Construction unions are enjoying the largest percentage increases in wages and fringe benefits in decades, setting a pace that could continue for years. But not all markets share equally.
Annual wage and fringe increases hit a national average of 4.4% in 2007, according to the Construction Labor Research Council, Washington, D.C. That was up only slightly from the 4.2% average in 2006, but the rate was the highest recorded by CLRC since 1983. Between 2001 and 2006, increases ranged from 3.9% to 4.2%, according to CLRC. “It’s been a very slow creep, but it’s creeping up nonetheless,” says Robert M. Gasperow, executive director of CLRC.
Organized labor’s negotiating strength could be seen at bargaining tables around the upper Midwest last year. Illinois registered a 5.3% average increase in 2007, the largest state increase recorded by CLRC. Pipefitters landed a 5% average increase, while most other trades ranged from 3.9% to 4.4%.
The Chicago area was particularly hot. Fifteen local unions had annual increases of 6% or more in deals with the Mid-America Regional Bargaining Association. Laborers walked away with a $3 hourly increase, or 6.8%, while operating engineers had a $3.70 hike, or a 6.7%.
MARBA Chairman Paul Hellermann notes that local contractors have been in high demand in recent years. “Contractors are so busy, they don’t want to see work stopped or delayed,” he says.
Fringe benefits have contractors worried, particularly about unfunded vested liability in pension plans, Hellermann says.“We want to see that covered, with more going toward fringes,” he says.
Carpenters will be a focal point of local collective bargaining when the union’s contract with MARBA expires May 31. Last year, carpenters received a 6.3% annual increase. Hellermann says he expects requests for higher increases, even as residential carpenters lose work. “The housing slowdown could put a bit of a crimp into their demands, but commercial is still strong,” he says. “I don’t see rates going any lower.”
Many contractors have a strong backlog of work for 2008 and 2009, but the outlook is fuzzy beyond that point, Hellermann says. As a result, MARBA will propose a two-year agreement.
Todd Harris, president of general contractor J. C. Harris & Sons, Elgin, Ill., says smaller companies like his don’t have a backlog as far out as larger ones and many are nervous about the changing economy. “We’re seeing package increases approaching 7% while cost of living is around 4%,” he says. “We can’t continue to outpace the cost of living, especially if we don’t see anything in these agreements to justify those merit increases.”