On October 10, the Daily Record printed a timely article entitled “Should NJ Towns steer public projects to union labor? Parsippany latest to take up debate”. The subject of the article was project labor agreements (PLAs) and Parsippany’s proposed ordinance 2022:24, which would mandate PLAs on all public construction projects over $5 million. Besides explaining what PLAs are, the columnist also included an unbiased summary of the arguments for and against these agreements. After analyzing the pros and cons, my conclusion is that the benefits of PLAs are overwhelmed by the extra costs that Parsippany taxpayers would incur by passage of this ordinance.
Regarding PLAs, the assumption is that the skill level of the unionized PLA workers is greater than non-PLA workers. However, I found no available evidence showing that PLA construction projects are any better or safer than non-PLA projects. What is not in dispute is that PLA projects are more expensive and tend to have a longer duration than non-PLA projects. An October 2010 report by the NJ Department of Labor and Workflow Development examining 2008 school construction projects, found that PLA project costs were 30% higher than non-PLA projects, and that the average duration of PLA projects was 100 weeks compared to 78 weeks for non-PLA projects. Statistics cited in the Daily Record newspaper article were in line with these findings. The article reported the results of a 2019 analysis by the Beacon Hill Institute, which also concluded that PLAs resulted in “significantly higher” costs for construction in five states, including New Jersey.
To highlight the effect on Parsippany’s taxpayers if this ordinance were passed, consider the following example. If a $5 million project was initiated with the ordinance in effect, the total cost would increase by $1.5 million due to the 30% PLA premium. Parsippany just cannot afford to be adding that kind of money to its already troubled budget. How many employees would have to be terminated to offset an extra $1.5 million?
Passage of Ordinance 2022:24 is not in the best interests of the taxpayers of Parsippany. The township has been functioning well for almost 100 years, and during that time projects large and small have been constructed without an ordinance mandating PLAs. We don’t need one now, and I hope the council will come to that same conclusion when they vote on it next week.