Though it went unnoticed amid the flurry of primary races, the most significant election result this month might be the outcome of a local referendum in Chula Vista, Calif.
Voters in the San Diego suburb finally voted to rein in greedy local unions by banning Project Labor Agreements — a common arrangement whereby unions, usually with government backing, dictate the terms of construction projects.
In 2008, after two years of negotiations, Tennessee hotel company Gaylord Entertainment walked away from a deal to build a $1 billion hotel and convention center in the city. The project would have created 10,000 construction jobs and 2,000 more permanent jobs in Chula Vista's newly revitalized bayfront.
Local unions tried to force Gaylord into a PLA that would stipulate Gaylord only hire union workers. Some 85 percent of construction workers do not belong to a union, and the terms of PLAs often go far beyond who is hired — setting wages and severely restricting flexibility for developers.
PLAs make construction projects 12 percent to 18 percent more expensive, according to the Beacon Hill Institute. A PLA on a billion-dollar hotel would translate into $120 to $180 million cost overrun.
Gaylord did agree to give preference to union and local workers, but that wasn't enough. San Diego-area unions are notorious for threatening environmental lawsuits against companies that don't agree to their demands.
Chula Vista voters know who is to blame for the Gaylord debacle, which is why on June 8 residents of the city voted 56 percent to 44 percent to ban PLAs. Nearby Oceanside, Calif., also voted to ban PLAs, 54-46.
Chula Vista's experience is not atypical. The question is why the Obama administration requires PLAs in the federal government, insisting they are a boon to the middle class.
One of Obama's first actions as president was to sign an executive ordering the use of PLAs on all federal contracts worth more than $25 million. Further, the White House Middle Class Task Force headed by Vice President Biden and Jared Bernstein — Big Labor's favorite economist — declared in its annual report that “PLAs can significantly enhance the economy and efficiency of federal construction projects.”
Despite that statement, nowhere in the annual report does the task force attempt to quantify the economic benefits of PLAs, let alone explain how they help the middle class. That's because they can't.
President George W. Bush previously signed an executive order banning PLAs on federal contracts, an action estimated to have saved taxpayers between $1.6 and $2.6 billion.
With the White House now requiring PLAs, potentially billions of tax dollars are now being funneled to the 8 percent of the population that happens to belong to a union. It's not a coincidence this same tiny minority spends hundreds of millions on campaign contributions electing Democrats. In reality, PLAs are a transfer of wealth from the middle class to a favored Democratic constituency.
Speaking of constituencies, the Wall Street Journal reports both Chula Vista and Oceanside elected President Obama by significant margins. Even more liberal Democratic communities have no choice but to concede that union favoritism kills jobs and impedes economic growth. As the economy starts hitting local economies harder, Chula Vista and Oceanside might end up being the first of many cities that take the necessary steps toward limiting union excess.
It's just too bad that Democrats in Congress and the White House would rather sacrifice local jobs in order to win national elections.
Mark Hemingway is an editorial page staff writer for The Washington Examiner. He can be reached at firstname.lastname@example.org.