The expansion deal that the state government of Rhode Island has just announced with Electric Boat at the quasi-public Quonset industrial park includes an understated feature:
As part of the deal with Rhode Island, Electric Boat has agreed to use union construction workers on the expansion and pay the prevailing wage.
Why would the government of the State of Rhode Island negotiate for the mandatory use of union labor? If state officials would rather have more money go to construction workers, rather than have it available for additional investment, the prevailing wage requirement would have been sufficient.
The likely answer sheds a different light on the component of the deal requiring “$14 million in state infrastructure spending at the Quonset industrial park.” If the state is negotiating on behalf of unions, this provision may have been requested by the state negotiators. That is, they were happy to tie taxpayers hands with a contract requiring new government spending for labor-union work.
Note, by the way, that the vast majority of the deal offered to Electric Boat is a targeted exemption from sales tax. Imagine how much more other companies would invest here if the state would eliminate or dramatically reduce the sales tax as a blanket measure. Of course, if people were investing their money in economic development on their own initiative, the government officials wouldn’t so often have a seat at the negotiating table to direct funds toward their friends and political supporters.