Creating educational programs and building strong relationships are what helped Louisiana become the top-ranked state on the Associated Builders and Contractors’ 2016 Merit Shop Scorecard.
And, John Walters, Vice President of Governmental Relations at ABC of Louisiana, says the ranking is a long time coming.
“We expected to be there due to everything we do with the Legislature and trying to promote free enterprise and open competition in Louisiana,” he says. “In some of these areas, Louisiana is leading the nation.”
“We emphasize and promote career pathways, showing that these are not just construction jobs. They are careers in construction.”
ABC launched “Building America: The Merit Shop Scorecard” in 2015 to review and grade the impact of state-specific policies and other regulations on the commercial and industrial construction industry in each state. The 2016 update was released on Nov. 21.
The Merits of Free Enterprise
The merit shop philosophy emphasizes free enterprise principles, a free market system, and open competition. The scorecard highlights states with free enterprise-based ecosystems where merit shop contractors are well positioned to succeed, and calls attention to needed improvements in some states.
“When contractors compete for work on a level playing field, everyone in the industry benefits,” says Brandon Ray, ABC’s manager of state and local affairs.
“Contractors are more likely to embrace innovation and seek ways to increase productivity to enhance their value proposition. To increase productivity, contractors must embrace a diverse workforce that recognizes and leverages the unique talents of individuals and develops their workforce to ensure that they are putting the best talent on the playing field. And, construction owners benefit from increased competition because it produces the highest quality product at the best possible price.”
The report grades state policies in seven areas: project labor agreements, prevailing wage, right to work, public-private partnerships, workforce development initiatives, career and technical education, and five-year average job growth rate.
Rankings paint a nationwide picture of merit shop conditions and provide valuable information for contractors and construction owners seeking to build or bid in specific states, Ray explains. State legislators and policy stakeholders can also gain insight on how their state stacks up against others.
“When thinking about an industry that isn’t hyperlocal, with construction owners looking to build and contractors looking to bid regionally and sometimes nationally, it is important for states to do what they can to encourage business and construction investment within their borders,” Ray says.
Louisiana ranks No. 1 in the 2016 report, followed by Virginia and North Carolina, respectively. Illinois, New Mexico, and Alaska fall at the bottom.
States with low scores often have “burdensome government mandates, unfair policies for workers, or a lack of innovation in developing a skilled labor force,” Ray explains.
“Business environments rooted in free enterprise and that encourage open competition among all qualified contractors best allow the private construction industry and its workforce to flourish and the state’s taxpayer dollars to be used responsibly.”
A-Head of the Pack
Louisiana ranked No. 2 on last year’s inaugural scorecard. Ray says revisiting the methodology as it applies to the state’s policies, re-examining workforce development incentives, and seeing a minor improvement in job growth brought the state up to the top spot in 2016.
The state received an A grade in each of the seven categories except average job growth rate, where it was given a C. Despite that average score, Walters says Louisiana’s construction industry has a low unemployment rate.
“From our perspective in Louisiana among construction employees and employers, we don’t have a lot of people sitting around,” he insists. “We’re hiring everyone we can.”
Ray says the state’s top ranking in the other categories is the result of years of hard work with the state Legislature and building relationships and partnerships throughout the state.
In 2011, Louisiana passed legislation to prohibit project labor agreements on publically funded projects. Project labor agreements, authorized under the National Labor Relations Act, are pre-hire collective bargaining agreements on public projects where construction unions have exclusive bargaining rights on wages and benefits.
“Typically, merit shop contractors will not bid on those jobs,” Walters explains. “We spent a lot of time educating elected officials on Louisiana’s construction community and got them to understand why project labor agreements are bad for the construction industry across the board.”
Some long-standing state policies and laws also contributed to Louisiana’s top scorecard ranking.
The state repealed its prevailing wage law in 1988, which allows employers and employees to mutually negotiate wages and other benefits, outside of any government mandate except for minimum wage laws.
Walters says the average wage for workers in Louisiana’s construction industry varies by job and location within the state, but that the majority exceed minimum wage. Louisiana follows the federal minimum wage of $7.25.
In 1976, Louisiana passed its right to work law. Today, there are 26 states with right to work laws allowing employees to decide for themselves whether to join or support a union.
Louisiana has developed extensive public-private partnerships, which Walters says have benefited taxpayers because private entities assume part of a project’s risk and more oversight and transparency exist.
“As budgets are getting tighter and tighter, I think states are getting more public-private partnerships to solve some of their construction or infrastructure needs,” he explains. “Moving toward that methodology opens up the contractual relationships that give local entities a little more leeway and private developers more skin in the game.”
Partnerships have also been valuable in providing extensive career and technical education and workforce development programs in the state.
“We emphasize and promote career pathways, showing that these are not just construction jobs,” he explains. “They are careers in construction.”
The state’s two ABC chapters have multiple training centers and work with organizations such as the Louisiana Workforce Commission and the Louisiana Community and Technical College System to offer programs. Walters says input from construction industry leaders drives training, which is ongoing despite industry changes.
“If you just train when business is great, and then you have ebbs and flows and you’re not training at all, you don’t have skilled, qualified workers when it all picks back up,” he explains.
Walters serves as the full-time statewide lobbyist for ABC, which he says not all states have, and this has contributed to Louisiana’s construction-industry merit shop friendly policies. The state also has forceful grassroots, member-driven efforts advocating for the industry.
“We focus on what’s best for the construction industry,” he explains. “It gets us out of the handcuffs so we can operate freely in a free enterprise system.”