Critics warn this will hurt the 98% of minority-owned firms that are non-union

the staff of thew Ridgewood blog

Trenton NJ, In one of his final acts as Governor, Phil Murphy signed A-5967 / S-4864 into law on January 20, 2026. While the administration frames the expansion of Project Labor Agreements (PLAs) as a victory for labor, a growing coalition of minority business leaders and independent contractors warns that the law effectively slams the door on small, diverse firms.

The new legislation allows local governments—including school districts and fire departments—to mandate union-only PLAs on construction projects of any size, essentially removing the previous $5 million threshold.

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What the New PLA Law Changes

Previously, PLAs in New Jersey were reserved for large-scale projects exceeding $5 million. The new law grants local entities the power to impose these agreements on projects as small as “one cent.”

Key Impacts of A-5967 / S-4864:

• Threshold Removal: Local units can now require PLAs on routine maintenance, small repairs, and minor municipal projects.

• Union-Only Hiring: PLAs typically require contractors to hire workers through union halls, pay into union pension funds, and follow union work rules—even if the contractor is non-union.

• Reduced Competition: By adding these requirements to small projects, the state risks sidelining “merit shop” (non-union) firms that cannot afford the dual overhead of union fees and their own employee benefits.

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The “Disparity” Dilemma: Statistics on Minority Firms

The timing of the law has drawn sharp criticism from the African American Chamber of Commerce of New Jersey (AACCNJ) and ABC-NJ, citing the state’s own 2024 Disparity Study. The data highlights a staggering gap in public contracting:

Group	Market Availability	Actual Contract Dollars Received
Black-Owned Firms	9.0%	0.014%
Hispanic-Owned Firms	11.6%	1.5%
Asian-Owned Firms	6.4%	2.0%
Women-Owned (WBEs)	24.5%	8.7%

The 98% Problem: Roughly 98% of minority-owned construction firms in New Jersey are non-union. Under the new law, these firms may be effectively disqualified from bidding on local projects they previously relied on to grow their businesses.

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Cost to Taxpayers: 30% Higher Prices?

Beyond the impact on equity, the law raises red flags for taxpayer wallets. According to data from the N.J. Commissioner of Labor, the financial and timeline differences are significant:

• Cost: PLA-mandated school projects were found to be 30.5% more expensive per square foot ($260 vs. $199).

• Efficiency: PLA projects averaged 100 weeks to complete, compared to 78 weeks for non-PLA projects.

In the most heavily taxed state in the nation, critics argue that adding a “union surcharge” to small local projects is an unnecessary burden on families already struggling with the cost of living.

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A Coalition Divided

While union leaders champion the law as a way to ensure high-quality work and prevailing wages, the opposition is a broad “merit shop” coalition including:

• African American Chamber of Commerce of NJ

• NFIB NJ (Small Business Association)

• NJ Independent Electrical Contractors Association

• United Service Workers Union

As New Jersey moves into a new administration under Governor Mikie Sherrill, all eyes are on whether these new regulations will be reviewed or if the “union-only” era of local construction is here to stay.

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