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The strength of overall construction activity and a shortage of skilled labor is playing in the favor of many unions when they step up to the bargaining table these days. Some unions are recording record increases in wage and fringe packages as they nail down agreements.

The impact became clear last year when wages and fringes jumped significantly. According to the Construction Labor Research Council, Washington, D.C., 2006 labor agreements tallied average increases of 4.5% for the first year, up from 3.9% in 2005. That is the highest percentage increase since 1989. Contracts covering 5,000 workers or more had the biggest increases, averaging 5.2%.
The increases came at a time when construction employment grew to a record 7.5 million persons in 2006, says Robert M. Gasperow, CLRC executive director. Despite a softening of the residential market, non-residential work remains high and construction unemployment should remain low, he says.

Already this year, some unions continue to reap the benefits. The Associated General Contractors of Washington reached an historic agreement with five trade unions in May following some heated negotiations. The cement masons and laborers settled for five-year pacts with increases of 5.5% in the first year, 5% in the second year and 5% in the third year with reopeners for wage negotiations in years four and five. Teamsters settled on a similar contract structure, but with a 5.5% increase in the second year. Carpenters and operating engineers agreed on increases of 6%, 5.5% and 5% for the first three years, respectively.

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Those increases mark a major jump in wages and fringes in the Seattle area, where annual hikes have been around 3.5% in the past, says Doug Peterson, director of labor at AGC of Washington. “We recognize that these are good times,” he says. “We’ve never seen those kinds of rate increases before around here. It’s the highest we’ve ever seen.”

The talks were held in the shadow of local strikes last August when 88 concrete workers picketed for a month and delayed several major Seattle construction projects. During negotiations in the spring, the operating engineers’ union walked away from the table and members authorized the bargaining team to call a strike if necessary. On May 31, the day the existing agreement was set to expire, the union ratified an agreement.

Las Vegas also has above-average hikes. The carpenters this spring agreed to 5% increases in each of the next four years. The deal comes at a time when local membership is at an all-time high of nearly 10,000, says Marc Furman, senior administrative assistant for the Southwest Regional Council of Carpenters.
While wages and fringe benefits spiked in Seattle, rates in the Portland area have remained steady. Negotiations between the AGC Oregon-Columbia chapter and the laborers, teamsters and operating engineers have centered around 3% annual increases, says Robin Edgar, the chapter’s labor relations manager. “That’s the level we’ve held at historically,” she says.

Within recent negotiations, many collective-bargaining agreements are dedicating increases to wages rather than fringes. Three to five years ago, many agreements focused on bolstering health benefits and shoring up pension funds. With those issues addressed, many agreements can shift the balance over to wage increases.
“There was a rapid escalation in the necessity to put money into health plans post 9/11,” Gasperow says. “They may swing back toward the wages this year.”