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Beacon Hill Institute: The Effects of Project Labor Agreements on Public School Construction in New Jersey

August 26, 2019
By William F. Burke, David G. Tuerck

New Jersey taxpayers would have saved $565.1 million, or more than $7.1 million per project, in 2018 prices, if PLAs had not been used.

New Jersey enacted the Project Labor Agreement Act (P.L. 2002, Chapter 44) on July 25, 2002. The Act authorized the use of PLAs on public building projects in New Jersey with total costs of $5 million or more. The Act also required that the Commissioner of Labor and Workforce Development provide an annual report evaluating the effectiveness of projects utilizing PLAs to the governor and legislature beginning in 2003.

The Department of Labor and Workforce Development (LWD) released its last report in 2008. The report found that school construction projects built under a PLA cost 30.5% more than non-PLA projects for the period of 2002 to 2008. (LWD, 2008)

We found that the presence of a PLA increases the final construction costs of a school in our sample by $57.84 per square foot (in 2018 prices) relative to non-PLA projects. Because the average cost per square foot of construction is $356.05, PLAs raise the final construction cost of building schools by 16.25 percent.