Researchers have studied the cost effects of project labor agreements for more than 20 years.
Peer-reviewed studies find no significant cost effect with Project Labor Agreements
It’s an age-old question in the construction industry: Do PLAs increase costs? The answer is no. The most rigorous peer-reviewed research finds no statistically significant relationship between project labor agreements and construction costs.
That is the central conclusion of a comprehensive research review from the Institute for Construction Employment Research (ICERES), in which economists Russell Ormiston of Allegheny College and Kevin Duncan of Colorado State University-Pueblo examined more than 20 years of economic studies on public-sector PLAs.
The question matters because the opposite claim circulates widely: that PLAs inflate public construction costs by 15% to 20%. Public officials weighing a PLA deserve to know where that number comes from, why the strongest research rejects it and what the newest data shows.
Where the 15% to 20% claim comes from
The alarming figures trace almost entirely to non-peer-reviewed reports that share a basic design flaw. Economists call it omitted variable bias. In plain English: the studies compared large, complex urban projects to smaller suburban ones and blamed the PLA for the cost difference, when the real driver was where and what was being built.
The proof is in the location data. When researchers controlled for urban construction in markets such as Boston, Los Angeles and Cleveland, the estimated PLA cost effect fell by half or vanished entirely. The reports promoting big numbers generally skip that control.
How to tell strong research from weak
Peer review is the quality filter of academic research: independent experts scrutinize a study’s data and methods before publication. The peer-reviewed PLA studies in the ICERES review used statistical models that explained 80% to 96% of the variation in project costs. The non-peer-reviewed reports behind the 15% to 20% claims explained as little as 10% to 21%, meaning those models captured very little of what actually drives construction costs.
The math does not support a 20% increase
There is also a simple arithmetic problem. Labor accounts for roughly 23% of total construction project costs. For a PLA to push total costs up 20%, labor costs would need to nearly double. No credible study has documented anything close to that.
What the newest data shows
The largest dataset ever assembled on the question points the same direction. A 2025 study by the Illinois Economic Policy Institute and the University of Illinois analyzed 2,574 bids on 773 state building projects worth more than $1.2 billion. Projects covered by PLAs drew 14% more bids on average, and each additional bid increased the likelihood that a project would be awarded below the engineer’s estimate by 6%. More competition, not less. Lower costs, not higher.
That echoes the only peer-reviewed study to examine bidding directly, which found PLAs had no effect on the number of contractors competing for California community college projects.
Private companies and the federal government keep choosing PLAs
PLAs have guided private construction for more than a century. Toyota, Apple, Intel and Honda have all used them on major builds. Profit-driven companies do not volunteer to overpay.
The federal government reached the same conclusion. Executive Order 14063 requires PLAs on large federal construction projects precisely because they provide structure, stability and dispute resolution on complex jobs. A federal appeals court upheld that mandate in April 2026.
READ MORE: Project Labor Agreements, Prevailing Wages and Apprenticeships Delivered Clean Energy Results
PLAs in the Eastern Atlantic states
Officials across the region are reading the same evidence. Hudson County, N.J., now requires PLAs on public projects of $3 million or more. Delaware lawmakers advanced a PLA requirement for large school projects. And Erie, Pa., is building labor agreements into its $14 million bayfront market house. Public bodies do not keep expanding a tool that costs taxpayers 20% more.
What the research does not yet cover
Honesty about the limits matters. Most PLA cost research focuses on school construction. There are no systematic studies of large infrastructure such as bridges or power plants, and findings on affordable housing are mixed. The existing research also has not quantified PLA benefits such as on-time completion, skilled craftsmanship and apprenticeship training, which means current studies may understate the full value PLAs deliver.
The bottom line for public officials, developers and taxpayers: the claim that PLAs inflate construction costs does not survive contact with the strongest available evidence.
| Study | Year | Scope | Peer-reviewed? | Finding |
| Ormiston & Duncan (ICERES) | 2022 | Review of 20+ years of PLA studies | Research review of peer-reviewed and other studies | Strongest studies show no significant PLA cost effect |
| Manzo & Bruno (ILEPI/PMCR) | 2025 | 773 Illinois projects, 2,574 bids | Independent research report | 14% more bids on PLA projects; competition controls costs |
| Philips & Waitzman | 2021 | California community college projects | Yes | No effect on the number of bidders |
| UC Berkeley Labor Center | 2024 | Affordable housing projects | Research report | Mixed findings; results vary by study |
| Beacon Hill Institute reports | 2000s | School construction | No | Claimed 15% to 20% increases; models explained only 10% to 21% of cost variation |
FREQUENTLY ASKED QUESTIONS
Do project labor agreements increase construction costs?
No. Peer-reviewed economic research finds no statistically significant relationship between PLAs and construction costs. A research review by economists at Allegheny College and Colorado State University-Pueblo examined more than 20 years of studies and found the strongest research shows no cost effect.
Why do some studies claim PLAs raise costs by 15% to 20%?
Those figures come from non-peer-reviewed reports that compared large, complex urban projects to smaller suburban ones and attributed the cost difference to the PLA. When researchers controlled for project location, the estimated cost effect fell by half or disappeared.
Do PLAs reduce the number of contractors bidding on projects?
No. The only peer-reviewed study on the question found PLAs had no effect on the number of bidders, and a 2025 Illinois analysis of 2,574 bids found PLA projects attracted 14% more bids on average.
Can non-union contractors work on PLA projects?
Yes. Any qualified contractor, union or non-union, can bid on and win PLA-covered work. The agreement applies the same terms to every participant.
Why do private companies use project labor agreements?
Companies including Toyota, Apple, Intel and Honda have used PLAs on major construction projects because the agreements deliver cost predictability, schedule certainty and a reliable skilled workforce. PLAs have been used in private construction for more than a century.
READ THE FULL REPORT AT ICERES
