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March 18th, 2011

Unions Negotiating With Themselves

By Nathan Tucker

Unions in the Cedar Rapids area recently “negotiated” a construction contract with city officials whom they had bought and paid for, producing an agreement which unionized non-union shops and allowed the unions to set their own compensation packages.

On December 15, 2010, the Cedar Rapids city council approved a project labor agreement (PLA) with local unions for work to be performed on the city’s $75.8 million Convention Complex project.  Shortly after his inauguration, however, Governor Branstad reversed his predecessor by issuing an executive order that prohibited the use of state funds on public projects which use PLAs.

The state’s I-JOBS program had awarded $15 million towards the project, but now the city faces the prospect of losing that money unless it abandons the PLA.  Despite that threat, city officials appear intent on following through with the labor agreement, approving the first construction contract on the Convention Complex project on February 23rd.

Their justification for the PLA is that it is necessary to ensure that local workers are hired for the project.  But such a stipulation, which could have been included in contracts with the construction companies themselves, is missing from the PLA.  Also missing are any incentives for staying under budget or completing the work ahead of schedule.

Bypassing the construction companies entirely, the city negotiated directly with the local unions and required the companies to accept the terms of the PLA as fait accompli.  The result unionizes non-union, merit construction companies by forcing union rules, compensation, and fringe benefits on them, making it far less likely that they will even bid for jobs on the project.

For instance, the PLA, a copy of which was obtained only by a Freedom of Information Act request, mandates that construction companies “hire employees for covered work through the job referral systems offered by each signatory” union.  A company could employ their “core” employees, but only if the employees applied to the local union for project work and, under no circumstances, could they make up more than half of the workforce.

The PLA provides that the “compensation package for each craft is set forth in the Appendices…provided by each signatory union.”  These packages have been established by the unions without any input from the city, which has informed The Iowa Republican that it doesn’t even have a copy of the appendices in its possession.

As a part of the compensation package, the construction companies are not only required to pay the hourly wage established by the union, but also the union-dictated pension benefits.  A company’s “core” employee can opt out of the union plan, but only in writing after having the union plan explained to them.  LIkewise, a company is not obligated to deduct union dues from a core employee unless that employee “voluntarily” asks it to do so.

PLAs, while resulting in a windfall for the unions, often end up costing the tax payers millions of dollars.  For example, a study by the Mt. Pleasant-based Public Interest Institute found that both the Tyson Events Center in Sioux City and the Quest Center in Omaha, neither of which used PLAs, cost $233 and $265, respectively, per square foot, while the PLA-constructed Iowa Events Center in Des Moines cost taxpayers $315 per square foot.

While no responsible public official would impose union-dictated labor agreements on construction companies that result in a higher tax burden for their citizens, it appears that seven of the nine members of the Cedar Rapids city council received a combined total of $60,000 in campaign contributions from unions, far more then they received from any other source.  Only one of those council members, Tom Podzimek, had the courage to break ranks and vote against the PLA.

For the sake of its taxpayers, Iowa municipalities should abandon the use of PLAs, both now and in the future.

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About the Author

Nathan W. Tucker
Nathan W. Tucker is a Davenport attorney and author of We The People: The Only Cure to Judicial Activism. He can be contacted at [email protected]

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