Gov. Tina Kotek has affirmed her commitment to her union-friendly executive order that sparked widespread opposition from construction trade groups and Republican lawmakers.

Now, those opponents are weighing their options to fight back while Democratic lawmakers, who hold large majorities in both legislative chambers, are mostly staying silent.

The order, signed Dec. 18, requires state agencies to negotiate and sign labor agreements with contractors on all major state-funded construction projects for which labor makes up at least 15% of the total costs.

Under the executive order, state agencies must negotiate wages, working conditions and benefits for all workers. In return, contractors must follow strict labor dispute procedures to prevent walkouts and hire workers who are typically more skilled and experienced.

The mandate does not apply to affordable housing or higher education institutions, the governor’s office clarified after the executive order was issued. Also, agencies can directly ask Kotek’s office for exemptions for specific projects.

The executive order came just weeks before lawmakers arrived in Salem last month for a months-long legislative session that will involve crafting a major transportation funding package. That package is likely to contain millions of dollars for large capital projects that will be affected by the governor’s order.

Proponents of the order, including unions, argue that mandating so-called project labor agreements helps maintain a high standard of quality work conditions and adequate wages and leads to lower construction costs and timelines. But opponents question those assertions and wonder how limiting competition among construction firms is good for taxpayers.

When Kotek’s office announced the executive order, she said the mandate would help guarantee Oregonians “know that public dollars are spent efficiently and benefit the communities in which they’re spent.”

Opponents, meanwhile, argue that the governor overstepped her authority and say the mandate will disproportionately hurt small and rural contractors and lead to higher costs and delayed construction timelines.

The executive order “completely undermines the whole point of public contracting laws that are in place,” said Mike Salsgiver, chief executive of the Oregon chapter of American General Contractors.

Potential benefits, drawbacks

Project labor agreements have been used nationwide in many major construction projects for decades. In Oregon, various government agencies and private organizations have used the agreements to help minimize the effect of labor disputes and provide apprenticeship opportunities.

In mega projects, such as the Interstate Bridge replacement project, project labor agreements can help streamline organization and enforcement by setting the same labor and workplace standards for all contractors and subcontractors, regardless of union status. Leaders of the bridge replacement project said they had already planned to use a labor agreement prior to Kotek’s executive order.

Studies of project labor agreements have shown mixed results regarding their effects on construction costs and timelines. Kotek’s office has not publicly released any state analyses that support her claims that the executive order will shorten construction timelines.

In fact, at least one state agency report has disputed the benefits of project labor agreements. A 2022 Oregon Department of Transportation analysis, first reported by Willamette Week on Jan. 29, stated that project labor agreements on major projects generally led to increased costs between the range of 10% to 20%.

The analysis reviewed six studies that collectively analyzed data from more than 1,000 projects nationwide. The authors acknowledged that project labor agreements have several upsides but stated that they are “inherently unfair to nonunion contractors and nonunion employees.”

Opponents to the executive order say that’s because project labor agreements typically require construction firms to hire a certain threshold of union workers, which is significantly easier for union contractors that already have such workers on board.

Requiring non-union contractors to adhere to union-negotiated rules will discourage many of them from competing for state contracts, opponents say, which would reduce the number of competitive bids for any given project and lead to higher costs.

“We are very concerned about how much this is going to hurt smaller contractors, particularly in the rural areas where … there’s simply no contractors that have been able to compete,” Paloma Sparks, executive vice president of statewide business lobbying group Oregon Business & Industry, told a committee of lawmakers on Monday.

Union leaders, who will benefit from the executive order, say those concerns are misguided. They point out that small and rural contractors can still place bids for the projects whether or not they have union employees. Project labor agreements can also include provisions to require a certain threshold of local workers.

They also argue that rural communities could benefit from the training opportunities and influx of highly-skilled workers that project labor agreements usually bring. And even without project labor agreements, they point out, rural contractors continue to face competition from larger firms.

“I almost feel we, as the unions, are generally giving up more in this executive order,” said Lorne Bulling, political director for Ironworkers Local 29. For example, he said, unions are not guaranteed work on projects and unions that typically have the right to strike must agree to give up that right. Meanwhile, the order ensures non-union workers can’t be excluded from consideration.

Some supporters of the executive order argue that the opposition partly comes from non-union contractors wanting to avoid the higher labor and workplace standards required by project labor agreements.

Although non-union construction workers in Oregon under law must earn the same amount as union workers when working on public works projects, proponents of the executive order argue that non-union contractors tend to pay less attention to labor laws, which can lead to worker exploitation that could be prevented with union oversight.

“I think their actual concern is that they can no longer get away with underpaying people or paying them the incorrect (wage), because there will be actual enforcement,” said Daniel Hutzenbiler, a longtime labor attorney who works with several Oregon unions. “That’s the only way I can see that there’s going to be an increased cost.”

Contractor groups say that’s not the case. “Non-union workers in this state are trained just as well and to the same standards as their union counterparts,” Jenny Dixson, executive director of the Northwest Utility Contractors Association, said in a statement. “Instead of being proud of all Oregon labor, the governor’s order suggests something that’s simply not true.”

Salsgiver, the American General Contractors state leader, said the group is weighing potential challenges to the order. Last year, it sued the Oregon Department of Transportation, alleging the agency overstepped its powers by negotiating project labor agreements for eight projects worth $180 million, Northwest Labor Press reported in December. The Oregon Supreme Court held a hearing on the challenge on Dec. 9.

Political battle

The executive order came as a surprise to many lawmakers and instantly sparked a political debate in Salem, where legislators convened in January for a five month legislative session that will involve the tedious process of crafting a state budget.

Republicans have expressed strong frustration with the executive order, claiming that it will unnecessarily raise costs for agencies and harm rural or non-union contractors. At the center of the debate is the state department of transportation, which oversees many projects that will be subject to the mandate and has requested an additional $1.8 billion per year to better maintain the state’s roads and infrastructure.

House Republican Leader Christine Drazan last month said Kotek’s executive order signaled to her that “there was zero commitment on the Democrat side of the aisle to ever control costs,” OPB reported in January.

The political fight reflects the national debate over labor agreement mandates on federally funded projects. Democrats typically support them, while Republicans tend to oppose them. Roughly two dozen Republican-led states have banned them, while several Democratic-led states have laws supporting their use.

Oregon Democratic lawmakers have previously supported requiring project labor agreements for large projects that would receive state funding. For example, a 2024 bill that all but two Republicans voted against included a provision to require project labor agreements for any future offshore wind energy projects.

Senate Republican Leader Daniel Bonham, in a scathing Dec. 20 press release, called Kotek’s executive order an “unconstitutional power grab and an insult to Oregon’s contractors,” claiming that the Democrat-controlled Legislature, not Kotek, should decide such policies.

But Republicans, as the minority party in both chambers, have few realistic options to push back against the executive order. Democrats could pass legislation creating more guardrails around the executive order, but they have shown no intent to do so.

Meanwhile, Kotek has affirmed her commitment to the executive order, saying she has no plans to roll it back.

“The governor acknowledges a philosophical difference between her and opponents of (project labor agreements),” Roxy Mayer, spokesperson for the governor, said in a statement. “But it is time to stop fighting over the tool itself and get to work building the infrastructure Oregonians will rely on for years to come.”

— Carlos Fuentes covers state politics and government. Reach him at 503-221-5386 or cfuentes@oregonian.com.

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