A report released today by the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) indicates that from 2011 to 2012, union membership declined from 14 percent to 13.2 percent of the U.S. private construction workforce, with construction unions losing 54,000 members.
Just 820,000 workers in the private construction industry belong to a union, the second fewest number of members since BLS started tracking this information in 1973. According to BLS data, the construction industry recorded the fewest number of union members in 2010, when just 801,000 private construction workers belonged to a union.
The construction industry remains on the tail end of the economic recovery. The average construction industry unemployment rate in 2012 was 13.9 percent; the peak unemployment rate was 17.7 percent in January 2012. The most recent government data has the construction industry unemployment rate at 13.5 percent, which is an improvement over the decade-high unemployment rate of 27.1 percent in February 2010. However, construction industry economists suspect the real unemployment rate is much greater, as thousands of workers have fled the industry workforce for jobs in other sectors of the economy.
The construction industry has shown few signs of steady improvement. The BLS report found that from 2011 to 2012, the construction industry lost 39,000 jobs, shrinking from 6,244,000 workers to 6,205,000 workers.
For state-specific 2012 union membership information for various industries, including construction (see table II), visit www.unionstats.com.
The Impact of Union Membership Data on Federal Contracting
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-PLA Executive Order 13502?
With the re-election of President Obama, there will be added pressure on the White House and labor-friendly U.S. House and Senate politicians to pander to Big Labor’s special interests and repay their key constituency for unprecedented political support in the last election cycle.
As they did during President Obama’s first term, politicians and Obama administration officials beholden to Big Labor’s costly special interest agenda will try to prop up sagging construction union membership numbers by steering federal construction contracts to unionized firms to create jobs exclusively for union members through government-mandated PLAs.
On April 13, 2010, the Federal Acquisition Regulatory (FAR) Council issued a final rule (pdf), effective May 13, 2010, implementing President Obama’s Feb. 6, 2009, pro-PLA Executive Order 13502 into federal procurement regulations. It encourages federal agencies, on a project-by-project basis, to mandate PLAs on federal construction projects exceeding $25 million in total cost. The order also permits (it does not require) private, local and state recipients of federal assistance to mandate PLAs—a practice prohibited from 2001 to 2009 by President George W. Bush’s Executive Orders 13202 and 13208.
While the negative impact of this policy on the merit shop contracting community has been muted by effective legal, legislative and public relations strategies executed by Associated Builders and Contractors and a coalition of industry groups opposed to government-mandated PLAs, billions of dollars worth of federal and federally assisted construction projects have been needlessly subjected to government-mandated PLAs.
As a payback to his construction trade union supporters, President Obama may enact Section 7 of Executive Order 13502 during his second term. Lowering the current $25 million threshold, or expanding the order to apply to federally assisted projects, would expose a much larger portion of the construction industry to PLA threats.
In 2013, expect special interests and their political allies to turn up the heat on federal bureaucrats to ensure more PLAs are attached to federal construction projects and other taxpayer-funded construction projects.
After all, numerous elected officials have a politically motivated interest in creating jobs for construction union members. Fewer union jobs spell disaster for union institutions, union pension 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 friends in politics.
This symbiotic relationship between Big Labor and its political chums cannot continue without healthy union institutions and political contributions from labor unions that fuel the Democrats’ political machine.
The latest union membership numbers—coupled with high unemployment in the construction industry and the complex relationship of entities dependent on union revenue—point to a greater push for local, state and federal governments to mandate PLAs at the expense of taxpayers and the merit shop contracting community.
PLA Mandates on Federal Contracts Is Bad Public Policy
There are valid economic and ethical reasons why promoting the special interests of Big Labor, which now composes just 13.2 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, on government-determined prevailing wage projects, PLAs on average increase the cost of construction between 12 percent and 18 percent compared to similar non-PLA mandated projects. With the added cost premium of anti-competitive PLAs, there is less construction money available. Because less construction money means fewer total construction projects and construction jobs, 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 government-mandated PLAs. No credible evidence suggests union members or unionized firms are faster, cheaper, safer or produce better quality results.
Qualified 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 decision to agree to a PLA should be left up to individual contractors rather than being imposed by government agencies as a condition of winning a govenment construction contract. Government-mandated PLAs reduce competition, increase costs and discriminate against the 86.8 percent of the U.S. construction workforce that does not belong to a union.
The U.S. economy and the construction industry would benefit from free and open competition, without union-favoring government-mandated PLAs, where taxpayers can get the best possible construction product at the best possible price.