School Building Projects – Rewarding Special Interests at the Expense of Students, Teachers, and Taxpayers

By Mary McCleary, Policy Analyst

Hiring union labor in school construction projects increases the costs period. You will be hard pressed to find an example in modern-day Ohio where hiring a labor union has led to cost savings that otherwise would have gone unrealized. By their very nature, labor unions drive up costs through paying workers higher wages than the market dictates.

Due to Senate Bill 102 passed in 1997, school districts are exempt from Ohio’s little Davis-Bacon law, which requires the government to compensate laborers at the prevailing wage rate. Essentially, this law forces workers to join unions to work on government-funded building projects. More often than not, school districts choose independent companies because they can bid projects at lower, more competitive rates than their union counterparts.

The fact that using union labor drives up school construction costs can be illustrated by three recent examples. Earlier this summer the Executive Director of the Ohio School Facilities Commission (OSFC) Richard Murray chose to use a project labor agreement for the construction of the new deaf and blind schools in Columbus. At each of the four stages of the design process, the OSFC signed off on the cost estimates. When Murray decided to use a project labor agreement, bids for the project came back $11.4 million over the $28 million budget – a 41 percent increase in estimated costs.

Only the kitchen equipment portion of the deaf and blind schools was exempt from a project labor agreement. Ironically, the kitchen equipment bids were the only bids that came back within the allotted budget, and there were twice as many bids for kitchen equipment than there were for any other part of the project.

Second, the Washington-Niles Local School District near Portsmouth planned to use a project labor agreement at the advice of the OSFC. However, when the bids came back 22 percent over budget, the district backed out. Washington-Niles is the eighth poorest of the 612 Ohio school districts and simply could not afford such significant cost overruns.

Third, the New Boston School District, also near Portsmouth and among the poorest Ohio school districts, has accused the OSCF of increasing costs and delaying the project because the district refused to accept a project labor agreement. When the district ran into a few problems during the planning phase, Richard Murray told school board members that he would make their problems disappear if they used union labor.

Because the OSCF has added extra costs to the schools estimate to account for a project labor agreement, the project is over budget by $400,000. To reduce costs, the OSCF has demanded the removal of the proposed facility’s front area and the reduction of cafeteria size. The OSCF has put construction on hold until the district concedes and is charging the district fees for delaying the project.

Unfortunately, when a project goes over budget due to a labor agreement, the OSFC recommends reducing building size and cutting other amenities instead of finding savings through nixing the project labor agreement. Sadly it has become more important to enhance the wallets of special interest groups rather than to act in the best interest of the students, their teachers, and the taxpayers.

With Ohio’s economy in shambles, this is no time to be pushing for the use of unions in school construction projects. Between January 1990 and July 2010, job creation in states that forced workers to join unions to obtain jobs only grew by 17 percent. On the other hand, job creation in states that protected a worker’s freedom to choose whether or not to join a union to obtain employment grew by 37 percent, or more than double the rate of forced unionization states.

Ohio’s road to economic recovery will not be paved with higher taxes and will not be found through paying homage to unions. Robbing Peter to pay Paul does nothing to promote job growth or prosperity in Ohio. Try explaining to the taxpayers that they are better off by paying more for less. The logic simply does not add up.

Source: Buckeye Institute, September 6, 2010.

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