Associated Builders and Contractors opposes court decision reinstating project labor agreement mandates on federal contracts over US$35M; ruling affects Department of Defense, General Service Administration construction projects

WASHINGTON, May 19—Associated Builders and Contractors today responded to a May 16 decision from the U.S. District Court of the District of Columbia that grants a preliminary injunction to the North America’s Building Trades Unions that reinstates project labor agreement mandates on certain U.S. Department of Defense and General Service Administration construction contracts over $35 million.

“ABC respectfully disagrees with the court’s reinstatement of illegal and costly project labor agreement mandates on a wide range of federal construction projects critical to America’s national security,” said Kristen Swearingen, ABC vice president of government affairs. “Instead, all government-mandated PLAs should be entirely rescinded by the Trump administration to prioritize efficient use of taxpayer dollars on high-quality, safely built projects over steering contracts to special interests. Rescinding this mandate would build on the administration’s ongoing efforts to reward merit in federal contracting—a significant victory for taxpayers that would reduce federal construction costs by up to $10 billion annually.

“By discriminating against the 89.7% of the industry workforce that is not unionized, PLAs discourage competition by forcing contractors to sign union collective bargaining agreements, hire workers from union halls and apprenticeship programs and accept compulsory union representation on behalf of any members of their existing workforces, and exposes those workers to union wage theft of up to 34%Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers Instead of Reform, Policymakers Want to Perpetuate the Broken System by Dr. John R. McGowan, Ph.D., CPA Director of Tax Strategy at Archford Accounting Retired Professor of Accounting at Saint Louis University October 2021 Table of Contents EXECUTIVE SUMMARY .................................................................................................................................................................................................1 I. OBJECTIVE ...................................................................................................................................................................................................................2 II. BACKGROUND ...........................................................................................................................................................................................................3 III. METHODOLOGY .......................................................................................................................................................................................................4 1. Identify annual federal construction spending potentially subject to Government-Mandated Project Labor Agreements ........... 4 1a. Calculate labor costs of applicable federal contracts..................................................................................................................4 2. Federal construction market share for nonunion contractors ................................................................................................................4 3. Financial impact of government-mandated PLAs on nonunion employees’ take-home pay .......................................................5 3a. Pensions ....................................................................................................................................................................................................5 3b. Union dues ...............................................................................................................................................................................................5 3c. Health Insurance ....................................................................................................................................................................................6 3d. Summary of lost benefits and expenses for nonunion employees on PLAs .......................................................................6 4. Estimate of additional costs to employers for employees on PLA projects .......................................................................................6 5. Total impact of government-mandated PLAs on nonunion employees and employers ................................................................7 5a. Total impact of government-mandated PLAs on nonunion employees ................................................................................7 5b. Total impact of government-mandated PLAs on nonunion employers .................................................................................7 6. Withdrawal liability exposure for nonunion employers ............................................................................................................................8 6a. Interviews with key experts in the field ...........................................................................................................................................8 6b. When is withdrawal liability triggered? ...........................................................................................................................................8 6c. Calculating a plan’s unfunded vested benefits liability ..............................................................................................................8 6d. Determining withdrawal liability from Form 5500 .......................................................................................................................9 7. A snapshot of multiemployer pension plans in the construction industry ..........................................................................................9 7a. Number of underfunded plans .........................................................................................................................................................10 7b. Underfunded plans with the largest number of employees ...................................................................................................10 7c. Plans in critical and declining status ...............................................................................................................................................10 7d. Share of total Pension Benefit Guaranty Corporation liabilities .............................................................................................10 8. A snapshot of the entire MEPP system .......................................................................................................................................................10 8a. Financial management of MEPPs ..................................................................................................................................................... 11 9. Congress and Biden administration initiatives for the MEPP system bailout ................................................................................... 11 9a. Special financial assistance for financially troubled plans (Sec. 9704) ................................................................................ 11 9b. Eligibility and application process .................................................................................................................................................. 12 9c. Amount of financial assistance available ...................................................................................................................................... 12 9d. No requirement to repay financial assistance received ........................................................................................................... 12 9e. Temporary delay on funding status designations ...................................................................................................................... 12 9f. Projected costs of the MEPP system bailout ................................................................................................................................ 12 IV. CONCLUSION .......................................................................................................................................................................................................... 14 Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 1 Instead of Reform, Policymakers Want to Perpetuate the Broken System EXECUTIVE SUMMARY The central finding of this study is that government-mandated less competitive with respect to price compared to firms project labor agreements harm the economic welfare of without such duplicative benefits costs, which is likely nonunion construction employees, impose significant costs to discourage nonunion contractors from competing for and liability exposure on nonunion contractors and discourage taxpayer-funded construction contracts. competition for qualified contractors. Next, this report assesses the risk of potential MEPP Nonunion employees who work under government-mandated withdrawal liability exposure employers may face as a result PLAs lose wages and benefits after they pay into union of working on government-mandated PLA projects. Using pension funds and often receive no benefits due to union Form 5500 data, we project that the withdrawal liability membership and vesting requirements. In addition, union exposure for each firm could range between $1 million and health insurance premiums are significantly higher than the $7 million when construction contractors trigger withdrawal average cost of health care coverage in the private sector, liability. More specifically, the average withdrawal liability for especially for single workers. the 10 construction industry MEPPs sampled in this report designated as “endangered” by the U.S. Department of Labor Next, nonunion contractors often double pay pension have an average withdrawal liability of $2.17 million. Moreover, and health insurance fringe benefits into both existing the 10 construction industry MEPPs in “critical” status have an company plans and union plans if their employees are average withdrawal liability of $2.76 million. permitted to work under short-term projects subject to government-mandated PLA contracts. Finally, nonunion Finally, the overall MEPP system is showing further signs of contractors are reluctant to work under PLA mandates as decay as the number of critical and declining status plans they may lead to substantial multiemployer pension plan is on the rise. According to data from the Pension Benefit withdrawal liability upon the completion of work and/or Guaranty Corporation, the construction industry is a major withdrawal from the plan agreement. contributor to both current MEPP underfunding and future PBGC insurance program funding shortfalls. According to Specifically, the report found that nonunion employees the PBGC’s 2019 Pension Data Table M-14, the amount of lose an estimated 34% of their total compensation construction industry MEPP underfunding grew to $368.45 package when working on a construction project subject billion (48.7%) of the total PBGC-insured MEPP underfunding to a government-mandated PLA. These lost wages and of $756.98 billion.2 Using the compound annual growth benefits should be considered “wage theft,” as nonunion rate formula, this represents an average rate of growth of employees on PLA contracts are required to pay a portion 8.23%. At this rate of growth, total construction industry of their paycheck to unions and union benefits plans as underfunding will grow to $467.2 billion by 2021.3 a condition of employment, yet they will not realize any benefit unless they join the union and/or meet certain To address the declining financial health of the MEPP vesting requirements.1 This study concludes that nonunion system, policymakers enacted an estimated $86 billion4 to employees could lose an estimated $159 million to $530 $94 billion5 taxpayer-backed bailout of the MEPP system million in compensation on federal construction contracts when the American Rescue Plan Act of 2021 (H.R. 1319) depending on how many contracts are subjected to PLAs was signed into law on March 11, 2021.6 Many argue that required by federal government agencies. this policy, currently subjected to a regulatory rulemaking process, is an unprecedented and ill-advised government This report also found that nonunion employers are forced intervention and support of a privately funded organization to pay an extra 35% of total employee compensation cost and will do nothing to fix systematic flaws in the MEPP in the amount of $163 million to $546 million in duplicative system in the long term, and may even expose American benefits on federal contracts annually, depending on how taxpayers to a limitless bailout of MEPPs well beyond the many federal contracts migrate to government-mandated $86 billion to $94 billion estimated price tag.7 PLAs. These additional costs make nonunion contractors 1 See Commentary, “IID considers giving outside contracts exclusively to unions,” The Desert Review, Nov. 23, 2020. 2 See Table M-14: Funding of PBGC-Insured Plans by Industry (2018) Multiemployer Program of PBGC 2019 Pension Insurance Data Tables report. 3 The CAGR formula is: 4 Congressional Budget Office, “Reconciliation Recommendations of the House Committee on Ways and Means,” Feb. 17, 2021, https://www.cbo.gov/ system/files/2021-02/hwaysandmeansreconciliation.pdf. 5 Special Financial Assistance by PBGC, 86 Fed. Reg., 36,598, 36,614 (July 12, 2021). 6 Text of American Rescue Plan Act of 2021 (H.R. 1319) known as ARPA: https://www.congress.gov/bill/117th-congress/house-bill/1319/text. 7 See U.S. House Education and Labor Committee August 11, 2021, comment letter to the Pension Benefit Guaranty Corporation, available at https:// republicans-edlabor.house.gov/uploadedfiles/pbgc_letter.pdf Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 2 Instead of Reform, Policymakers Want to Perpetuate the Broken System I. OBJECTIVE The objective of this report is to update and expand The agreements typically include provisions to discourage on the findings of a previous report on the impact of strikes, lockouts or other work stoppages for each project. government-mandated PLAs on employers and employees, Moreover, PLAs typically mandate that employees for the The Discriminatory Impact of Union Fringe Benefit project are referred and hired through union hiring halls Requirements on Nonunion Workers Under Government- and apprenticeship programs and that nonunion workers, Mandated Project Labor Agreements (McGowan 2009).8 if permitted to work on a PLA project, must join a union The 2009 report estimated nonunion employees’ lost and/or pay union dues and other withholdings for the wages and benefits and additional costs facing nonunion length of the project. Contractors must also follow union employers when working on federal construction contracts rules on pensions, health coverage, work conditions and subject to government-mandated PLAs. dispute resolution.11 At the time of the first report’s publication, President Obama PLAs have been used on some large construction had recently issued the pro-PLA Executive Order 13502.9 projects in the United States since the 1930s and became However, its impact on federal contractors and their nonunion the subject of intense public policy debate in the late workforce was largely unknown because regulations 1980s and early 1990s as they began to be mandated by implementing the executive order’s final rule did not take lawmakers and governments on publicly procured and effect until May 2010.10 This report reflects on the impact of taxpayer-funded projects with greater frequency. President Obama’s pro-PLA order on federal contractors and their employees and attempts to estimate how these The use of government-mandated PLAs on public works populations would be affected if the Biden administration and projects is opposed by stakeholders,12 who argue that PLA 117th Congress increase the use of government-mandated mandates create a rigged and corrupt bidding process PLAs on federal construction contracts. when politicians steer contracts to donors and lobbyists who deny jobs to local construction workers. They maintain II. BACKGROUND government-mandated PLAs discourage competition from quality local contractors and more than 87% of the U.S. The subject of government-mandated PLAs has created a construction workforce13 because they are not affiliated great deal of controversy over the past few decades both with unions. They claim government-mandated PLAs in public policy circles and in the construction industry. A have led to projects that lack oversight, transparency and PLA is a pre-hire collective bargaining agreement between accountability. The result is a government contracting contractors and one or more labor organizations that system that isn’t cost-effective and robs hardworking establishes the terms of conditions of employment for a taxpayers of the value they deserve. specific construction contract. The agreement supersedes any existing collective bargaining agreement and applies to Opponents point to problematic PLA projects and all contractors and subcontractors who bid on the project. research suggesting that government-mandated PLAs 8 See J. McGowan, “The Discriminatory Impact of Union Fringe Benefit Requirements on Nonunion Workers Under Government-Mandated Project Labor Agreements,” (October 2009). 9 Executive order 13502, signed by President Obama on February 6, 2009, urges federal agencies to consider mandating the use of PLAs on federal construction projects costing $25 million or more on a case-by-case basis. This act revoked President George W. Bush executive orders 13202 and 13208, signed in 2001, that prohibited government-mandated PLAs on federal and federally funded construction projects. The Obama order indicates that federal agencies may require a PLA if such an agreement would achieve federal goals in economy and efficiency. According to the terms of the order, nonunion contractors may also compete for contracts subject to PLAs, but they must agree to the various terms and conditions contained in each PLA in order to win a federal contract and build a project. The Obama order also permits the use of government-mandated PLAs on federally assisted projects. 10 Federal Register, “Federal Acquisition Regulation; FAR Case 2009-005, Use of Project Labor Agreements for Federal Construction Projects,” April 13, 2010. 11 David G. Tuerck, PhD and William F. Burke, Beacon Hill Institute, “The Effects of Project Labor Agreements on Public School Construction in Connecti- cut,” (February 2020). 12 Construction and employer groups opposed to government-mandated PLAs include the American Pipeline Contractors Association, American Road and Transportation Builders Association, Associated Builders and Contractors, Associated General Contractors, Construction Industry Round Table, Independent Electrical Contractors, National Association of Home Builders, National Black Chamber of Commerce, National Federation of Indepen- dent Business, National Ready Mixed Concrete Association National Roofing Contractors Association, National Utility Contractors Association, Plastics Pipe Institute, Power and Communication Contractors Association, Small Business and Entrepreneurship Council and the U.S. Chamber of Commerce, among many other groups. In addition, government-mandated PLAs are opposed by more than a dozen taxpayer advocate groups. See recent letters to the White House and Congress at www.BuildAmericaLocal.com. 13 See Union Members Summary, U.S. Bureau of Labor Statistics, Jan. 22, 2021. Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 3 Instead of Reform, Policymakers Want to Perpetuate the Broken System increase the cost of school construction by 12% to 20%.14 government-mandated PLAs on state, local and publicly They argue government-mandated PLAs will result in funded construction projects to some degree.16 A handful taxpayers paying more for fewer schools, affordable of states have rolled back these laws following Democratic housing, roads, bridges and other infrastructure projects party takeovers of state government, bringing the total overall. Opponents argue the added costs of government- number of current states that currently have measures mandated PLAs will stifle construction industry job opposed to government-mandated PLAs on the books creation and improvements to America’s underfunded and to 24.17 In contrast, eight states have enacted measures crumbling infrastructure. Finally, opponents contend that encouraging the use of government-mandated PLAs on many of the alleged benefits of government-mandated state construction projects to some degree. In addition, PLAs are already prescribed by existing laws and/or can numerous localities have enacted measures prohibiting or be achieved through contracting language independent of encouraging the use of government-mandated PLAs on the anti-competitive and discriminatory provisions at the public works projects. core of typical government-mandated PLA schemes. Despite President Obama’s pro-PLA order, government- Proponents15 argue government-mandated PLAs can ensure mandated PLAs were not widely used on federal that large, complex projects are completed on time and construction projects during the Obama and Trump on schedule by preventing union strikes/labor unrest and administrations due to a variety of factors. Research found ensuring the use of a well-trained union workforce and quality that of all federal construction contracts exceeding $25 union-signatory contractors. They point to the inclusion of million from FY 2009 to FY 2020, just 12 contracts worth clauses in PLAs that establish labor management problem- a total of $1.25 billion out of 1,889 federal contracts worth solving committees that deal with scheduling, quality control, $117.36 billion were subject to government-mandated PLAs.18 health and safety and productivity problems during the project, which translate into project cost savings. Finally, It is unknown how much the Biden administration and proponents claim PLAs ensure the use of well-trained union lawmakers from the 117th Congress will increase the use workers who are paid family-sustaining wages and benefits, of government-mandated PLAs on federal and federally and can be crafted to meet certain workforce and business assisted construction contracts. With full Democratic party demographic hiring goals benefitting the community. control of the White House and the U.S. House and Senate, there is a strong likelihood there will be an increase in Presidential executive orders issued since 1992 have government-mandated PLAs via legislative requirements or affected the use of government-mandated PLAs for federal executive actions.19 For example, the Biden administration’s construction projects. The most recent order, President American Jobs Plan, the outline for a multitrillion-dollar Obama’s Feb. 6, 2009, Executive Order 13502, encourages spending plan including more than $1 trillion in investments federal agencies to consider mandating PLAs on a case- in America’s infrastructure, affordable housing and clean by-case basis for federal projects exceeding $25 million energy projects, calls on lawmakers to pass legislation in total costs. It also permits state and local governments requiring PLAs and other pro-labor provisions on taxpayer- procuring public works projects that receive federal funding funded federal and federally assisted construction projects.20 to mandate PLAs. In addition, the Biden administration has enacted policies through agency rulemaking not prescribed by legislation Since the order was issued in 2009, 26 states have enacted that encourages state and local governments to mandate Fair and Open Competition Act legislation, which prohibits 14 See multiple studies measuring the impact of PLA mandates on public school construction already subject to state prevailing wage laws in Connecti- cut, Massachusetts, New Jersey, New York and Ohio by the Beacon Hill Institute; an October 2010 report by the New Jersey Department of Labor and Workforce Development, “Annual Report to the Governor and Legislature: Use of Project Labor Agreements in Public Works Building Projects in Fiscal Year 2008”; and a 2011 study by the National University System Institute for Policy Research, “Measuring the Cost of Project Labor Agreements on School Construction in California.” Available at https://buildamericalocal.com/learn-more/. 15 Proponents of government-mandated PLAs are 14 national construction unions affiliated with North America’s Building Trades Unions and their local affiliates, as well as national and local contractor trade associations primarily representing unionized contractors (e.g. the National Electrical Contrac- tors Association), and other left-of-center/progressive ideological groups and think tanks (e.g. the Center for American Progress). 16 See list of state Fair and Open Competition Act statutes at: https://www.abc.org/Portals/1/2021%20Files/Current-State-FOCA-Laws-GMPLA-Bans- through-Virginia%20Repeal-Updated-June-2021.xlsx?ver=2021-06-29-120347-173. 17 See map of state Fair and Open Competition laws at: https://www.abc.org/Portals/1/2021%20Files/Map_FairCompetition(June). PNG?ver=2021-06-29-132759-323. 18 See TruthAboutPLAs.com, “February 2021 Update: ABC’s Fight Against Government-Mandated Project Labor Agreements,” Feb. 10, 2021. 19 Bruce Buckley, Engineering News Record “Will Project Labor Agreements Grow in Biden Administration?” December 16, 2020. 20 White House Fact Sheet: The American Jobs Plan, March 31, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021/03/31/fact-sheet-the-american-jobs-plan/. Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 4 Instead of Reform, Policymakers Want to Perpetuate the Broken System PLAs on construction projects receiving federal assistance.21 1a. Calculate labor costs of applicable federal These policies are consistent with campaign statements and contracts policy papers issued by the Biden campaign. Next, I estimate the llabor costs typically do not comprise III. METHODOLOGY the largest cost element in construction contracts. Previous U.S. Census Bureau data indicates that labor costs are This report uses a similar methodology to the 2009 report in normally 20% to 30% of construction contracts (Phillips an attempt to quantify the financial impact of PLA mandates 1998).23 Accordingly, I used 25% to compute labor costs in on employees and contractors engaged on future federal the original 2009 study. construction contracts under the Biden administration. In 2017, U.S. Census Bureau data pegged labor costs The first step in this process is to identify both the population of 32.7% of a project across the entire construction of federal construction contracts over $25 million potentially industry.24 This number includes single family subject to government-mandated PLAs along with the home residential construction, which has a much labor costs associated with these contracts. Second, the smaller percentage of labor costs than other types federal construction market share for nonunion contractors of construction that have higher labor costs. To be is determined. Third, estimates are computed for lost conservative, I use 35% in this study. Specifically, compensation for employees while working on PLA-based estimated total labor costs are $3,571,799,658 federal construction projects. Fourth, an estimate of additional ($10,205,141,881 x .35) for all federal construction costs to employers is derived. The fifth step is to estimate contracts in excess of $25 million. the total costs based on the volume of PLA mandates. The sixth and final step is to estimate the prospective withdrawal liability faced by employers who separate from the union upon 2. Federal construction market share for nonunion completion of their work on a government-mandated PLA. contractors Bureau of Labor Statistics data indicate that unions now comprise about 12.7% of the U.S. construction workforce.25 1. Identify annual federal construction spending potentially subject to government-mandated PLAs The percentage used in the original 2009 study was 15%. Since there is no government data disclosing the union Based on data from USASpending.gov, Exhibit 1 shows the contractor market share of federal construction contracts, annual value of public construction projects greater than an assumption is made that the same percentage of 12.7 $25 million performed in the United States and territories applies to the federal construction marketplace. Accordingly, during FY 2015 to FY 2020.22 The annual average of the nonunion market share of federal construction contracts contracts in this population totals $10,205,141,881, or 43% of is assumed to be 87.3%. The implication for this study is that all federal construction contracts totaling $23.6 billion. This 87.3% of the construction workforce could be compelled to figure of the average annual number of federal projects adopt new fringe benefit rules and experience a reduction in exceeding $25 million is needed to project the future take-home pay under PLAs. construction spending and costs in this model. 21 See language in the U.S. Treasury’s May 17, 2021, interim final rule on $350 billion worth of federal funding for state and local fiscal recovery allocat- ed in the American Rescue Plan Act that encourages recipients of federal dollars to mandate PLAs on federally assisted water, sewer and broad- band projects. In addition, the U.S. Department of Transportation Build America Bureau announced Feb. 17, 2021, that the FY 2021 Infrastructure for Rebuilding America grant program, which provides $889 million to fund state and locally procured transportation projects of national and regional significance, encourages grant applicants to mandate PLAs. See “Notice of Funding Opportunity for the Department of Transportation’s Infrastructure For Rebuilding America Program for Fiscal Year 2021,” and related program announcement: https://www.transportation.gov/buildamerica/financing/ infra-grants/infrastructure-rebuilding-america. 22 Annual reports accessed Dec. 23, 2020, from USASpending.gov and manually filtered for NAICS 23 contracts exceeding $25 million performed in the United States and Guam. $25 million is the threshold designated in President Obama’s pro-PLA Executive Order 13502 and related regulations, where PLAs must be considered. See example of pre-filtered raw data from FY20 from USASpending.gov: https://files.usaspending.gov/generated_down- loads/All_PrimeTransactions_2020-01-25_H15M21S59841420.zip. 23 Philips, Peter. 1998. “Kansas and Prevailing Wage Legislation.” Report prepared for the Kansas Senate Labor Relations Committee. Also cited in Ma- halia, N. “Prevailing wages and government contracting costs: A review of the research,” Economic Policy Institute Report, Briefing Paper #215, July 3, 2008. 24 U.S. Census Bureau, “Construction: Summary Statistics for the U.S., States, and Selected Geographies: 2017,” Formula: (Annual Payroll + Total Fringe Benefits) / Net Value of Construction Work = Labor Cost % of Construction Project Cost 25 U.S. Bureau of Labor Statistics, 2021, https://www.bls.gov/iag/tgs/iag23.htm. Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 5 Instead of Reform, Policymakers Want to Perpetuate the Broken System 3. Financial impact of government-mandated PLAs 3a. Pensions on nonunion employees’ take-home pay The pension contribution for a defined benefit plan pays To measure the potential impact of PLAs on nonunion workers their monthly benefit amount once they are workers’ take-home pay, surveyed nonunion contractors eligible for retirement. A second pension allocation is and lawyers were asked to provide data on the amount also commonly made to an annuity fund. These amounts that nonunion workers stand to potentially lose from joining go into an account in the worker’s name. Unfortunately, PLAs on government projects. In each case, respondents nonunion workers who have contributed to these funds identified three major sources of earnings reductions on a PLA project typically never receive any of these for nonunion workers who join PLA projects. First, the funds due to vesting requirements.26 The total average mandatory MEPP contributions were cited as a major pension allocation for members of these 13 unions is 19% source of lost earnings. Most PLAs require contributions ($10.93/$58.88) of their total compensation package. to MEPPs that have union membership and vesting Accordingly, this pension amount is included among those requirements that nonunion workers do not meet. Second, benefits nonunion workers will never see as they work on union dues and other withholdings required in union PLA projects. collective bargaining agreements are indicated as another major source of lost earnings for nonunion workers on PLA- 3b. Union dues sponsored contracts. Third, the excessive cost of health The average percentage for union dues withholding insurance premiums charged by union plans was identified for all 13 unions is 6% (some unions withhold greater as another source of lost earnings. percentages than others). For example, the International Exhibit 2 presents data from the wage schedules of current Union of Painters and Allied Trades withholds the largest publicly available collective bargaining agreements of 13 percentages for union dues withholding of all other unions construction unions. Column 1 shows taxable wages for surveyed in this study. First, they withhold administrative each CBA. Since union dues are withheld from employee dues, which are funds paid to the union for contract earnings, taxable wages are reduced by this amount. The negotiations, contract enforcement, overhead in gaining total package of compensation includes amounts paid for market share and the securing of PLAs. Next, they withhold health care and pensions. In general, prevailing wage laws equality dues, which promote the union’s job targeting require the total compensation be paid to workers in a programs, which subsidize union-signatory contractors’ combination of wages and benefits. The average amounts bids against nonunion competitors and help ensure that for each column are shown at the bottom of Exhibit 2. The union contractors win their contract. Third, they withhold average percentages are also shown for each category. organizing dues, which are used to hire, train and run While other union CBAs may have wage schedules with various other union organizing programs and campaigns. benefits and costs larger or smaller than the ones cited Fourth, unity action dues are withheld and used to pay for here, these CBAs provide a reasonable sample to estimate building and construction trades councils. Fifth, dues are the costs of this model. withheld for general administration of the IUPAT union. Sixth, there are dues withheld for the IUPAT political action trust and political campaign. These funds are used to elect local, regional, state and federal politicians who are labor- friendly. Seventh and finally, dues are withheld for the vacation holiday fund.27 All of these dues add up to more than 7% for the IUPAT painters’ union. 26 Vesting is a legal term that means to give or earn a right to a present or future payment as in a pension. According to the IUPAT Plan Description, the vesting schedule requires at least five years of contributions, and under certain conditions may require 10 years of contributions. In addition, one year of vesting service is awarded only when the worker has at least 1,000 hours worked. Because construction projects require certain types of labor only during various phases of a project, this means a nonunion worker would have to be employed for 24 weeks at 40 hours a week on a PLA project to hit year one vesting milestones, which is very unlikely on typical projects for most trades. See: https://iupat.org/wp-content/uploads/IUPAT-Summa- ry-Plan-Description.pdf. 27 Unions typically withhold holiday or vacation pay as a way to fund employees’ time off. In other words, they receive vacation or time off pay, but it is self-funded. Since these funds are typically placed in a separate fund in the employee’s name, it is assumed they will receive these funds. Therefore, they are not included as part of unions dues and withholdings. Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 6 Instead of Reform, Policymakers Want to Perpetuate the Broken System 3c. Health insurance Based on these calculations, a good argument can be made that union workers are overpaying significantly Deductions for “health and welfare” typically cover for health insurance. If fair market health care premiums medical, dental and vision coverage for workers. The are closer to 7% of total compensation, and union health rates are set by the health care providers and approved insurance costs are 16% of total compensation, the loss to by the trustees. An inspection of the Form 5500 database nonunion workers is actually 9% of total compensation. shows that many unions have their own health and welfare fund. The average hourly rate for the surveyed union health and welfare deduction is $9.26, or 16% of the total 3d. Summary of lost benefits and expenses for compensation package. nonunion employees on PLAs Due to vesting requirements, nonunion workers typically Most private sector insurance plans have separate rates lose their pension contributions. Union dues and depending on whether the worker is single, married or withholding further reduce their take-home pay. Their married with children. In contrast, many union plans have tenure on PLA contracts is normally too short to gain any one “blended” rate they charge all workers. benefits from these two items unless they join a union For example, the Sacramento District Council 16 wage and meet vesting and other membership requirements schedule shows the current insurance rate as $10.55 per after the PLA project is completed. Nonunion workers also hour. When compared with typical market-based insurance suffer loss as a result of their excessive contributions to the costs, IUPAT employee health insurance contributions exorbitant, above-market costs of union health care plans. appear to be exorbitant. For example, assuming 160 work The sum of these lost benefits and other expenses for hours in a month, the $10.55 hourly premium yields a nonunion workers on PLA contracts amounts to 34% of monthly cost of $1,688 ($10.55 x 160). A typical open shop total compensation (pensions, 19%; union dues and other rate for good insurance coverage for a single painter is withholding, 6%; excess health care contributions, 9%). $4,80 per hour.28 This particular open shop plan is very competitive, with a $0 annual deductible and $1,500 out-of- pocket maximum. Adding in the dental/vision/life coverage 4. Estimate of additional costs to employers for comes out to a total of $5.27 per hour for good insurance employees on PLA projects coverage. In comparison, when union plans charge all workers one “blended rate” they may be shortchanging The next step in the analysis is to determine the average their members. excess fringe benefit costs that nonunion businesses often pay when their employees work on short-term PLA contracts. The next question is, what amounts to an average health insurance contribution for workers throughout the For the 13 union CBAs reviewed in this study, the average economy? The Kaiser Family Foundation conducts an pension contribution is 19% of an employee’s total annual survey of employers and provides a detailed look at compensation. In addition, the average health insurance trends in employer-sponsored health coverage, including contribution to the union plans on behalf of employees is premiums, employee contributions, cost-sharing provisions, 16% percent of an employee’s total compensation. offer rates, wellness programs and employer practices. For While employers are not obligated to do so, interviews the year 2020, annual premiums for employer-sponsored suggest nonunion employers typically maintain contributions family health coverage reached $21,342, up 4% from last to existing retirement and health insurance plans, in addition year. Of this amount, workers paid $5,588, on average, to contributing to union plans required under a PLA, for toward the cost of their coverage.29 as long as their nonunion employees work on short-term This breaks down to an average monthly contribution of PLA projects. This double payment of benefits increases approximately $465. Assuming workers put in 160 hours nonunion employers’ fringe benefit costs by an extra 35% per month, the monthly amount of $465 translates into an (19%+16%) of a nonunion employee’s compensation when hourly rate of $2.90. This means that covered employees they work on a short-term PLA construction contract. The in the private sector are purchasing insurance coverage for added costs of paying these duplicative benefits place roughly one-third ($2.90/$9.26) of what union construction nonunion contractors at a competitive disadvantage when workers are paying. Moreover, using $2.90 as a percentage trying to win bids against unionized firms that are not faced of total compensation ($58.88), the market-based health with double benefits costs. insurance costs are roughly 5% of total compensation. 28 Current data provided from open shop painting business in Sacramento, California. 29 See https://www.kff.org/health-costs/. Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 7 Instead of Reform, Policymakers Want to Perpetuate the Broken System Summary of Potential Extra Costs for Nonunion Employers and Employees on Government-mandated PLAs Employers Employees Pensions 19% 19% Health Insurance 16% 9% (16% - 7%*) Union Dues Withholding 0% 6% Total 35% 34% * As noted above, 7% is the estimated cost of market-based insurance premiums. 5. Total impact of government-mandated PLAs on government-mandated PLAs. For purposes of this study, I nonunion employees and employers use three estimates for federal contracts that would move to government-mandated PLAs (15%, 30% and 50%) to The final step in the model is to determine the macro calculate the range. Accordingly, lost wages are projected portion of lost wages for nonunion employees and excess to fall into the following range: $159,209,398 at 15%, costs for nonunion employers while working on federal $318,418,796 at 30% and $530,697,993 at 50%. construction projects with a PLA. As previously noted, an assumption of the model is that union shops perform 12.7% 5b. Total impact of government-mandated PLAs on of federal contracts in the data population. Therefore, the nonunion portion of labor costs is $3,118,181,101 nonunion employers ($3,571,799,658 x .873). This cost is used to compute both Nonunion employers are often exposed to duplicate the total lost wages for employees and the total additional and excess costs when their employees work on short- costs for employers as they pay certain fringe benefits for term government-mandated PLA contracts. Employers employees while they work on short-term PLA contracts. typically maintain pension contributions to existing plans. Also, they maintain health insurance coverage for the 5a. Total impact of government-mandated PLAs on employee, expecting them to return after the PLA contract nonunion employees is finished. As discussed above, the estimate of 35% is used to compute duplicate fringe benefit costs for employers As explained earlier, 34% of a nonunion employee’s while their employees work on short-term PLA projects. total compensation is lost or stolen when they work on As a portion of total wages, that amounts to $1,092,613,515 short-term government-mandated PLA projects, which ($3,121,752,901 x .35). Next, applying the same estimates amounts to $1,060,181,574 ($3,118,181,101 x .34). Next, as above yields the following range of additional costs for the actual loss of nonunion employee compensation employers: $163,892,027 at 15%, $327,784,055 at 30% and depends on how many federal contracts are subject to $546,306,758 at 50%. % of Federal Construction Contracts Moving to Government-mandated PLAs Lost Wages and Benefits 15% 30% 50% to Employees $ 159,027,236 $ 318,054,472 $ 530,090,787 % of Federal Construction Contracts Moving to Government-mandated PLAs Excess Fringe Benefit 15% 30% 50% Costs to Employers $ 163,892,027 $ 327,784,055 $ 546,306,758 Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 8 Instead of Reform, Policymakers Want to Perpetuate the Broken System 6. Withdrawal liability exposure for nonunion with the NLRB and unions. Mason has helped many employers companies navigate away from the potentially enormous cost of being affiliated with union MEPPs. The purpose of this section is to explore the potential exposure for nonunion contractors that face increased and Mason also emphasized the hazards of membership or unnecessary exposure to pension fund liabilities when affiliation with union MEPPs. According to Mason, any they perform work under PLAs. This section is based both unionized company involved in a MEPP should decertify the on interviews with key players in the field such as labor union and get out as soon as possible. He explained that attorneys and an examination of data from Form 5500s for this conclusion applies regardless of the funding condition 20 MEPPs in the construction industry. This data is used of the pension. His position is that PLA contracts that to calculate a prospective “pro-rata” withdrawal liability for require union labor are a bad deal for both the public and each of the 20 pensions examined. for nonunion contractors that may get involved. They are a bad deal for the public due to excessive costs. They are As noted earlier, when construction companies sign a bad deal for nonunion contractors that join PLAs as they PLAs, they generally must contribute to defined-benefit lead to substantially greater costs and the employees often multiemployer pension plans sponsored by the union(s). never receive any benefits from their pension contributions After signing PLAs and/or other union agreements, due to vesting requirements. In addition, he noted that construction employers may find themselves with interest expenses typically double the total withdrawal unwanted MEPP withdrawal liability they did not bargain liability costs. for. For small and mid-sized companies, this liability can be enormous, sometimes greater than the value of the 6b. When is withdrawal liability triggered? company itself. The withdrawal liability is computed based on the 6a. Interviews with key experts in the field employer’s share of the plan’s underfunded liabilities. The withdrawal liability applies when a contractor either As explained by Thomas Lenz, a prominent labor withdraws from the pension or continues working in and employment attorney from Pasadena, California, the same geographical area in a nonunion context. My contractors sometimes stumble into potentially crippling original 2009 report conjectured that such withdrawal withdrawal liability exposures. For example, before meeting liabilities may reach $1 million.30 This report provides more Lenz, one client signed a master labor agreement disguised detailed information and calculations concerning the as a PLA solely in order to make picket lines disappear. He size of prospective withdrawal liabilities for 20 different eventually encountered a substantial withdrawal liability. construction industry MEPPs. Another construction contractor received notice of a The approach to calculating an employer’s withdrawal surprise withdrawal liability when the union told him liability involves first calculating, and then allocating, the that it would no longer sign any agreements with him. plan’s unfunded valuation benefit or liability among the Lenz related a third case where the union unexpectedly participating employers. An April 2020 issue brief from pulled the plug on one of his clients, which had been an the American Academy of Actuaries presents the rules for equipment rental signatory for more than 20 years. This calculating a withdrawal liability.31 case also led to a significant withdrawal liability. 6c. Calculating a plan’s unfunded vested benefits Finally, one client in Colorado, a fire sprinkler company, experienced betrayal and a subsequent withdrawal liability liability after his affiliated union suddenly decided to subsidize one A plan’s UVB is the difference between the liability for of his competitors and underbid a signatory to their own vested benefits under the plan and the value of plan union contract. Lenz took several of these cases before the assets. The most significant actuarial assumption for this National Labor Relations Board seeking, and in many cases calculation is the interest rate used to discount future securing, relief for his clients. expected liabilities. There are two approaches for selecting the interest rate to estimate the rate of investment returns A second labor and employment law attorney interviewed that plan assets will earn in the future. The first approach for this report is Ron Mason, an experienced management typically involves developing expected returns for the labor lawyer in Columbus, Ohio, who specializes in dealings various asset classes in the plan’s investment portfolio. 30 See Supra note 1, p. 24. 31 See “Determining Withdrawal Liability for MEPPs: A Range of Approaches to Actuarial Assumptions,” https://www.actuary.org/sites/default/ files/2020-04/Withdrawal_Liability.pdf. Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 9 Instead of Reform, Policymakers Want to Perpetuate the Broken System This approach usually embraces a discount rate near 7%. provides a reasonable average estimate for the withdrawal The second approach bases the selection of the discount liability for each employer in that pension. rate on observations of market data. The PBGC publishes interest rates each quarter on its survey of insurers in the Exhibit 4 shows the estimated “per-capita” withdrawal annuity marketplace. The actuarial liability calculated used liability for the 20 MEPPs in the construction industry in this market-observed interest rate is typically consistent included in this study. The first 10 are in the “endangered” with an estimate of the cost of settling a pension liability. category, where the funding ratio is 65% to 80%. The This discount rate is near the 3% rate customarily used on next 10 are in the “critical” zone, where the funding ratio Form 5500 for multiemployer pensions. is below 65%. The average per-capita withdrawal liability in the endangered plans is $2,173,203. The average After selecting the discount rate, the next step is to multiply per-capita withdrawal liability in the critical plan group is the fund’s UVB liability by a fraction. The numerator is $2,763,869. These figures serve to illustrate the potentially the amount of the withdrawing employer’s contribution large withdrawal liabilities that employers could face by for that plan year. The denominator is the amount of all unwittingly joining certain MEPPs. Virtually every union employers’ contributions. In theory, this becomes the plan also has considerably more inactive participants than foundation for the 20-year cap in place for the payment active ones. Similarly, the number of employers is declining of the withdrawal liability. However, Wolf and Spangler over time. (2015) point out that the payment period for the withdrawal liability may be as short as five years.32 They note, “as MEPP administrators have also aggressively pursued a practical matter, employers frequently are required to unpaid withdrawal liability claims against the purchasers pay withdrawal liability in annual amounts substantially of a withdrawing employer’s assets, even where traditional in excess of their pre-withdrawal annual contributions, criteria of “successor liability” are not present.35 To avoid despite the Multiemployer Pension Plan Amendment Act multimillion-dollar exposures, companies and contractors of 1980 limitations. This occurs, in particular, when the are incentivized to avoid signing PLAs that may entangle employer’s contribution base units have declined over the them with troubled MEPPs. This tends to make the funding years while the negotiated contribution rate has increased. situation even worse for existing MEPPs. Consequently, many withdrawing employers have less than five years to pay the entire liability.33 7. A snapshot of MEP plans in the construction 6d. Determining withdrawal liability from Form 5500 industry As noted earlier, the Pension Benefit Guaranty As explained above, the total UVB is determined first. Corporpation is the independent agency of the federal The data for this calculation is found on Form 5500 and government that monitors and privately insures pension is based on the current view for both assets and liability benefits in private sector. The PBGC takes over MEP plans values. The UVB is determined by subtracting the current value of the assets from the total RPA ’94 liability34 when they become insolvent. Once these plans are handed over to PBGC, qualified individual beneficiaries may receive as reported on Form 5500. The next step would be a up to $12,870 per year in defined benefits. According to determination of the contractor’s respective share. data from the PBGC, the construction industry is a major The contractor’s share of the UVB is computed as the contributor to both current MEPP underfunding and future fraction of its average pension contribution divided by the PBGC insurance program funding shortfalls. total contributions from all employers. Form 5500 does not MEPP underfunding has been widely discussed. provide this information. However, it does present the total This section focuses on construction industry MEPP number of employers contributing to the pension. Thus, it underfunding. To put it in context, the amount of is possible to determine a pro-rata withdrawal liability as if construction industry MEPP underfunding grew to $167 each employer pays an equal amount each year. This figure 32 See Wolf C. and P. Spangler “Withdrawal Liability to MEPPs Under Erissa,” 2015, https://www.vedderprice.com/-/media/files/vedder-thinking/publica- tions/2015/05/updates-to-withdrawal-liability-to-multiemployer-p/files/2015-withdrawal-liability-to-multiemployer-pension/fileattachment/2015-with- drawal-liability-to-multiemployer-pension.pdf 33 See Ibid. at page 14. 34 See discussion of RPA ’94 liability, which is a measure of the current liability that uses a more realistic discount rate and results in a higher value for current value, https://www.everycrsreport.com/reports/R43305.html 35 See McGuire-Woods at https://www.mcguirewoods.com/client-resources/Alerts/2018/7/Purchasing-Assets-Employer-MEP-Withdrawal-Liability-Succes- sor. Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 10 Instead of Reform, Policymakers Want to Perpetuate the Broken System billion or 47% of total underfunding in 2009.36 According 8. A snapshot of the entire MEPP system to Table M-14 of the PBGC’s 2019 Pension Insurance Data Tables report, which contains the most recent PBGC data In any discussion of the financial solvency of the MEPP on MEPPs, the amount of construction industry MEPP system, it should be noted that there are two schools of underfunding grew to $368.45 billion (48.7%) of the total thought for calculating the funding ratio. Actuaries, who PBGC-insured MEPP underfunding of $756.99 billion.37 This officially score the pensions’ financial solvency, rely on the represents an average annual rate of growth of 8.23%. At traditional view. Both the PBGC and Form 5500 rely on the this rate of growth, total construction industry underfunding current view. The traditional view assumes a higher interest will grow to $467.2 billion by 2022. rate of around 7% to both calculate the value of assets and to discount liabilities. The current view assumes a lower 7a. Number of underfunded plans rate of between 3% and 4%. These two schools of thought produce dramatically different funding ratios for pensions. The 2019 PBGC report indicates that there are 753 unfunded plans in the construction industry. This amounts Studies have applied both rates to MEP plans to to 54.8% of the total 1,373 plans insured by the PBGC in the demonstrate dramatically different results. For example, construction industry.38 Zion et al. (2012) computed the average funding status for the MEPP system using both views. Under the current view, 7b. Underfunded plans with the largest number of the portfolio of 1,354 MEPPs had an aggregate funding ratio employees of 46%. Under the traditional view, the aggregate funding ratio climbed steeply to 81%.42 Moreover, they estimated a According to the 2018 PBGC report, the largest number of total funding deficit of $369 billion for all U.S. MEPPs. employees in underfunded plans, almost 3.877 million, are from the construction industry. This amounts to 36.7% of the 10.565 An example of an estimate using the traditional view is million PBGC-insured MEPP participants across all industries.39 shown by a study by Miller (2017). Using the traditional view, they projected the much smaller deficit of $36.4 7c. Plans in critical and declining status billion for all MEP plans.43 Miller also reported that the three MEPPs of Central States, United Mine Workers and the In 2020, 30 of 65 MEPPs sending Critical and Declining Bakers and Confectionary Union were responsible for 63% Status Notices to plan participants (reflecting plan of that deficit. The total deficit of $36.4 billion, broken down performance through the end of 2019) were from the among the four pensions above and the rest, is shown in construction industry, according to a list posted by DOL’s Panel A of Exhibit 4. Employee Benefits Security Administration. In addition, 81 out of 121 MEPPs sending Critical Status Notices and 47 out As reported by Bradford (2019), the PBGC released a more of 61 sending Endangered Status Notices were from the recent report that showed a record funding deficit of $65.2 construction industry.40 billion for the multiemployer pension system. The report indicated that total liabilities for the MEP system were $68 7d. Share of total PBGC liabilities billion with only $2.9 billion in assets as of Sept. 30. The PBGC According to the 2019 PBGC report, the construction also indicated that by 2025, the probability is 99% that the industry made up $646.8 billion (49.9%) of the PBGC’s total PBGC will become insolvent. Since that time, the multiemployer liabilities.41 This data makes it clear that the construction pension system’s aggregate funding level is estimated to have industry was a key contributor to the drastic underfunding declined further from 85% to 75% (using the traditional view) of MEPPs. Moreover, they will likely cause dramatic future between Jan. 1 and April 7, 2020, due to COVID-19, according PBGC insurance program funding shortfalls. to the consulting firm Milliman. That is the equivalent of adding $21,000 of underfunding per active participant. 36 See Table M-14: Funding of PBGC-Insured Plans by Industry (2009, estimated) Multiemployer Program of PBGC 2010 Pension Insurance Data Tables report. 37 See Table M-14: Funding of PBGC-Insured Plans by Industry (2018) Multiemployer Program of PBGC 2019 Pension Insurance Data Tables report. 38 See Table M-8: PBGC-Insured Plans and Participants by Industry (2018) Multiemployer Program of PBGC 2019 Pension Insurance Data Tables report. 39 See Table M-8: PBGC-Insured Plans and Participants by Industry (2018) Multiemployer Program of PBGC 2019 Pension Insurance Data Tables report. 40 See “Taxpayer Bailout of Multiemployer Pension Plans and Government-Mandated Project Labor Agreements,” TheTruthAboutPLAs.com, March 17, 2021. 41 See Table M-14: Funding of PBGC-Insured Plans by Industry (2018) Multiemployer Program of PBGC 2019 Pension Insurance Data Tables report. 42 See Zion, et. al. p. 26. 43 Miller, S., “114 Multiemployer Pension Plans Projected to Fail Within 20 Years: Failing Union Pensions May Seek Relief Through Reduced Payouts,” SHRM.org, August 29. 2017. Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 11 Instead of Reform, Policymakers Want to Perpetuate the Broken System Further evidence of this decline was reflected by an increase significant loss for 2019 for this MEPP. This is another in the number of plans in either critical and declining status distressing sign for this MEPP. or insolvent and paying reduced benefits with financial assistance from the PBGC to 130.44 Milliman also determined Similarly, the Plasterers and Cement Masons Local No. that there had been a further decline in the average funding 94 MEPP reveals a significant loss for the year. If these ratio of MEPPs of 10%. Coffing et al. (2020) predicted a pensions cannot perform well in a record stock market, similar decline in the MEPP system.45 They predicted that what will they do during the next downturn? Finally, the MEPPs are likely to suffer further declines due to the sudden return on assets displays the ratio of total earnings from drop in industry activity due to COVID-19. investment over total assets. The variance in returns indicates different levels of financial performance for 8a. Financial management of MEPPs managers of each MEPP. These results also suggest that the financial management of a MEPP has a significant The two primary objectives of a MEPP are to manage impact on the plan’s solvency and financial health. plan assets to maximize earnings and to collect employer contributions and pay employee pension benefits. Ideally, contributions should cover a large share of employee 9. Congress and Biden administration initiatives for pension benefits. This structure provides more safety for the MEPP system bailout the pension in times of recession when earnings decline. Prior to the election, the Biden presidential campaign Exhibit 5 shows additional financial characteristics of these promoted relief measures for the MEPP system. This relief construction industry MEPPs. Revenue data is provided for was presented by Congress in the form of the Butch Lewis both employer contributions and earnings. Expense data is Act.46 On March 11, 2021, language in the American Rescue provided for both employee pension benefit payments and Plan Act incorporated aspects of the Butch Lewis Act. The for earnings. The return on assets provides a good picture law seeks to preserve and restore the pensions of more than of how well the MEPP is managed. Especially during this one million retirees and workers in an estimated 200 to 225 time of record stock market performance, it is important for severely underfunded multiemployer pension plans.47 The MEPPs to have solid financial performance. MEPP system bailout is estimated to cost $86 billion48 to $94 Ideally, an MEPP will have enough employer contributions billion,49 although the total may be much more. to cover employee pension benefit payments. This leaves room for earnings to improve the financial condition of the 9a. Special financial assistance for financially pension. In fact, there are several plans in the endangered troubled plans (Sec. 9704)50  group where employer contributions exceed employee The ARPA established a new financial assistance fund pension benefits. This is a good sign. In the critical plan under the PBGC to support select MEPPs on the verge of group, there is only one such pension, the Carpenters insolvency. The ARPA allows the following broad categories Pension Trust Fund for Northern California, where employer of MEPPs to apply for financial assistance under the new contributions exceed employee pension benefits. This PBGC program: shows a higher level of risk intrinsic in these plans. • The MEPP is in critical and declining status for any The pension with the smallest percentage of employer plan year beginning in 2020 through 2022; contributions is Local 202 Sheet Metal Workers Pension Fund at 6%. This indicates that 94% of its income was • Benefit cuts or suspensions have already been derived from earnings. This suggests that the fund will approved by the U.S. Treasury as of the date of the suffer severe financial consequences when earnings ARPA’s enactment; decline. The net income margin also shows an overall 44 Lantz N., R. Barker, T. Connor, S. Kliternick, J. Steward, and W. Wade, “Multiemployer Pension Funding Study”: December 2019, February 2020. 45 Coffing K., T. Connor, and N Lantz, “COVID-19 to Leave Multiemployer Pension System More Distressed Than Ever,” Multiemployer Review, April 2020. 46 The Butch Lewis Act of 2017, S. 2147, 115th Congress, 1st Sess., https://www.congress.gov/115/bills/s2147/BILLS-115s2147is.pdf (accessed November 15, 2020). Also see S. Miller, “Biden Proposals Could Alter Retirement Planning Landscape,” Society for Advancement of Human Resource Management (SHRM), November 16, 2020. 47 Estimates of number of plans affected overall and in each category come from a March 2021 article published by Milliman, a consulting firm. Nina Lantz, Yutaro Saki, Aaron Shapiro, “Butch Lewis Emergency Pension Relief Act of 2021,” Multiemployer Review. 48 Congressional Budget Office, “Reconciliation Recommendations of the House Committee on Ways and Means,” Feb. 17, 2021, https://www.cbo.gov/ system/files/2021-02/hwaysandmeansreconciliation.pdf.. 49 Special Financial Assistance by PBGC, 86 Fed. Reg., 36,598, 36,614 (July 12, 2021). 50 https://www.jdsupra.com/legalnews/struggling-multiemployer-pension-plans-7223095/ Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 12 Instead of Reform, Policymakers Want to Perpetuate the Broken System • In any plan year beginning in 2020 through 2022, 9d. No requirement to repay financial assistance the plan is certified by the plan’s actuary to be in received critical status, has a modified funding percentage of less than 40%, and has a ratio of active to inactive The ARPA explicitly states that MEPPs receiving financial participants which is less than two to three; or assistance under the ARPA are not required to repay the PBGC for any amount of the financial assistance payment. • MEPPs that became insolvent after Dec. 16, 2014, However, MEPPs must use their financial assistance have remained insolvent and have not been payments for benefit payments and plan expenses. MEPPs terminated as of the date of the ARPA’s enactment. that fail to adhere to these limitations may be forced to repay some or all of the financial assistance payment. 9b. Eligibility and application process The ARPA specifies that receipt of a special financial PBGC is authorized to limit applications for the first two assistance payment does not relieve MEPPs from making years following the ARPA’s enactment to: payment of PBGC premiums otherwise applicable to underfunded plans. Moreover, the ARPA mandates that • MEPPs that are insolvent or likely to become insolvent within five years of the date of the ARPA’s MEPPs receiving special financial assistance payments enactment; be deemed to be in critical status until the last plan year ending in 2051. • MEPPs where the PBGC projects that the present value of financial assistance payments as otherwise 9e. Temporary delay on funding status designations available to the MEPP through existing PBGC MEPP sponsors generally must certify the plan’s funding programs exceeds $1 billion; status on an annual basis. The plan is certified as being either in endangered (generally, 65% to 79% funded), • MEPPs that have implemented benefit suspensions as of the date of the ARPA’s enactment; or critical (generally, less than 65% funded), or critical and declining status (generally, less than 65% funded • MEPPs that satisfy similar circumstances approved and projected to become insolvent within ten plan by the PBGC. years), or none of the above (generally, more than 80% funded). Entry into endangered, critical or critical and 9c. Amount of financial assistance available declining status requires plan sponsors to implement certain adjustments to optional benefits and to adopt The ARPA specifies that there is no cap on the amount supplemental benefit contribution requirements for of financial assistance that can be granted by the PBGC contributing employers. These requirements include to the MEPP. The PBGC will provide the amount required a funding improvement plan for MEPPs in endangered for the MEPP to pay all benefits due during the period status and a rehabilitation plan for MEPPs in critical or beginning on the date of the special financial assistance critical and declining status. payment and ending on the last day of the MEPP’s plan year ending in 2051. ARPA also obligates MEPPs receiving Under the ARPA, a MEPP may also elect that its funding special financial assistance to reinstate benefits that were status for the first plan year beginning on or after March 1, previously suspended and to use a portion of the special 2020, and ending on Feb. 28, 2021, or the next succeeding financial assistance to make participants and beneficiaries plan year be the same funding status as reported by the in pay status whole for reductions caused by previous MEPP for the plan year preceding the designated plan year. suspensions. For example, a MEPP that was in endangered status for the plan year ending on Dec. 31, 2020, can elect to retain The ARPA also restricts an MEPP’s use of special financial its endangered status for either the plan year beginning assistance payments by making these payments available in January 2021 or January 2022. This relief allows MEPPs only for payment of benefits and plan expenses, requiring to avoid implementing long-term changes (e.g., mandatory that the payments be segregated from other plan assets adoption of a rehabilitation plan) due to funding changes and obligating the MEPP to invest the financial assistance that may be short term and resulting from the COVID-19 solely in investment-grade bonds or other investments public health emergency. approved by the PBGC. Essentially, the ARPA is making these special financial assistance payments available solely 9f. Projected costs of MEPP system bailout for the purpose of paying benefits and expenses, not to resolve MEPP underfunding either directly or by chasing This new law has a number of critics who raise important greater returns through riskier investment strategies. objections to this government bailout. Aharon Friedman, former senior tax counsel to the House Ways and Means Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 13 Instead of Reform, Policymakers Want to Perpetuate the Broken System Committee, asserts that the legislation will saddle participants left in the pension. For most all the rest of the taxpayers with unfunded pension promises made by plans, the number of inactive participants relative to active MEPPs, which are underfunded by more than $100 billion. participants continues to grow. Moreover, the new law also provides perverse incentives for other MEPPs to subsequently qualify. According Finally, as pointed out by Greszler, this bill incentivizes to benefits attorney Frank Berrodin, “One of the most plans to become even more underfunded rather than interesting and unfair things about the new law is that the improving the solvency of plans and preventing future plans that will receive the most benefit are the ones that underfunding.57 In other words, this bill allows them to have been managed the most irresponsibly.” Finally, Sen. “push their broken promises onto taxpayers.” It should Chuck Grassley, R-Iowa, criticized the measure as a bailout be noted that the PBGC has never been financed with with no strings attached. “It’s just a blank check, with no taxpayer money. The PBGC gets its funding from the measures to hold mismanaged plans accountable.” payment of annual insurance premiums paid by each multiemployer plan based on the number of participants The impending bankruptcy of the PBGC in 2026 raises covered by the plan. further questions about the propriety of this bailout at this time.51 According to a 2016 CBO estimate,52 the fair-value Policymakers continue to escalate their spending programs estimate of PBGC’s future obligations was $101 billion, and seem oblivious to such impending fiscal calamities meaning the cost of backstopping the PBGC, should it as the bankruptcy of Medicare (2026) and Social Security completely fail, could be as much as $101 billion.53 (2035).58 Among other things, this report on the future of America’s entitlements projects that over the next 75 The most recent CBO estimate of this legislation is years, Social Security will owe nearly $14 trillion more than $86 billion54 to $94 billion.55 Even this figure is a major it is projected to take in. Medicare’s annual cash shortfall understatement of the long-term costs of bailing out the in 2018 was $363 billion. Since 1965, the cumulative cash MEPP system. There are numerous other variables and shortfall in Medicare has been $5.1 trillion. Medicare covers factors that could eventually push the actual cost of this these cash shortfalls by “borrowing” unrelated tax revenues new scheme to even larger sums. Examples of these factors from other programs. include the fact that numerous MEPPs are already in a deficit position. For example, the three pensions mentioned earlier It should be noted that these projections were made prior have a combined net income deficit of more than $1.3 billion to the fiscal damage created by COVID-19. According to for 2019.56 These pensions are representative of many who Statista, the national debt mushroomed to $28 trillion by the will run a deficit for 2020. The fact that many MEPPs show end of February 2021.59 The portion of this debt financed substantial deficits in the face of record stock market returns by the Federal Reserve continues to climb and now is just suggests that the MEPPs will suffer devastating losses over $8 trillion.60 This means that almost 30% of the total during the next stock market downturn. national debt is financed with fiat money created by the Federal Reserve. One wonders where the tipping point will Other important factors not considered in current be when investors around the world lose confidence in the government estimates are the fact that the number of U.S. dollar. In light of this accelerating and unhealthy financial employers paying into most pensions is declining. This metric, a policy that adds the bailout of the privately financed means that employer pension contributions will continue and maintained MEPP system seems like an irresponsible to fall. As shown earlier in this report, a number of acceleration of an approaching fiscal calamity. critical and declining pensions no longer have any active 51 See: https://www.gao.gov/highrisk/pension-benefit-guaranty-corporation-insurance-programs. 52 Congressional Budget Office, “Options to Improve the Financial Condition of the Pension Benefit Guaranty Corporation’s Multiemployer Program, 51356,” August 2016. 53 See Congressional Research Service report, “Policy Options for Multiemployer Defined Benefit Pension Plans,” October 2020. 54 Congressional Budget Office, “Reconciliation Recommendations Of the House Committee on Ways and Means,” Feb. 17, 2021. 55 Special Financial Assistance by PBGC, 86 Fed. Reg., 36,598, 36,614, July 12, 2021. 56 Central States reported a net income deficit of $858,136,661 in 2019. The United Mine Workers 2019 deficit was $242,014,636. Similarly, the 2019 Form 5500 deficit for the Bakery and Confectionary Union $195,683,081. 57 Commentary, R. Greszler, “Pension Bailout Bill Would Only Worsen the Underfunding Crisis,” Sep. 12, 2019. 58 O’Neill Hayes T. and G. Gray, “The Future of America’s Entitlements: What You Need to Know About the Medicare and Social Security Trustees Re- ports,” April 22, 2019. 59 https://www.statista.com/statistics/273294/public-debt-of-the-united-states-by-month/. 60 Federal Reserve Board - Recent balance sheet trends. Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 14 Instead of Reform, Policymakers Want to Perpetuate the Broken System IV. CONCLUSION of 20 struggling MEP plans in the construction industry. The average funding status for the 10 The economic disadvantages faced by nonunion plans in endangered status was just over 38%. employees and employers related to government- Moreover, the average funding status of the 10 mandated PLA benefit requirements explain why many pensions in critical status was 40%. Several of the nonunion construction companies choose not to participate plans are benefitting from the strong stock market. in the bidding process for government-mandated PLA If the market declines, many plans are slated to projects. If PLAs were imposed on a significant percentage experience losses. of federal construction work, hundreds of millions of dollars of compensation would be taken from nonunion workers 5. This study takes a brief look at the overall MEPP and distributed to union pension funds and union benefits system. Prior to 2020 and the start of COVID-19, programs, which do not benefit nonunion workers. the MEPP system had been showing signs of improvement and growth. Funding ratios for There are five primary conclusions in this study: several MEP plans improved over the 10-year 1. Employees of nonunion contractors who are forced period ending in 2019. Despite the progress in the to perform work under government-mandated PLAs financial health of certain MEPPs over this period, on prevailing wage construction projects suffer a the total number of plans in the entire MEPP system reduction in their take-home pay estimated at 34%. in critical and declining status increased from 114 More specifically, lost wages, otherwise referred to in 2017 to 130 in 2019. Similarly, by conservative as “wage theft,” are now projected to range from estimates, the total funding deficit in the MEPP $159 million to more than $530 million, depending system grew from $36.4 billion in 2017 to $65.2 on the assumptions made for companies executing billion in 2019. Moreover, using Form 5500 data contracts through government-mandated PLAs. from the three largest MEPPs in critical status, it was determined that the current funding deficit in 2. The study finds that nonunion employers the MEPP system has grown from $93 billion in (contractors) will be forced to pay approximately 2019 to $102.3 billion in April 2020. 35% in extra costs to work under government- mandated PLAs on federal construction projects. Since the Biden administration took office, a major MEPP Evidence is provided that total extra employer relief initiative was passed by Congress and other MEPP costs would range from $163 million to just policy options will no doubt be considered. The primary over $546 million, which would make them less policy proposal enacted to date is the American Rescue competitive with contractors that do not face these Plan Act, which was passed on March 11, 2021. This new extra benefits costs. law provides for direct cash assistance and forgivable loans to MEP plans. The promise is that there will be no 3. Nonunion contractors face increased withdrawal further benefit cuts. Pegged at close to $100 billion, the liability exposure when they work under PLAs. cost of this legislative bailout may even be understated This exposure includes possible withdrawal as the true costs of this bailout will continue to escalate liability when the PLA project is completed. This into the future without additional reforms by Congress. study uses data from Form 5500 to compute The PBGC has always been privately funded. It has not per-capita withdrawal liability for 20 MEPPs in the involved government funds. With the ARPA, this will construction industry. The first group of MEPPS change. The idea of a government bailout of the pension in the endangered category has an average system is unprecedented and ill-advised. Sen. Grassley per-capita withdrawal liability of $2.1 million. The criticized the measure as a bailout with no strings average per-capita withdrawal liability in the next attached. “It’s just a blank check, with no measures to group of critical MEPP plans in the construction hold mismanaged plans accountable.” industry is $2.7 million. It is unlikely that any employers in these MEPPs will voluntarily leave A large number of policymakers now assert that MEPPs and risk becoming subject to such large potential should follow the private sector and replace defined benefit withdrawal liabilities. These large potential plans with defined contribution plans. As noted by Lee, a penalties also serve as disincentives for employers substantial move in this direction has already taken place.61 to join PLAs and MEP plans. Since the 1980s, 401(k) accounts have effectively replaced pensions to become one of the most popular retirement 4. This study also considered the current health plans for American workers. Moreover, Americans have 61 Lee, N., “How 401(k) accounts killed pensions to become one of the most popular retirement plans for U.S. workers,” March 24, 2021. Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 15 Instead of Reform, Policymakers Want to Perpetuate the Broken System saved about $6.5 trillion in 401(k) accounts, representing In addition, this report demonstrates how government- nearly one-fifth of the U.S. retirement market. Finally, mandated PLAs result in considerable increased costs in 2020, there were about 600,000 401(k) plans, with and potential MEPP withdrawal liability exposure that approximately 60 million Americans participating in them. negatively impact the ability of contractors to compete and win construction contracts against union firms that are not Lawmakers and stakeholders are often persuaded to subjected to these disadvantages. require government-mandated PLAs because proponents argue they will result in better economic outcomes for Lawmakers and industry stakeholders should be aware of construction trades workers employed on PLA projects the negative economic effect of government-mandated that will benefit from increased wages and participation in PLAs on nonunion employees and employers when union benefits and retirement plans. However, this report considering their controversial use on taxpayer-funded suggests that is not the case for nonunion workers. construction projects. Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 16 Instead of Reform, Policymakers Want to Perpetuate the Broken System EXHIBIT 1 U.S. Federal Construction Contracts > $25 million Fiscal Year U.S. Fed. Construction Contracts > $25M Total $, U.S. Fed. Construction Contracts 2015 $ 6,576,148,121 $ 22,548,000,000 2016 $ 3,543,468,900 $ 22,242,000,000 2017 $ 6,839,031,533 $ 21,267,000,000 2018 $ 9,610,513,761 $ 21,979,000,000 2019 $ 16,049,261,164 $ 25,263,000,000 2020 $ 18,612,427,804 $ 28,376,712,200 Annual Average $ 10,205,141,881 43% $ 23,612,618,700 EXHIBIT 2 Collective Bargaining Agreement Wage and Fringe Benefits Data† 13 Construction Unions Dues as % of Taxable Health Total Total Union Name State Wage Insurance Pension Dues Package Package 1 IUPAT Northern CA Painters CA $33.16 $10.55 $9.83 $4.16 $57.70 7.2% 2 IUPAT Northern CA Drywall CA $46.26 $10.55 $15.58 $4.58 $76.97 6.0% 3 IUPAT Northern CA Flooring CA $38.42 $10.55 $12.14 $4.50 $65.61 6.9% 4 IBEW 110 Electrical Workers MN $42.28 $11.11 $9.32 $3.24 $65.95 4.9% 5 IBEW 292 Electrical Workers MN $45.90 $12.60 $12.42 $3.70 $74.62 5.0% 6 AGC* of Minnesota MN $40.65 $8.91 $12.85 $2.34 $64.75 3.6% 7 WI Laborers District Council WI $31.30 $8.40 $11.95 $2.04 $53.69 3.8% 8 Local 113 Wisconsin Laborers WI $32.96 $8.55 $11.45 $3.61 $56.57 6.4% 9 AGC Carpenters of Michigan MI $31.50 $7.96 $19.76 $3.09 $62.31 5.0% 10 AGC of WA and Carpenters WA $41.67 $7.86 $6.60 $3.05 $59.18 5.2% 11 Heat & Frost Insulators Local 82 WA $33.74 $9.24 $9.55 $2.71 $55.24 4.9% 12 Laborers District Council of MN MN $23.24 $7.75 $6.83 $2.52 $40.34 6.2% 13 Cement Masons Local 692 KY KY $21.45 $6.35 $3.80 $2.67 $32.50 8.2% Average $35.58 $9.26 $10.93 $3.25 $58.88 Average % of Total Package 60% 16% 19% 6% † Prevailing wage laws require the total wages (package) amount be paid to workers in the form of taxable wages and benefits. Union dues and other withholding are generally subtracted from taxable wages to arrive at take-home pay. Percentages above are based on total package amount. * Associated General Contractors for building and highway construction Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 17 Instead of Reform, Policymakers Want to Perpetuate the Broken System EXHIBIT 3 Pension, Health, Union Dues, Taxable Wages Average % for 13 Construction CBAs 6% Taxable Wage 18% Health Insurance 60% Pension 16% Dues EXHIBIT 4 20 Construction Industry MEPPs “Per Capita” Withdrawal Liability Per Capita Active/ Withdrawal Endangered Plans Employers Inactive Unfunded Liability Greater Pennsylvania Carpenters’ Pension Fund 649 84% $ 1,627,377,839 $ 2,507,516 IBEW Local 688 Pension Plan 24 47% $ 24,231,730 $ 1,009,655 Insulators Local No.27 Pension Plan 19 73% $ 49,296,158 $ 2,594,535 Ironworkers Local Union No.167 Pension 30 49% $ 64,016,955 $ 2,133,899 Local Union 373 U.A. Pension Plan 46 58% $ 73,792,925 $ 1,604,194 Michigan Carpenters Pension Fund 380 57% $ 1,084,507,758 $ 2,853,968 Sheet Metal Workers National Pension Fund 3846 72% $ 10,022,185,202 $ 2,605,872 Southern California IBEW-NECA Pension Plan 461 99% $ 2,069,363,960 $ 4,488,859 Southern Illinois Bricklayers Pension Plan 35 55% $ 25,407,625 $ 725,932 Twin City Carpenters and Joiners Pension Plan 2200 62% $ 2,656,716,397 $ 1,207,598 Average 769 65% $ 1,769,689,655 $ 2,173,203 Critical Plans Asbestos Workers Philadelphia Pension Plan 52 38% $ 370,665,862 $ 7,128,190 Carpenters Pension Trust Fund for Northern California 1147 82% $ 6,041,347,726 $ 5,267,086 Colorado Cement Masons Trust Funds 32 31% $ 9,752,323 $ 304,760 IBEW Local 150 Pension Fund 256 96% $ 322,141,414 $ 1,258,365 Ironworkers Local Union 16 Pension Fund 53 24% $ 85,601,291 $ 1,615,119 Kansas Construction Trades Fringe Benefit Funds 100 20% $ 276,304,999 $ 2,763,050 Laborers National Pension Fund 792 40% $ 2,317,531,236 $ 2,926,176 Local 202 Sheet Metal Workers Pension Fund 3 2% $ 13,390,528 $ 4,463,509 Plasterers and Cement Masons Local No.94 Pension Plan 8 43% $ 3,107,243 $ 388,405 Sheet Metal Workers Local 44 Retirement Income Plan 30 64% $ 45,720,924 $ 1,524,031 Average 247 44% $ 948,556,355 $ 2,763,869 Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 18 Instead of Reform, Policymakers Want to Perpetuate the Broken System EXHIBIT 5 20 Construction Industry MEPPs Financial Characteristics Benefits as Net Return Funding Employer % of total a % of Total Income on Endangered Plans Ratio Contribution Revenue Benefits Expenses Margin Assets Greater Pennsylvania Carpenters’ 34.9% $ 82,003,364 35% $ 92,239,960 95% 58% 14% Pension Fund IBEW Local 688 Pension Plan 38.4% $ 1,595,734 80% $ 1,239,379 90% 30% 1% Insulators Local No.27 Pension Plan 44.2% $ 3,750,160 36% $ 3,625,505 92% 62% 17% Ironworkers Local Union No.167 43.3% $ 2,180,827 20% $ 4,409,914 95% 58% 18% Pension Local Union 373 U.A. Pension Plan 36.9% $ 4,920,693 36% $ 4,400,665 89% 64% 21% Michigan Carpenters Pension Fund 34.1% $ 57,474,330 85% $ 63,600,355 94% -0% 2% Sheet Metal Workers National 32.7% $ 606,859,427 42% $ 515,332,653 95% 63% 16% Pension Fund Southern California IBEW-NECA 35.8% $ 105,726,706 69% $ 117,417,865 93% 17% 4% Pension Plan Southern Illinois Bricklayers 43.1% $ 817,030 47% $ 1,406,526 90% 11% 5% Pension Plan Twin City Carpenters and Joiners 38.7% $ 101,230,089 28% $ 151,857,827 95% 56% 16% Pension Plan Average 38% $ 96,655,836 48% $ 95,553,065 93% 42% 11% Critical Plans Asbestos Workers Philadelphia 37.6% $ 17,701,007 57% $ 27,850,737 94% 4% 5% Pension Plan Carpenters Pension Trust Fund for 39.0% $ 341,679,728 72% $ 260,147,956 93% 41% 3% Northern California Colorado Cement Masons Trust 40.4% $ 322,841 20% $ 935,370 85% 31% 19% Funds IBEW Local 150 Pension Fund 39.3% $ 10,164,359 60% $ 15,094,256 94% 6% 3% Ironworkers Local Union 16 Pension 44.4% $ 3,524,570 27% $ 9,043,718 93% 25% 14% Fund Kansas Construction Trades Fringe 33.9% $ 8,059,347 24% $ 16,610,347 94% 47% 18% Benefit Funds Laborers National Pension Fund 36.4% $ 69,068,410 23% $ 153,225,269 93% 46% 18% Local 202 Sheet Metal Workers 62.2% $ 64,112 6% $ 1,692,073 92% -62% 5% Pension Fund Plasterers and Cement Masons 36.9% $ 124,246 60% $ 267,426 74% -75% 4% Local No.94 Pension Plan Sheet Metal Workers Local 44 31.9% $ 1,979,893 35% $ 2,001,322 90% 60% 17% Retirement Income Plan Average 40% $ 45,268,851 38% $ 48,686,847 90% 13% 11% Government-Mandated Project Labor Agreements Result in Lost and Stolen Wages for Employees and Excessive Costs and Liability Exposure for Employers 19 Instead of Reform, Policymakers Want to Perpetuate the Broken System REFERENCES American Academy of Actuaries, “Determining Withdrawal Liability for MEPPs: A Range of Approaches to Actuarial Assumptions,” Issue Brief, April 2020. 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Also cited in Mahalia, N., “Prevailing wages and government contracting costs: A review of the research,” Economic Policy Institute Report, Briefing Paper #215, July 3, 2008. Tuerck D., W.F. Burke “The Effects of Project Labor Agreements On Public School Construction in Connecticut,” Beacon Hill Institute, (February 2020). Wolf C. and P. Spangler, “Withdrawal Liability to Multi-Employer Pension Plans Under Erissa, 2015. Zion, D., A. Varshney, and N. Burnap, “Crawling out of the Shadows: Shining a Light on Multiemployer Pension Plans,” Credit Suisse Equity Research, 26 March 2012. October 2021 of their compensation unless they join a union and vest in union benefits plans,” said Swearingen.

“Taxpayers lose when responsible, qualified contractors are effectively and unfairly excluded from bidding on contracts to build essential infrastructure,” said Swearingen. “Americans deserve long-lasting construction projects built safely, on time and on budget by the best contractors and workers, regardless of labor affiliation. ABC will continue to fight for fair and open competition that allows the most qualified contractors and workers to bid for federal work on a level playing field.”

This PLA mandate has been widely criticized by the construction industry, taxpayer watchdogs and lawmakers for needlessly inflating construction costs, delaying projects and effectively steering contracts to unionized firms and union labor.