New York politicians, especially city Mayor Bill de Blasio, an affordable housing advocate, also have a stake in the outcome.
Harder to Hire
Even as 56% of firms in the AGC report said they are increasing base pay rates for craft workers, 78% expect that “it will either continue to be hard, or become harder, to hire hourly craft professionals during the coming year.”
Michael Sireno, president of San Antonio-based nonunion drywall contractor Baker Triangle, says pay rates for field employees are up 20% over the last two years “and we have increased our benefit package with added vacation time and 401K matching as well as health insurance.” He adds that “although we are seeing a recovery of sorts, it has been slow in this market and profits have not moved upward,” he says.
On projects bid over a longer term, “the increase in pay rates comes right off the bottom line.” He says that workers who left for higher paying oilfield sector jobs are not returning even with that sector’s downturn.
But falling oil prices don’t appear to be hurting the outlook for Pipeliners Union Local 798 bargaining in 2017, says Daniel C. Hendrix, business manager of the Tulsa-based union. “We are still blessed with an abundance of work opportunities,” he says. “I feel very positive that when negotiations begin, we will be in a strong position... with at least improvements equal to or better than what was achieved last term,” which included 3% annual wage hikes.
Hendrix says lower oil prices “will actually push clients to find the most economical way to transport the product, which is pipelines.”
Recent analysis shows improved wage and fringe packages for union labor, although at a more modest rate. In September, the Construction Labor Research Council reported that the average bargaining settlement during the first half of 2015 resulted in a first-year increase of 2.5%, with second and third-year hikes each at 2.6%.
By comparison, average first-year increases were 2.3% in 2014 and 2.2% in 2013. “We haven’t seen a big jump [in settlements] occurring yet,” says Carey Peters, its executive director. “There’s been a steady increase since 2011, when the average was 1.7%.”
Confidence in the construction market’s long-term stability also is reflected in recent settlements, Peters says. “During the beginning of the downturn in 2008, contract lengths got shorter—that was a very prominent theme,” he says. “There were more and more one-year contracts, but that trend has now reversed. It’s getting closer to what it was in 2007, but still short of that.”
On the Horizon
The CLRC findings mirror those seen in California. Robbie Hunter, president of the State Building & Construction Trades Council of California, says most union trades in the state are seeing increases of 2.5% to 2.89%. “That’s coming off six years with contract periods that had no pay raise at all,” he says. “Just about all of the trades did a one-year deal two years ago, They could see the work coming on the horizon, but it just wasn’t there yet.”
Mark Breslin, CEO of the Bay Area union heavy-highway contractors’ group United Contractors, says “unions are not experiencing completely empty halls, but near enough.” He notes booming activity in San Francisco and its environs “fueled by tech investment and a resurgence of housing and pricing on a regional basis.”
"Tthe high-tech boom in Silicon Valley is an absolute game changer and doesn't look to be cooling off anytime soon," says Michael Ghilotti, president of heavy contractor Ghilotti Brothers Inc., San Rafael, Calif. "But the gorilla in the room is where the funding for public works is going to come from."
Hunter points out that costs related to health and benefits continue to factor heavily into union compensation. He says most of a recent three-year settlement with ironworkers with 3% annual increases, was earmarked for retirement and health. “Those members are seeing probably less than a dollar on their check,” he says.
Ghilotti also remains concerned about union pension fund unfunded liability, "the reason nonunion companies are hesitant to sign on." He sees open shop firms building market share in the Bay area in jobs under $1 million, "which can add up to big dollars."
CLRC’s Peters says that while many firms are reporting shortages, the severity varies. In a report the researchers did for The Association of Union Constructors, of the 52% of respondents reporting a union labor shortage in 2014, only 11% saw a significant one.
There are notable differences in some markets. In the first half of 2015, union labor pacts in the northwestern U.S. resulted in an average first-year increase of 2.9%, compared to 1.4% in the southeastern states, says CLRC.