NEW YORK—On Thursday, 23 contracts will expire between construction trade unions and contractors and while no one is talking about a strike, the possibility invariably looms. In negotiating contract renewals, new precedents may be set for the future of the $24 billion a year industry in New York City.
Union labor currently costs 30 percent more than nonunion labor on average. Many contractors are willing to pay extra for what they feel are higher quality standards and greater reliability offered by unions, said Louis Colletti, president and CEO of the Building Trades Employers’ Association (BTEA) in a phone interview. However, BTEA contractors are willing to pay a 10 percent premium, not 30 percent.
Developers and contractors are pressuring unions to trim the fat by ending what they call inefficient practices, rather than by cutting the wages and benefits of laborers. A Regional Plan Association (RPA) report released June 9 exposed union inefficiencies. For example, Operating Engineers Locals 14 and 15 spent $100 million over three years on 52 highly skilled employees that did not work whatsoever.
They were required to be on site for safety reasons.
Robert Ledwith, business manager and financial secretary-treasurer of the Metallic Lathers and Reinforcing Ironworkers Local 46 presented an impassioned argument against this study and its charge that unions are inefficient or wasteful at a June 9 forum held at Harvard Club of New York City to discuss the report.
“It makes assumptions that we’re not rational human beings. It makes assumptions that we in labor don’t understand the economics of our industry that we don’t care. It makes assumptions that after 113 years of existence, that we have no institutional memory,” declared Ledwith.
The unions’ work practices have developed over the course of a century of learning what best works for the industry, argues Ledwith—a century during which they had the assured patronage of the BTEA.
In the first week of June, BTEA announced its intention to withdraw from an agreement that requires its members to hire only union workers. Coletti says this move was not intended as a bargaining chip.
“We didn’t do it for those purposes. … We’ve had those conversations for several years,” said Coletti.
A lot hangs in the balance: a strike by the operating engineer union alone could halt $10 billion in work and take tens of thousands of workers off the job, predicts Colletti.
"Nobody in labor wants to see work stoppages," wrote Paul Fernandes, chief of staff for the Building and Construction Trades Council of Greater New York in an e-mail. "We hope management approaches the expiration of contracts on June 30 the same way. The place for negotiations to occur is at the bargaining table. That’s where all efforts should be focused in the coming days.”
Audience member Jeff Grabelsky, director of Cornell University’s construction industry program, posits that even if unions meet demands and lower their operating costs, it could simply be the beginning of a downward spiral. Private contractors have no collective bargaining agreements to stop them from continually undercutting the bids.
While Grabelsky and Ledwith agree that there are certainly upstanding, quality, private contractors who will not cut corners to lower costs, they caution that there are quite a few who could skim where they shouldn’t.
“We didn’t talk about illegal immigration and how favorable that is to lowering costs because workers are being exploited; we didn’t talk about the middle class and what the middle class means to this city and how we’re going to keep it a strong middle class,” said Ledwith, listing off topics other panelists did not cover.The industry is hurting: construction employment is down 22 percent since 2008 and the unemployment rate is about 25 percent. Many union tradesmen are jumping ship and working nonunion jobs to make ends meet.
“Unless they bend, they are going to break,” said Jeffrey Levine, chairman of Levine Builders and Douglaston Development, of the unions.