By Oregon Business and Industry,
On Dec. 18, Gov. Kotek issued an executive order that requires the use of project labor agreements (PLAs) on significant construction projects funded by the state. Oregon Business & Industry is deeply disappointed by this action. It was made without consulting affected businesses, without involving the state Legislature and seemingly without considering the inflationary effects of PLAs on taxpayer-funded projects or the impacts on smaller and emerging contractors.
In effect, the governor’s executive order requires the use of collective bargaining agreements for most state-funded projects for which onsite labor costs will make up at least 15% of total costs. Anyone who operates a business knows that labor costs will always exceed 15%, so this means this effectively applies to all projects using state funds with only very minor exemptions. The requirement will apply to all contractors and subcontractors even if their employees are not themselves represented by a union. OBI supports the right of workers to organize. It is inappropriate, however, for the governor’s office to impose de facto union representation on employees who have not sought union representation themselves. It is also inappropriate to do this by sweeping executive fiat.
Executive Order 24-31 will be particularly harmful for small and local contractors, who are much less able to absorb additional costs associated with PLAs. That means that small and emerging contractors will almost certainly either be outbid for these projects or opt not to bid for them at all.
The executive order will be costly for taxpayers as well. Imposing collective-bargaining requirements on all businesses participating in state-funded projects will reduce the buying power of Oregonians’ hard-earned tax dollars. This will require more tax revenue to complete the same number of projects, increasing the chances of tax hikes, or reduce the work that can be done with existing revenue, leading to fewer outcomes for a state with significant infrastructure needs. The executive order couldn’t have come at a worse time given Oregon’s ongoing transportation funding crisis.
OBI is disappointed that the governor made a decision with such profound consequences on taxpayers and businesses without consulting them or, better yet, placing the issue before the Legislature, which will convene in only a matter of weeks. Legislative deliberation would have ensured an open, public discussion about the costs as well as the benefits of PLAs. It also would have allowed affected employers and taxpayers to share their views.
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