PAS data shows that open-shop craft workers in the northwest have also seen the highest U.S. increases, with the lowest in the northeastern states.
James Parrott, New York City-based chief economist of research group Fiscal Policy Institute, speculates that low pay gains showing in 2014 New York state construction payroll employment information don’t reflect “possible misclassification of workers as independent contractors who are not showing up in the state data.”
At the local level, differences between compensation in urban markets versus suburban and rural markets are also an issue.
In April, six building trades in Philadelphia reached three-year settlements that included a lower rate for work in the suburbs in the city. Emily Bittenbender, CEO of Bittenbender Construction and chairwoman of the city’s General Building Contractors Association, told the Philadelphia Inquirer that the pact would help union contractors remain more competitive with open shop crafts in the suburbs.
Mark Erlich, executive secretary-treasurer of the New England Regional Council of Carpenters, says market recovery in the region has been “good, but uneven.” Among the region's six states, Rhode Island and Vermont have been slower to recover. Even within Massachusetts, “metro Boston is booming but Worcester is still struggling,” he says.
As a result, the regional carpenters’ union settlement has different rates for metro Boston and the rest of eastern Massachusetts. Erlich says the northern New England deal has a wage-opener after two years.
Breslin says that the market immediately outside California's Bay area "is challenged to take on any signfiicant increases and remain relevant."
Ed Kommers, executive director of the Mechanical Contractors Association of Western Washington, said it is very difficult to strike the right balance in a large region, like western Washington. His territory covers the Seattle metro area as well as the surrounding rural areas. “Both sides of the bargaining table are challenged with trying to help out someone whose region can take a wage increase against someone whose region can’t,” he says.
With most of its bargaining set for next year, St. Louis building trades and employers are fortifying relationships to present a unified front to owners as they seek to preserve market share in an uncertain outlook for private-sector growth picture. “Since 2008, we’ve been trying to reinvent our relationship,” says Douglas R. Martin, executive vice president of the regional electrical contractors group. “Marketing is targeted to make sure union contractors and their workforces are perceived as those who can perform.”
Robbie Hunter says that he doesn’t see unions being unable to staff jobs in California in the coming years. “Just about all of the trades have doubled up and tripled up on classes to meet the need,” he says.
In terms of compensation, analysts expect increases to continue. Robinson of PAS says he expects to see open shop craft increases to average about 3.6% to 3.7% in 2016. CLRC’s Peters says he expects that union pacts will average 2.7% to 2.8% nationwide next year.
“In the Carolinas, we are actually seeing gains from the unions,” says the contractor CFO. “In particular, all of the Google data centers require union contractors, which is part of the reason for the increase in wages.”
One design firm CEO says his tight labor supply offers a mixed blessing. "Fees (and margins) improve when labor gets tighter. Supply and demand of econ 101 of course supports this," says Robert Clark, president of Richmond, Va.-based Baskervill. "But it has been interesting in this slow recovery to really watch it play out. Fees are approaching a healthier level. But finding the best talent to fill the growing demand is becoming more difficult."
Little of Colorado contractor Gallegos adds that gaining what a booming marketplace has to offer "may be in jeopardy if we do not solve the labor issue. Schedules are sliding and costs are rising—owners may have no choice but to pull back and let the market settle.”