How Obama Affected the Construction Industry

Since I will be speaking to a group of NARI (National Association of Remodeling Industry) leaders about labor and employment issues since Obama took office, I was thinking about how his Executive Orders have impacted the construction industry more than probably any other industry.  Here is a brief recap of what those Orders are and how they affect the construction industry.

  • Federal contractors will no longer be reimbursed for educating their employees about the benefits and detriments of forming a union.  The Notification of Employee Rights Concerning Payment of Union Dues or Fees was revoked and replaced with Notification of Employee Rights under Federal Labor Laws.  Federal contractors are no longer required to post instructions on how employees could opt out of union dues earmarked for political purposes.  As such, the Office of Federal Contract Compliance Programs has discontinued onsite visits to union employers during compliance reviews.  These on site visits involved a review of required postings, contracts and purchase orders, facility accessibility for individuals with disabilities, veterans and disabled recruitment efforts and an I-9 inspection.  This rule effectively mutes contractors that only do federal construction projects because all of that contractor’s money is trailed back to the government.  This Order may face a constitutional challenge, especially since the intent of the National Labor Relations Act was to manifest a clear intent to encourage free debate on labor relations issues and because Congress explicitly intended for noncoercive employer speech to remain unregulated.


  • The Nondisplacement of Qualified Workers Under Service Contracts Order creates rights for employees of federal contractors when a  contract changes hands – which frequently happens.  Contracts must now contain a specific provision granting employees of a federal contractor that has lost the service contract the right of first refusal for employment with the successor contractor.  Essentially, the new contractor cannot hire hourly workers until all employees of the predecessor contractor have been offered employment, and if the contract goes from a unionized company to a non-union company, the non-union company must offer employment to all those union workers (and all of their added costs and restraints) first and has to bargain with the union even though it has not been certified as the employees representative.  Contractors who willfully violate this Order will be disbarred from federal contracts for 3 years.


  • Project Labor Agreements on construction projects costing more than $25M.  Obama’s Order overturned President Bush’s ban on the federal government requiring PLAs on such projects.  Whether a PLA was used would normally be wholly dependant on your town’s political make-up.  However, projects using some of the roughly $800M earmarked in the stimulus bill for federal construction will likely be PLA-only work.  PLA work typically adds 20% to the cost of the project.  PLA really means labor union-only work as unionized companies are typically  the only ones forced to abide by the PLA strictures.  And unionized construction companies make up less than 10% of construction companies, so effectively, this Order eliminates 90% of the companies from performing federally funded construction work.

Misc. Mondays: Middle Class Task Force Update

More than half of all Americans – about 160 million – think of themselves as middle class according to a 2008 Pew survey.  However, Washington, especially the White House, view only one tenth of those people as middle class.  Specifically, only the 16 million union workers are considered by our Federal government to be in the middle class.

VP Biden was in Philadelphia a few weeks ago holding his first Middle Class Task Force town meeting – next up is Minnesote, home of anti-union Target.  According to an editorial in the Philadelphia Inquirer, it is “apparent that the administration’s policies are not friendly to most of the middle class.”  For back up, the author cited Obama’s Executive Order that repealed the right for employees to know whether labor officials use their dues to support political candidates and the Order that encourages project labor agreements for union construction workers, including for construction as a result of the stimulus plan effectively eliminating 85% of the construction workforce.  Most striking, though, according to the author, is the “green jobs” legislative language “being touted on Capitol Hill is little more than union giveaways in a shiny new wrapper.”  I couldn’t agree more.

Misc Mondays: Biden Addresses AFL-CIO Bigs

Earlier in the Month, VP Biden addressed the top brass of the AFL-CIO at their annual convention in Miami, Florida.  By the way, at a time when the unions are crying foul on of big business owners and CEOs, that meeting was held at the ultra-luxurious, five-star, Fontainebluea Resort.  But I digress.  According to FoxNews, the VP decided to ban cameras from filming his speech.  Uh, wait, the next day, the AFL-CIO recanted that statement and said it was actually the union that did not want the speech filmed.  Whatever.  What’s more important is that some print reporters were allowed to attend and a transcript was made of the speech.  Here is the whole transcript.  Below are some worthy snippets:

  • The best place for me to be my whole career is surrounded by organized labor.  And I know how to say “union.”
  • An old joke, Mr. President [of the union], you know, you go home with them that bring you to the dance.  Well, you all brought me to the dance a long time ago.  And it’s time we start dancing, man.  It’s time we start dancing.
  • It’s just not right, it’s just not right, and everybody knows it – it’s just not right when the average CEO makes $10,000 more every day – $10,000 more every day than what the average worker makes every year – $10,000 per day.  And by the way, before I said it, I did the math, I did the math, and it’s literally true.
  • The NLRB explicitly says – and that came later – the NLRB explicitly says, this nation’s policy is to encourage – encourage – collective bargaining, encourage unions.
  • What is news here is you now have an American President and Vice President, and the Speaker of the House and Majority Leader who agree with everything John Sweeney [union president] said.
  • Some of you guys were there when the Middle Class Task Force was announced.  I said “welcome back to the White House, let me tell you something: I think John [Sweeney], you’ve been back every week.
  • We will judge the success or failure of our administration at the end of our four years based on whether or not the standard of living of the middle class has increased, or not.  That’s the bottom line measure.  And guess what.  Neither one of us believe it can get better without you getting stronger.
  • Even when our economy felt like it was on solid footing over the last – you know, during the ’80s and ’90s and through the first part of 2000, even when we were on solid – when the economy was growing, the middle class was slipping – middle class was slipping.
  • We’ve only been in office about a  month.  The first bill to pass, Ledbetter Fair Pay Act.  What happened then?  We named a Secretary of Labor – who I guess came down and spoke to you all.  We named a Secretary of Labor who is a daughter of union members, not the darling of union busters.  A little change over the first executive orders, first version in the past eight years, and making it clear we want to see a project labor agreement on federal construction projects.  Second order: making sure that taxpayer dollars go to something other than union-busting activities.
  • On the Employee Free Choice Act, folks, let’s get it straight – we’re not asking – we’re not asking for anything we don’t deserve.  And we’re not asking for anything that wasn’t intended when the NLRB said we should be encouraging – encouraging – unions.  We just want to level this playing field again.
  • If a union is what you want, a union you’re entitled to have.

Of course I have some problems with what he said.

First – the average CEO does not make $10,000 per day.  The averageCEO employs less than 100 people and makes a fraction of $10,000 per day.  The $10,000 per day figure is bantered around by unions all the time now.  The CEO of Bank of America made that much one year.  And now that number is the “average” of what CEOs make. 

Second – the Obama Administration has just went on record to say that it will judge the success or failure of its administration on whether the standard of living of the middle class increased.  Not whether the United States remains a superpower.  Not whether the Middle East is secure.  Not whether illegal immigration is controlled.  Not whether the stock market has rebounded.  Not whether gas prices have remained stagnant and alternative fuel vehicles are more prevalent.  Not whether education prepares students to compete on a truly global platform.  Not whether the unemployment rate has shrunk – because remember the saying during the Great Depression when unionization ran rampant, a unionized job is a good job, if you can get it.

Third – on the Employee Free Choice act, Biden says we aren’t asking for anything we don’t deserve, and if a union is what you want, a union you’re entitled to have.  Since when do employees deserve unions?  Employees deserve to be treated and paid fairly and have their employers follow the myriad of labor and employment laws already in place to ensure that they are treated and paid fairly.  Likewise, they are entitled to be treated and paid fairly and have their employers follow the myriad of labor and employment laws already in place to ensure that they are treated and paid fairly.  Biden lets the cat out of the bag – union members believe they deserve and are entitled to outrageous demands simply for being an employee.

Follow Up Friday: Stimulus Funds will Blacklist Non-Union Workers

By now we’ve all heard about Obama’s Executive Ordersaimed at pacifying labor until EFCA rolls into town.  Now, any unfair labor practice charges leveled against a contractor – perhaps during a union organizing drive – could be used to bar the contractor from competing for taxpayer-funded federal work.  According to National Right to Work, “Now that union operatives at DOL have the power to blacklist a company from federal contracting simply by lodging a few spurious (even unadjudicated) charges, it’s pretty clear union bosses are in for a massive payday when the “stimulus” bill passes.”

For many years, I have seen first hand how union-filed prevailing wage complaints against non-union contractors cost them locally and state funded work, even if the charge doesn’t have merit or is settled for pennies on the dollar.  Unfortunately, the filling of such charges is a one-way street.  Non-union contractors, for some reason, don’t file charges against union contractors.  Assuming non-union contractors continue to not file charges – whether for prevailing wage violations or unfair labor practice charges for harassment on job sites – only non-union companies will be blacklisted from performing some of the $188 billion worth of federal work currently earmarked in the stimulus package.

Obama’s Anti-Non-Union Federal Contractor Executive Orders

Earlier this week, I mentioned that Obama signed Executive Orders that were aimed at undoing some of President Bush’s Orders regarding the the federal contractor and construction industries.  Prior to signing the orders, Obama declared, “We cannot have a strong middle class without strong labor unions.  We need to level the playing field for workers an dunions that represent their interests.”  His signatures on the following Executive Orders are his initial steps at single handedly creating nationalized unionism throughout our country.

Bush’s Executive Order 13201 helped ensure that employees of federal contractors were informed of their right to resign or decertify a union under the U.S. Supreme Court case Communication Workers v. Beck holding that private sector employees may be compelled to pay certain union dues, but may not be compelled to pay any dues or fees earmarked for union politics, lobbying, an dother non-bargaining activities.  I warned of Obama’s repeal of Beck rights in December, and unfortunately, it came true. 

According to National Right to Work, “Obama included the revocation of Beck rights noticesin an executive order advertising, and essentially endorsing, the formation of unions under a theory (long discredited by academic research) that forcing employees into union collectives will somehow prevent ‘substantial obstructions to the free flow of commerce.'”  NRTW continues: “The executive order also purports to give the Sectretary of Labor[pro-union Hilda Solis] the authority to detemrine what will be required by the notice, the authority to investigate violations, to hold hearings, and the power to punish violators of all federal labor laws mentioned in the notice.  In effect, the Secretary of Labor[who dodged answering questions about her stance on EFCA and other controversial issues when questioned by Congress] would become an additional judge, jury, and executioner of federal labor laws with respect to federal contractors.  Most importantly, the Secretary [who is not a done deal yet because of her radical positions] would determine whether a contractor would be fired by the federal government (apparently where the contractor has not even been found to have violated any laws by the law enforcement body of jurisdiction.)”  All of this would be a tremendous extension of the Secretary’s power, if not illegal, so it will be interesting to see what the final regulations look like.

Obama also requiresthat whenever federal agency changes contractors, the new contractor must offer jobs to the non-supervisory employees who workeed for the previous contract.  For example, rank-and-file workers could continue working on the same federal project even if the administrative contract expired.

Obama also had an Order denying federal contractors reimbursement for funds spent to “support or deter their employees’ exerciese of their right to form unions and engage in collective bargaining,” although it is unclear how much money contractors are now spending on anti-union measures or whether they are being reimbursed for it.

The last Executive Order Obama signed at the Middle Class Task Force launch party requires federal vendors with more than $100,000 in contracts to post workers’ rights under thr National Labor Relations Act.

Looking forward, seven Republican members of the Louisiana congressional delegation asked Obama to reconsider his campaign pledge to repeal President Bush’s executive order barring federal contractors from signing project labor agreements.  I image this request will fall on deaf ears, and I’ll let you know what happens about it in the future.