 per hour minimum wage.

On the other hand, Biden’s order was well-recieved by certain union contractors.

“This streamlines the negotiation process and gives employers access to a highly skilled pool of craftworkers,” said Daniel Hogan, chief executive of the Association of Union Constructors, which represents 1800 contractor companies.