Public projects valued at $6 million will require project labor agreements

Mercury New October 24, 2017

SAN JOSE — City lawmakers on Tuesday adopted a policy that requires contractors to hire at least some union workers on public projects valued at $6 million or more, including new libraries, fire stations and airport improvements.

The City Council adopted “project labor agreements” requirement on a 6-5 vote. The agreements require a contractor to hire some workers from a local union hall and pay state-mandated prevailing wages — what a majority of workers in a county’s largest city earn. Contractors also must provide fringe benefits and hire a number of apprentices from disadvantaged groups. Contractors will be allowed to hire 35 “core” workers from their own workforce with the rest hired through a union hall.

Private construction projects, those funded by federal dollars and city-funded affordable housing projects will be excluded. Santa Clara County, Los Angeles, San Francisco, Oakland, Cleveland and New York have all passed similar labor agreements.

Backers said the agreements will help ensure every worker has a fair chance of getting work and support families struggling to survive in Silicon Valley’s technology-driven economy. Critics said the move will stifle competition and inflate construction costs, meaning taxpayers get fewer public improvements for their tax dollars.

The approved policy was a compromise proposed by Councilman Chappie Jones after hours of debate and a handful of failed votes. Union leaders said the requirement doesn’t go far enough to help laborers being squeezed out of Silicon Valley.

Mayor Sam Liccardo recommended the agreements apply only to projects valued at $10 million or more — limiting the agreements to a small number of projects. Councilman Raul Peralez favored a lower threshold covering contracts costing $2 million or more.

Peralez, Vice Mayor Magdalena Carrasco and council members Sergio Jimenez, Sylvia Arenas and Don Rocha voted against the compromise.

According to city data, only three future projects would fall in the $6 million category and require project labor agreements. Seventeen upcoming projects will not.

Kim Davis, a longtime electrician, on Tuesday said project labor agreements provide a path to employment for disadvantaged youth in apprenticeship programs and would not increase construction costs.

“Please pass a meaningful policy that protects workers,” Davis urged the council Tuesday.

But Suzanne Salata, who owns Garden City Construction, said it’s “unfair” to demand her longtime employees join a union or pay fees in order to get construction work.

“Can you imagine us telling them that you need to sign in, go to the union office and then get a check?” Salata said. “That’s insulting to our employees. If they wanted to join a union, they would’ve done it a long time ago.”

Labor leaders cited a UC Berkeley study released earlier this year that analyzed 263 public projects and found the agreements had no effect on project costs or the number of bidders.

But other studies show conflicting findings. A 2011 study from the National University System Institute for Policy Research measured the impact of labor agreements on school construction and found a 13 percent to 15 percent rise in construction costs.