LaborTalk for March 22, 2011

New York’s Construction Unions Are Losing
Their Market Share of New Building Projects

By Harry Kelber

New York City’s construction unions, that controlled more than 90 percent of the building industry’s jobs throughout most of the 20th century, have lost a significant market share of the $20 to $30 billion spent annually on erecting new buildings and repairing old ones.

While there are no official statistics, two out of five (about 40 percent) construction jobs in the city are said to be built non-union, although unions put the number at one to four (25 percent). Competition between unionized companies and their non-union rivals became intense during the economic recession, when there was a decline in available new construction projects.

The construction unions, whose members earn relatively high wages, and are composed of mostly of blue-collar workers, were regarded as the backbone of the city’s middle-class, until the drop in construction began to lower their living standards.

At a time when construction companies and developers became more cost-conscious, non-unionized firms had an obvious appeal: They could outcompete unionized companies on price They could help contractors who wanted to lower their labor costs by as much as 25 percent. Developers, too, were aiming at labor-savings of 20 percent.

The one big problem for the non-union companies is to assemble a low-wage work force of all the necessary crafts that could erect high-riser buildings. They might have to employ workers that are inadequately trained, but are willing to work at much lower wage rates. Non-union construction companies make direct appeals for workers in various crafts, even setting up a web site and using ads to lure them away from unionized firms with promises of steady work.

The unionized firms could offer a contractor work crews with years of training experience in every craft, from carpenters, plumbers and electricians to iron workers, painters s and operating engineers. They emphasize the quality of their product, particularly the safety features. Yet unionized firms have been forced to make concessions in benefits and working practices in order to hold on to big contracts...

Pre-Fab Construction May Affect Housing Market

A feature that favors the entire industry is that it is not readily subject to outsourcing, like autos and a string of manufactured goods and financial services. Yet, there are scientists and engineers trying to think of models that could utilize U.S. construction resources and know-how for the global market.

This week, the developers of the Atlanta Yard’s megaproject in Brooklyn said it was seriously considering using a pre-fabricated method to erect its residential high-rise buildings, where wage rates would be lr lower than on the construction site. While most of the workers would be unionized, there would be fewer of them, and they would earn less money, because much of the labor would be done in a factory

If new technologies are developed to lower the cost of building residential towers, the housing industry will be affected. It may eventually reduce the cost of buying a home and securing a favorable mortgage.

If pre-fabricated construction becomes standardized, the current division between craft unions will be eliminated. Their members will be working together in an integrated construction factory. The craft unions might become one gigantic industrial union.

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For leaders of today’s building trades unions, the idea of transforming their members’ skilled crafts into factory hands is a nightmarish prospect that they would oppose fiercely, and they would offer even expensive concessions to prevent it from happening.

But what if pre-fabs may grow under the pressure of rising construction costs, If pre-fab dominates the construction market, what will union leaders do? Hang on to the status quo? Or accept change?—Harry Kelber

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