NJ’s project labor agreements discriminate against minority businesses and workers

In 2024, during Black History Month, the African American Chamber of Commerce is shining a spotlight on the racial disparities in New Jersey’s government procurement process.

Recently, the Murphy administration released a study that showed a "statistically significant disparity" when it comes to public contracts awarded to minority businesses. In fact, according to the study, minority African American businesses received less than half of 1% of $18.5 billion dollars the state awarded to contractors. A prime example of the disparity: Minority-owned businesses represented 9.19% of the available construction businesses but received only 0.14% of the dollars on construction contracts valued from $65,000 to $5,710,000. 

New Jersey has to fix its project labor agreement policy

The release of the data contained in the Disparity Study helps to move stakeholders and the administration forward to find solutions. However, significant obstacles remain in the fairness of the state procurement process for minority- and women-owned businesses: the state's project labor agreement, or PLA, requirements, which inherently discriminate against non-union enterprises.

Since 2002, the state of New Jersey has allowed discriminatory PLAs to be placed on any public works contract over $5 million. PLAs discriminate against workers who are non-union, which is more than 78% of the construction workforce in the state. And an overwhelming 98% of all African American and Hispanic construction companies are non-union. Furthermore, at $5 million, New Jersey has the lowest threshold for PLAs for state works of any state in the country, meaning there are fewer and less lucrative projects for non-union and minority firms to bid on.

PLAs also come at a huge cost to New Jersey taxpayers. The most recent study conducted by the New Jersey Department of Labor and Workforce Development found that PLA projects costs were 30.5% higher than all non-PLA projects and they had a longer duration by about 22 weeks. Over 10 years have passed since this study was prepared, and not a single body or association has refuted the analyses and conclusions.

Unfortunately, some unions are pressuring local towns, such as Parsippany, Montclair and Brick, into passing ordinances to require PLAs on all public works projects in their municipalities and school districts. These ordinances are being passed with little input or knowledge by taxpayers, who will ultimately pay for artificially inflated construction costs contained in the PLAs. Despite false assurances from union officials with a vested interest in these discriminatory schemes, PLAs have been proved to be an expensive and deceptive practice that hurts taxpayers and discriminates against local and minority workers.

For example, last April, the New Jersey Superior Court Appellate Division ruled that the Delaware Joint Toll Bridge Commission “violated its fiduciary and legal duties” because it required a PLA for its project that resulted in just one bid at $69 million, or roughly 20% more than the estimated project cost. This is just one instance that shows how PLAs exclude qualified contractors and raise costs considerably for taxpayers.

More: Murphy says 'disparity' in NJ public contracts awarded to minorities, women must be fixed

New Jersey policy cannot discriminate against a majority of its workers

If the Legislature is looking for solutions, it need search no further. To ensure that more of our public works contracts are afforded to minority- and women-owned businesses, New Jersey needs to increase the threshold from $5 million to $35 million so that our state is in alignment with the federal contracting levels as recently stipulated by President Joe Biden. The current PLA requirements discriminate against the majority of New Jersey’s workers and only benefit the union special interests.

Ensuring that taxpayer-funded construction projects are open to all workers who are paying for these projects with their own tax dollars is what is fair and equitable. Equal access to public works projects is the only way to ensure fair and equitable change for our state’s minority- and women-owned construction businesses.

John E. Harmon Sr., IOM, is founder, president and chief executive officer of the African American Chamber of Commerce of New Jersey.

This article originally appeared on NorthJersey.com: NJ project labor agreements biased against minority businesses workers