New report finds project labor agreements lower costs, boost competition
in Illinois
[March 22, 2025]
By Bridget Craig and Medill Illinois News Bureau
After a major Biden-era executive order mandating the vast majority of
federal construction projects use project labor agreements suffered an
initial loss in federal court this winter, a new report analyzing the
use of these agreements in Illinois is refuting typical criticisms from
opponents who claim they unfairly favor unionized labor.
A project labor agreement, or PLA, is a binding contract between a
government or private entity that needs a construction project done and
a labor union. Before workers are even hired on a project, the two sides
negotiate a PLA that sets wages, benefits, work conditions and often
provisions for resolving labor disputes to prevent strikes or other work
stoppages.
In Illinois – a state with historical ties to the labor movement and a
government dominated by labor-friendly Democrats – PLAs have long been a
tool that has kept union participation rates high in the construction
industry.
Non-union industry groups and conservative organizations have long
criticized the practice of governments using, encouraging or mandating
PLAs, arguing that forcing projects to use union labor makes them slower
and more expensive. But new research from the Illinois Economic Policy
Institute and the University of Illinois’ Project for Middle Class
Renewal found the opposite.
The study, commissioned by the state’s Capital Development Board, found
that PLAs in Illinois have enhanced bid competition, helped to lower
construction costs for taxpayers and increased business for firms owned
by people of color, women and veterans.
“The biggest finding in this report, and one that hadn’t been shown as
much in other research or was unclear, is that Project Labor Agreements
promote robust competition,” said Frank Manzo, an economist at ILEPI, a
nonprofit research organization with a board of directors that’s closely
tied to organized labor. “The PLAs were linked with a 14% increase in
the number of bids submitted by contractors seeking to win public
building contracts.”
The report analyzed hundreds of public building projects — 499 had PLAs
and 274 did not — as well as the bids for state projects.
Previous to this report, in May 2024, the institute analyzed 95 major
construction projects at the Port of Seattle. Robert Bruno, a University
of Illinois professor, and Manzo found that PLAs did not significantly
impact bid competition or total construction costs but did help
stabilize public construction costs. Manzo and Bruno also completed a
similar report for the Capital Development Board a decade ago analyzing
state projects from 2011 to 2013.
Manzo said he concluded that PLAs in Illinois “promote efficiency for
taxpayers,” including faster completion of projects.
PLA opposition
The Illinois findings come as the efficacy and legality of PLAs continue
to be debated across the county. In January, the U.S. Court of Federal
Claims sided with private contractors who challenged former President
Joe Biden’s 2022 executive order mandating PLAs on federal construction
projects valued at $35 million or more, concluding that PLAs limit full
and open competition among contractors.
In MVL USA Inc. v. United States, U.S. Court of Federal Claims Judge
Ryan Holte ruled that the mandate violates the Competition in
Contracting Act. The court found that the mandate placed unnecessary
barriers on bidding, limiting the ability of non-union firms to
participate freely in federal contracts. The private contractors who
launched the court challenge are now asking for a permanent injunction
on Biden’s order, though President Donald Trump could rescind the order
at any time.
PLAs experience state-level opposition too. In Rockford, two PLAs were
recently negotiated: the Hard Rock Casino and Colman Yards housing
project, according to Northwestern Building and Construction President
Alan Golan.
The Hard Rock Casino was a project worth more than $300 million,
according to Golan, with a PLA agreement approved for its construction;
a 2021 state law passed on an overwhelmingly bipartisan basis required
would-be casino operators to enter into PLAs before they could apply for
one of Illinois’ six new casino licenses made available two years prior.
After operating in a temporary location for a few years, the Hard Rock
Casino opened in August 2024. But the smaller-scale Colman Yards project
is a different story, having been delayed by fights over adopting a PLA.
At a July 2023 Rockford City Council meeting, community members spoke in
support of redeveloping Colman Yards under a PLA. Speakers included a
pastor and the leader of a local community group, who said a PLA would
protect both the developer and labor workforce diversity.
However, Ald. Jeffrey Bailey viewed the PLA differently, according to
meeting minutes.
“When you look at the history of this city, we’ve never had a PLA
agreement for previous projects and it’s political,” Bailey said. “It’s
beyond diversity … It’s about equality, fairness, valuing other people
and what they bring to the table, and a PLA agreement is not going to
accomplish that.”
Ten days later, council members rejected the Colman Yards PLA on an 8-7
margin. Despite the vote, Golan, the negotiator for these PLAs, said
efforts to finalize the Colman Yards agreement are still ongoing.
Though local elected officials sometimes oppose the use of PLAs, the
bulk of opposition to the practice comes from private contractors who
don’t use union labor, often calling themselves “merit shops.”
Nationwide industry groups have long fought against PLAs. That includes
Associated Builders and Contractors, which represents 23,000
construction companies across the U.S.
“We do not support the use of project labor agreements, and there have
been multiple studies that show that PLAs negatively impact merit shop
contractors,” ABC Illinois chapter CEO Alicia Martin said.
PLAs do not strictly mandate union labor, but they do require all
contractors — union and non-union — to adhere to the same wage, benefit
and working condition standards outlined in the agreement. While
non-union contractors can bid on PLA-covered projects, they must follow
union-scale wages and benefits, which can make union participation more
prevalent.
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The Chicago & Cook County Building & Construction Trades Council
listed 300 N. Michigan Ave., a 47-story tower in downtown Chicago,
as an active PLA project since 2020 under the contractor of Linn-Mathes
Inc. Parts of the building are still under construction, but the
completed portions are ready to be rented by businesses, according
to Retailat300.com. (Capitol News Illinois photo by Bridget Craig)
According to Manzo and Bruno’s analysis of 773 public building projects
approved by the Capital Development Board from 2017 to 2023, projects
with PLAs tend to receive more bids than those without, increasing
competition and driving down taxpayer costs. On average, they found most
budgets come in 6% below initial projections, and PLAs help stabilize
public construction costs regardless of a project’s size, complexity or
location.
But Martin doesn’t agree with that finding.
“The provisions and project labor agreements require that a non-union
contractor either go through a union hiring hall or their workers must
join the union for the duration of the project,” she said. “They have to
pay into the union benefit plans, their training funds“ … They have to
abide by the union work rules and other onerous requirements, so it
discourages competition from the whole of the industry, raising costs
for taxpayers and pushing out Illinois non-union contractors in favor of
union labor.”
PLAs and unionization rates
According to Bruno and Manzo’s study, PLAs can help develop a steady
pipeline of skilled labor through apprenticeships and workforce
training. PLAs often require contractors to hire apprentices from
certified training programs, ensuring that new workers gain hands-on
experience under the supervision of professionals. These agreements help
standardize skill development across the industry, union or non-union
alike.
Illinois AFL-CIO President Tim Drea emphasized PLAs’ commitment to such
training. He pointed out that union-affiliated programs ensure hands-on
training and skill development.
“Unions have apprentices and built-in on-the-job training,” Drea said.
“With a project labor agreement, contractors can be confident in the
training workers receive because it comes from a joint contractor-union
program.”
Bruno and Manzo also are seeking to highlight how PLAs benefit diversity
in public contracting. They said that building projects with PLAs
increases participation among minority-owned, women-owned, and
veteran-owned businesses by creating an even playing field.
Martin, though, disagrees with that view.
“It does hit me as a female in the construction industry, I do have a
commitment to a more diverse workforce and a more diverse industry here
in Illinois,” she said. “The best way to uplift minority and women-owned
businesses is by leveling the playing field and allowing all to compete
and not reward with any type of political favor or one segment of the
industry based on labor affiliation.”
While many states have seen unionization rates in the construction
industry plummet over the decades, Illinois has bucked that trend.
Illinois and Hawaii trade the No. 1 and No. 2 spots for unionization in
the construction sector, according to the Union Membership and Coverage
Database, which uses U.S. Census and Bureau of Labor Statistics data and
is maintained by a trio of economics professors at different
universities in the American south.
By contrast, some right-to-work states like Florida and Georgia have
unionization rates below 2% for the construction sector, while South
Carolina’s unionization rate is so low it’s effectively 0%, according to
the UMC Database.
Right-to-work laws bar employers from requiring workers to be union
members to keep their jobs. As a result, unionization rates are lower in
those states. Right-to-work laws have seen a resurgence in
Republican-controlled states in the last decade or so after an initial
wave of southern and rural states adopted such laws in the 1940s and
‘50s. But in 2022, Illinois voters approved a constitutional amendment
that prohibits future General Assemblies and local governments from ever
enacting such laws.
About a decade before, lawmakers approved legislation mandating the use
of PLAs in all state government construction projects when a state
agency can demonstrate a PLA “advances the state’s interests” on metrics
like costs, efficiency, quality, safety, or policy goals like boosting
minority- and female-owned businesses.
Before then, Democratic governors like Pat Quinn and Rod Blagojevich
signed executive orders to the same effect. But when Gov. JB Pritzker
was sworn into office in early 2019, he signed a more ceremonial
executive order requiring state agencies to adhere to the 2011 Project
Labor Agreements Act. More than 800 PLAs were inked during Pritzker’s
first term.
According to the Illinois Capital Development Board, PLAs have been used
in state public works projects since 1992, and their use expanded in
2003 Blagojevich issued his executive order on PLAs.
Both Manzo and Bruno’s study and the Capital Development Board
highlighted the broader history of PLAs, which have been used in federal
construction since the 1930s, including with notable projects like the
Kennedy Space Center. Use of PLAs was reinforced in 1997 by President
Bill Clinton’s memorandum encouraging PLAs on large-scale projects, then
expanded in 2009 when President Barack Obama signed an executive order
allowing PLAs on federally funded projects.
The next few years could be key in determining whether PLAs continue to
expand — or diminish in the face of political and legal challenges.
Bruno said that he and Manzo hope that anyone reading their report — but
especially legislators — will come away with “a more confident, clearer,
objective understanding of the policy.”
“Maybe,” he added, “we’ve tamped down some of the abstraction for them.”
Bridget Craig is a graduate student in journalism
with Northwestern University’s Medill School of Journalism, Media,
Integrated Marketing Communications, and a fellow in its Medill
Illinois News Bureau working in partnership with Capitol News
Illinois.
Capitol News Illinois is
a nonprofit, nonpartisan news service that distributes state
government coverage to hundreds of news outlets statewide. It is
funded primarily by the Illinois Press Foundation and the Robert R.
McCormick Foundation. |
