A new report released today (pdf) by the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) indicates that from 2009 to 2010, union membership fell from 14.5 percent to 13.1 percent of the U.S. private construction workforce, with construction unions losing 157,000 members.
In 2010, 801,000 workers in the private construction industry belonged to a union, the lowest recorded number of construction union members since BLS started tracking this information in 1973.
In 2009 (pdf), just 958,000 members of the U.S. private construction workforce belonged to a labor union, the fewest since 1995, when 908,000 union members composed 17.7 percent of the U.S. private construction workforce, according to the Union Membership and Coverage Database, available at www.unionstats.com.
The sharp decline in union membership in 2010 can be attributed to a mix of factors.
While the first of the baby boomer generation turns 65 in 2011, many union members have already retired and dropped out of the construction workforce because of the physical demands of the construction industry. They are now drawing from union pension plans, many of which are underfunded and don’t have enough paying members to keep up with current and future liabilities.
A Sept. 2009 report by Moody’s Global Corporate Finance, “Growing Multiemployer Pension Funding Shortfall is an Increasing Credit Concern,” found construction industry multi-employer pension plans (MEPPs) are only 54 percent funded, with an estimated shortfall of a whopping $72.484 billion. In other words, for every dollar that these funds owe, they hold only 54 cents of invested assets. Because some union pension plans are in critical or endangered status, and most depend on incoming payments to fund benefits for retired workers and future beneficiaries, the plans are under greater pressure from a lack of incoming revenue due to declining union membership and high unemployment. The U.S. workforce has a similar problem with Social Security funding.
Data suggests that construction workers have turned in their union cards to seek steady employment with open shop contractors, as nonunion construction workers have a lower rate of job loss compared to their union counterparts. Other construction union members have even developed new skill sets and changed careers.
However, the biggest factor contributing to the decline of construction union membership is the economy.
The latest government data pegs unemployment at 20.7 percent unemployment – more than double the unemployment rate across all industries. Construction unemployment peaked at an all-time recorded high of 27.1 percent in February 2010 – more than double the rate of construction unemployment at any point in time between January 2000 and October 2008.
So how will the decline in overall construction union membership change the public policy debate surrounding government-mandated project labor agreements (PLAs) and President Obama’s pro-government-mandated PLA Executive Order 13502?
In short, there will be added pressure on politicians to pander to Big Labor’s special interests and help keep their political base afloat. As they did in 2009 and 2010, the White House, members of Congress and federal officials beholden to Big Labor’s costly special interest agenda will try to steer federal construction contracts to unionized employers and create jobs exclusively for union members through federal government-mandated PLAs. On April 13, 2010, the Federal Acquisition Regulatory (FAR) Council issued a final rule (pdf), effective May 13, implementing President Obama’s Feb. 6, 2009, pro-PLA Executive Order 13502 into federal procurement regulations.
While the final rule does not mandate PLAs on all federal construction projects — and it offers agencies some flexibility when deciding whether to mandate a PLA on a specific large-scale construction project — the decision to agree to a PLA should be left up to individual contractors and not forced onto qualified contractors by government agencies as a condition of winning a federal construction contract.
Special interests and their political allies will turn up the heat on federal bureaucrats to ensure more PLAs are attached to federal construction projects.
After all, numerous parties have a politically motivated self-interest in creating jobs for construction union members. It’s stating the obvious, but fewer union jobs spells disaster for union institutions, union retirement plans and the politicians that depend on union contributions to get elected and pass public policy favoring Big Labor.
Politicians understand that a lack of union jobs in the construction industry means fewer union dues and “voluntary” political contributions deducted from union members’ paychecks that are funneled into various union slush funds coordinated through Labor Management Cooperation Committees (LMCCs), 527 groups and Political Action Committees (PACs) that support Big Labor’s political friends.
The relationship between Big Labor and its political supporters cannot continue without healthy union institutions and political contributions from labor unions that fuel the Democrats’ political machine.
In biology, this behavior is called symbiotic mutualism. For example, the clownfish live among the tentacles of sea anemones. The territorial clownfish protects the anemone from anemone-eating fish, and in turn the clownfish has developed immunity against the stinging tentacles of the anemone, which protects the clownfish from predators.
So the latest union membership numbers—coupled with 20.7 percent unemployment in the construction industry and the complex relationship of entities dependent on union revenue—point to a greater push for the government to use PLAs.
There are valid economic and ethical reasons why promoting the special interests of Big Labor, which composes just 13.1 percent of the U.S. private construction workforce, ahead of the needs of the rest of the construction industry through PLAs is bad public policy.
For example, PLAs typically increase the cost of construction and waste taxpayer dollars. With the added cost premium of PLAs, there is less construction money available. And less construction money means fewer total construction projects and construction jobs. So union-favoring PLAs could make unemployment in the construction industry even worse.
In addition, there is no compelling reason (other than political self-interest) to create jobs for union members ahead of nonunion employees via PLAs. Nonunion employees deserve just as fair a shot to feed their families as union members. Unions should use the ultra-competitive market and tough economy as an opportunity to retool their product and make it more lean and efficient to compete in today’s marketplace instead of relying on government handouts to stay relevant.
The U.S. economy and the construction industry would benefit from free and open competition, without corrupt government-mandated PLAs, where taxpayers would get the best possible construction product at the best possible price.