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The Great Recession hit the building trade unions in the Philadelphia area hard.
They saw a significant decline in their membership along with increasing challenges to their near-monopoly over construction projects within the city.
Overall membership in the 23 larger unions that constitute the Building and Construction Trades Council went from 65,000 in 2008 to 58,000 last year, according to disclosure documents unions file with the U.S. Department of Labor.
While that represents an 11 percent decline, some unions lost even more, among them the Sheetmetal Workers (down 19%); Painters Local 252 (-19%); the Electrical Workers Local 98 (-20%); Laborers Local 57 and Local 322 (each down 21%); the Painters District Council, which represents a number of crafts including glaziers (-31%) and the Plasterers and Cement Masons Local 8 (-37%).
Labor leaders I called were reluctant to talk about the trend. In fact, they were reluctant to return my calls at all. But others, who count themselves as friends of labor, said that aside from the recession, the building trades unions are facing difficult trends that could imperil them in the long term.
I did talk to Pat Gillespie, head of the Building and Construction Trades Council, which represents most of the unions, and he attributed the decline to the recession and technological advances that allow builders to use fewer workers. His example: larger construction equipment that allows you to hire fewer operators.
“We are subject to the vagaries of the marketplace,” Gillespie said, “but there is still a vitality there.”
He cited the number of applications unions have for people interested in being apprentices. “The lists are maybe 10 times the amount of applicants who are taken,” Gillespie said.
That may not be a sign of vitality. People familiar with the operations of the unions said many of them have trimmed their apprentice programs because they can’t guarantee trainees work.
With fewer people joining the unions and more older members retiring, the trend line in union membership is pointing downward. Increased competition from workers who do not belong to unions is exerting additional pressure.
If you wanted one number to foretell the future of the construction trades union in the region it would be this: 30.
According to construction experts, using all-union labor will increase the cost of a project by an average of 30 percent. The difference in hourly wages is one reason, but the hefty cost of contributing to the unions’ health and welfare and pension funds is the main one.
The half-dozen contractors I talked to all said virtually the same thing: They praised the expertise and efficiency of the union workers, but said the per-worker price was a hurdle hard to get past, especially in these days of tight budgets and low profit margins.
As a result, many contractors, especially in the suburbs, have moved toward using non-union workers for simpler jobs, such as dry wall installation, though they will hire union help for more complicated construction tasks.
This “mixed-project” model of union and non-union help has been in effect in the suburbs since the 1970s — though to hear Gillespie tell it the non-union workers tend to be low-pay undocumented workers from overseas.
To counter this drift toward using lower-wage workers, unions sometimes resort to subsidizing a portion of the cost a contractor incurs for using union help. It’s not something the unions like to broadcast — lest every builder demand it — but the practice has become more widespread in recent years, going by such names as “Pinpoint Money,” and “Market Recovery Supplements,” or “Job Creation Subsidies.”
Two of the unions most active in handing out subsidies are also among the region’s largest: the Carpenters District Council, which represents members in a dozen counties, and the Electricians Union Local 98, which also has a regional membership.
In the past five years, Local 98 has used its Market Recovery Fund to pay out $4.2 million in subsidies to contractors, according the U.S. Labor Department reports. Most of the money has gone to individual firms.
As the recession deepened, the subsidies increased. In 2008, Local 98 made $347,000 in payment; last year it gave out $1,286,898.
The carpenters made even more use of “wage supplements” to the tune of $22 million since 2008.
In effect, these subsidies are a discount given to builders to make union workers more affordable. The worker gets the same hourly wage and benefits, but his union helps carry the cost of providing them. The subsidy funds come from the dues paid by union members.
Last year, 20 percent of the total budget of the Carpenters District Council was spent on subsidies.
Gillespie is not a fan of using pinpoint money. “I call it the race to the bottom,” he said. He portrayed it as a practice in decline, though the evidence suggests otherwise.
I wasn’t able to reach anyone at the Carpenters or Electricians Union to discuss the practice.
Supporters of labor see the use of subsidies as something that cannot be sustained and as sign of a broader problem: a wage-and-benefit structure that is going to be increasingly difficult to sustain in today’s economic climate.
Some have urged the unions to formally create what unions practice on a case-by-case basis now: a two-tiered wage structure, with one for commercial projects and a lower one for residential ones.
The craft unions may be ailing but they are not weak. In Philadelphia in particular unions are part of the political establishment. In fact, they are the political establishment. U.S. Rep. Bob Brady, the Democratic party chair, is a member of the Carpenters Union. Local 98 head John Dougherty is a Democratic power broker. Union presidents sit on various boards and commissions throughout city government. Union PAC money represents an increasing share of campaign funds. The unions have close relationships with construction firms that specialize in doing work in the city.
Because of these factors, unions have maintained a near monopoly over construction jobs in the city. Those who defy them will get picketed, harassed or worse, as the Quakers in Chestnut Hill learned late last year.
They hired a contractor who uses non-union workers to build their new meeting house, though not before considerable debate. Their budget was $3.5 million. Non-union contractor E. Allen Reeves, Inc. bid $300,000 over the Quakers’ budget. But, the union contractors bid $1 million over the budget. They chose Reeves.
Four days before Christmas, vandals descended on the site, causing $500,000 in damage. They burned the cab of a crane and used an acetylene torch to sheer steel bolts from a dozen columns. It was seen by the contractor and police as an act of revenge for using non-union workers. No one has been arrested in the case.
However, one deviation from the no non-union worker rules took place last year that may have significance. Developers Michael and Matthew Pestronk started a mixed project in the former Goldtex factory and warehouse on 12th Street north of Vine. The unions picketed for weeks, blocking deliveries and intimidating workers (actions the developer recorded and post on YouTube). Brady intervened and negotiated a settlement: The brothers could continue to use union and non-union help at 12th and Vine.
The brothers have said the agreement also allows them to use the same formula on other projects they plan, including one at Broad and Spruce Streets. The unions say the 12th Street deal was a “one and done.”
Work at Broad and Spruce has yet to start. As it unfolds, keep in mind that this is not a minor dispute. The future of the union monopoly on building in Philadelphia is at stake.