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BHI Weekly Dispatch: Taking on the D.C. union proxies on Project Labor Agreements

by: Beacon Hill Institute

Thu Jul 21, 2011 at 16:26:07 PM EDT


In June, the House Subcommittee on Technology, Information Policy, Intergovernmental Relations and Procurement Reform, Committee on Oversight and Government Reform, heard testimony from the Beacon Hill Institute about the Government Neutrality in Contracting Act (H.R. 735) now under consideration before the U.S. House of Representatives.

The purpose of the bill is to level the playing field among open shop and union firms bidding for public project by precluding the use of mandatory union-only Project Labor Agreements. The issue is an important one for organized construction trade unions friendly with the Obama administration, which has made no secret about encouraging PLAs on government projects.  

As noted before,  Project Labor Agreements are costly to the taxpayer; the Beacon Hill Institute has shown that PLAs can add 12 to 18 percent to the  cost of the public projects like school buildings since all labor must be hired through union halls. BHI Executive Director David G. Tuerck provided compelling evidence that mandatory PLAS are not in the public interest since they increase construction costs and freeze out competing bids from open shop contractors. Governors across the United States are taking heed of the advice. Louisiana just passed prohibits PLA mandates. Recently Utah, Montana, Missouri and Arkansas pulled the plug on mandatory PLAs. Legislatures in Maine and Michigan recently passed bills awaiting Governors' signatures.

The debate over the years has been a contentious one and the June 3 hearing is the latest chapter in a long-standing, often acrimonious dispute over research. Minority Democrats used the hearing as an opportunity to plug often-cited union claims that PLAs are cost-effective and that BHI's research is flawed. Both claims are false showing once again, the Democrat broadside against BHI falls flat. Moreover sympathetic Congressman failed to offer any academic defense of project labor agreements. That's because none really exists.

The longstanding debate spilled over into the June 3 hearing. Before Tuerck could testify, Representative Elijah E. Cummings quoted a prepared statement from Professor Peter Philips of the University of Utah in which the author claimed that BHI's work was nothing but "simple minded statistics" that, in his judgment, do "not pass muster." Philips was not invited to the hearing.  If the injection of the Philips letter was to throw PLA opponents off their game, the ploy failed.

Tuerck ,unaware that Philips statement had been submitted to the Subcommittee, could not respond adequately to the professor's accusations at that time. It's a move that the University of Utah professor may come to regret in this ongoing debate.

Facts matter and hit-and-run accusations do not speak well of the people who make them --  even if they are delivered before a House subcommittee.  

This week, upon the receipt of a copy of the Philips letter, BHI responded to the union-backed PLA supporters' shameless distortions.

As any informed reader will see, Philips' criticisms are a desperate fiction, based on an entirely fabricated characterization of BHI's methodology used in its studies.

It is not as if Philips just disagreed with BHI's interpretation of BHI's statistical results, as economists often do in examining each other's work.  This was not a complaint, say, that BHI's results suffered from some problem connected with sample selection or that they failed some standard test for robustness.  This was a false characterization of how BHI came to its results.   It would be as if one chemist tried to debunk another chemist's findings by falsely describing the laboratory procedures followed in getting those findings.  

Congressman Cummings, who willfully served as a proxy for union interests that day, has yet to respond to BHI's recent letter to him and the committee staff. This is not a surprise given the high-stakes unions have placed on winning this battle.

But the time has arrived to set the record straight.

If, as it appears, neither Congressman Cummings nor anyone on his staff has asked Philips to clarify his remarks, then anyone  who read the record of that hearing would be permitted to believe that there was substance to those remarks, when in fact there was none.  

Anyone could infer that BHI's findings about PLA costs were spurious and could be ignored in pursuit of union-friendly legislation when in fact there was nothing presented at that hearing (or anywhere else, by the institute's reckoning) that would support any such conclusion.  

Yes it's all very academic but the public deserves better.

BHI is not afraid of well-inform criticism of its work; that's part of the job and such criticism offers an opportunity to defend the fine points of a methodology.

Reasonable people can disagree about normative economics --whether policy should tilt to one group in favor of some public end. But in the pursuit of shilling for organized labor, Philips is betraying his profession.  Meanwhile, BHI will continue its pursuit of the truth.

In other news:

David Tuerck published an op-ed in the Boston Globe about the FairTax's potential to solve the nation's budget problems.

Over at masslive.com, the website of the Springfield Republican Paul Bachman offers reporter Dan Ring comments on the state's new tax revenue numbers. While everyone's on the topic of tax forecasts, readers should take note of BHI's formidable record on providing state revenue forecasts. Here's what we told the legislature last December.

Read about BHI's take on the proposed sales tax holiday for August 2011.

Two Maine legislators argue in the Kennebec Journal for tax cuts by citing the results from BHI's STAMP model.

Meanwhile, our good friends over at the Mackinac Center for Public Policy in Michigan weigh in on BHI's New Jersey Wind Energy cost-benefit analysis and doesn't think the the downwind moving west will be any good for Michigan, which like most states is banking on dubious alternative energy plans. Full NJ study can be found here.

UPDATE 7/22: Tuerck issues statement on "Cut, Cap and Balance" bill.

To learn more about BHI's research visit www.beaconhill.org.

Beacon Hill Institute :: BHI Weekly Dispatch: Taking on the D.C. union proxies on Project Labor Agreements
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