More love for Big Labor

By Megan McArdle

Obama signs an executive order encouraging stimulus projects costing more than $25 million to use union-only project labor agreements.  This means that any contractor or subcontractor working on a large project will have to submit a bids with collective bargaining agreements spanning one or more unions for the duration of the project.  In theory, you could bid a job with non-union labor, but let a union run the bargaining.  In practice, projects with PLAs almost always go to union shops.

What does this mean for the stimulus?  Union labor is more expensive.  Every project that uses a PLA will cost more, and many of those jobs will use as much capital equipment as possible to minimize the demand for labor.  That means that we will get a lot less employment for every dollar of stimulus spent than we would without the PLA.

Obama is offering these "cheap" concessions to the unions because it's lookng less likely that the Democrats will be able to get EFCA through.  But these things aren't free.  They're just less transparent.

This article available online at:

http://www.theatlantic.com/business/archive/2009/02/more-love-for-big-labor/458/