Contact: Gail Raiman, (703) 812-2073 Gerry Fritz, (703) 812-2062
Washington, D.C. – A new study, conducted by George Mason University’s John M. Olin Institute for Employment Practice and Policy, shows from 2000 to 2007, unions in the construction industry spent more than $1 billion to engage in and support a practice called “job targeting.” Job targeting programs, also known as market recovery funds, collect fees from union members and then funnel that money to other union contractors, and in some case nonunion contractors, to use to compete on projects on which they would not otherwise be competitive.
“Job targeting hurts state and local economies by taking money from workers in one area of the country and moving those funds to construction contractors in other localities, thereby avoiding being considered as tax revenue,” said Jim Elmer, 2009 national chairman-elect of Associated Builders and Contractors, and president of James W. Elmer Construction Co., Spokane, Wash. “The net effect is that those construction contractors that use job targeting programs as a business practice not only violate the principle of our country’s free-enterprise system, but tarnish the reputation of honest, taxpaying construction contractors.”
The Olin Institute study, “Job Targeting and Marketing Recovery Practices of Construction Unions: Their Apparent and Hidden Costs,” found that:
Job targeting programs are unknowingly undermining tax collections: The dollars that a union member pays his or her union as “dues” may legitimately be deducted on a union member’s federal, state and local tax returns. In contrast, the dollars that union members contribute to fund job targeting programs are not considered as “dues” and, therefore, may not be deducted on their tax returns.
As documented in the study, the lengths to which unions have gone to mask their job targeting programs raise serious questions about how their contributions to, and payments from, these programs are being treated for tax purposes, as well as to what extent these programs are adversely affecting tax revenues at the state and local levels.
Job targeting programs increase public construction costs: Job targeting artificially inflates wages. As a result, the public is unknowingly paying a much higher cost to build fire and police stations, hospitals, schools, roads, libraries and numerous other publicly funded construction projects. In many cases, the public is being prevented from building much-needed projects due to the inflated cost and fewer tax receipts.
To read the full job targeting study, go here.