The contemporary industrial relations system in construction: analysis, observations and speculations

Abstract

The construction industry experienced deep transformations coinciding with its three-decade decline in unionization from the 1970s to the present. Several factors shaping its industrial relations system have changed so fundamentally that it would be extremely difficult to recreate the workplace rules and governance mechanisms (e.g. apprentice systems; hiring halls; multi-employer funds) long associated with the industry. This essay provides a prospective look at the construction industry by examining the transformation it has undergone over the past thirty years. I focus on changes in the management of construction projects, the operation of public and private construction markets, and the structure of employer and labor institutions and assess how they affect worker–management relations prospectively. The article also discusses where these dramatic shifts have left us with large holes in our understanding of the current and future characteristics of the construction workplace.

Acknowledgements

I am grateful to Dale Belman, Joseph Dart, Mark Erlich, Fred Feinstein, Jim Platner, Pete Stafford, and members of the Construction Economics Research Network for recent discussions on matters related to this paper. It was my privilege and pleasure to work for many years with John T. Dunlop as a student and colleague and I trace my ongoing interest in and understanding of the construction industry to him. This essay is dedicated to his memory.

Notes

 Palladino, Skilled Hands.

 Erlich, ‘Who Will Build the Future;’ Grabelsky, ‘Lighting the Spark;’ Grabelsky and Erlich, ‘Recent Innovations;’ Linder, Wars of Attrition; Lewis and Mirand, ‘Creating an Organizing Culture.’

 For historic estimates and analysis, see Allen, ‘Declining Unionization.’ Based on household survey data from the Current Population Survey, the Bureau of Labor Statistics estimate unionization rates in construction of 16.0 percent in 2003 and 14.7 percent in 2004. See US Department of Labor, Bureau of Labor Statistics, ‘Union Affiliation of Employed Wage and Salary Workers by Occupation and Industry.’ News release, USDL 05-112, 27 January 2005, Table 3.

 Dunlop, ‘Industrial Relations System,’ 258.

 See Dunlop, Industrial Relations Systems, 44–48.

 Ibid.

 See, for example, Kaufman, Origins and Evolution, for an overview of the debate around Dunlop's framework.

 Sweet, Legal Aspects, also discusses the complex legal risks in terms of worker and product liability arising in construction.

 Eccles, ‘The Quasifirm,’ analyzes the relationship between general contractors and subcontractors in terms of transaction cost theory, arguing that the nature of construction makes ‘quasifirm’ forms of contracted organization superior to vertically integrating subcontractor trades into the general contractor.

 Commons, ‘New York Building Trades,’ 410.

 A hybrid form of GC/CM is also active in commercial and industrial sectors of construction. Unlike a CM, these contractors employ a small core group of skilled workers, but, in contrast to a traditional GC, this represents a very small group of workers.

 There are other significant sectors of construction not addressed here, for example at one extreme heavy and highway construction characterized by very large-scale projects often involving multi-state or national companies and at the other extreme the remodeling sector, characterized by single pick-up truck contractors. Some of the factors described above (such as the more permeable lines around jurisdiction) apply to these sectors as well. Other distinctive factors, however, are having an impact on some of the sectors not addressed here. For example, remodeling contractors are increasingly affected by changes in the supply chain of products. Home Depot and Lowe's have changed the dynamics of this sector by both expanding customers’ choices of products and their knowledge of product pricing. This has had the secondary affect of squeezing contractors who are less able to hide part of their margin in the price of materials. See Roth, ‘Consolidation in Distribution;’ Abernathy et al., ‘Residential Supply Chain;’ Colton, Housing in the Twenty-First Century.

 For example, large and established electrical contractors in the Boston-area market tend to view other unionized contractors as their most frequent competitors in the jobs they bid for rather than nonunion contractors. Based on a survey conducted by the author for the International Brotherhood of Electrical Workers (IBEW), Local 103 and the New England chapter of the National Electrical Contractors Association (NECA), October 2000.

 This change is also illustrated among electrical contractors in the Boston area: only 23 percent of ‘new’ union contractors (those which have been in business fewer than five years) report competing against other union contractors for private sector work (IBEW/NECA Survey of Union Contractors, October 2000).

 Azari-Rad et al., ‘Introduction.’

 For example, the formula for determining the ‘prevailing’ wage for federal projects has been adjusted a number of times under the Davis–Bacon Act.

 The impacts of changes in prevailing wage laws on a variety of labor market outcomes are analyzed in detail in Azari-Rad et al., ‘Introduction.’

 See Dunlop, ‘Project Labor Agreements,’ for a history of PLAs and US General Accounting Office (GAO), Project Labor Agreements, for a discussion of their use and prevalence more recently.

 This is not uniformly true, however. Those building trades associated with segments of construction that have long had a regional or national focus have emulated this structure in collective bargaining. For example, the Boilermakers union has long operated at a national level, given that many of its employer counterparts operate at a national level in the market for large-scale power plant construction projects. Other building trades unions have national collective agreements covering those employers that work at a national or international scale.

 Ulman, The Rise; Palladino, Skilled Hands.

 See, for example, Mangum, Operating Engineers, in regard to the Operating Engineers; Segal, The Rise, in regard to the United Association of Plumbers and Pipefitters; and Galenson, United Brotherhood of Carpenters, in regard to the United Brotherhood of Carpenters.

 Section 6A of the United Brotherhood of Carpenters and Joiners of America constitution states, in part, ‘The United Brotherhood is empowered, upon agreement of the Local Unions and Councils directly affected, or in the discretion of the General President subject to appeal to the General Executive Board, where the General President finds that it is in the best interests of the United Brotherhood and its members, locally or at large, to establish, or dissolve any Local Union or Council, to merge or consolidate Local Unions or Councils, to establish or alter the trade or geographical jurisdiction of any Local Union or Council.’

 The Council By-Laws adopted with these changes state that ‘the Executive Secretary-Treasurer shall be the Chief Executive Officer of the Council. The Executive Secretary-Treasurers shall be responsible for the management and supervision of the field activities, business office(s), and for conducting the daily business of the Council … [and] … shall have the authority to appoint, hire, suspend, promote, or terminate Council representatives and organizers, subject to the approval of the executive committee of the Council.’

 The UBC members were not allowed to vote for delegates to the Councils for five years following these appointments. When the first delegate elections under the new council system were held in 2001, many of the appointed Council leaders were turned out as leaders from the pre-1996 period were elected as delegates. The Council structure has been challenged as a violation of member rights under the Labor Management Disclosure and Reporting Act.

 For example, the number of regional councils had been further reduced from the target of 65 Councils adopted at the 1996 UBC Convention to only 43 Councils in the US and Canada in May 2005.

 Dunlop, ‘Industrial Relations System;’ Mills, ‘Construction.’

 Commons, ‘New York Building Trades,’ 409.

 Control over skill also causes areas of disagreement between unions and union contractors regarding a variety of training-related policies. Most common among them are disagreements relating to the ratio of apprentices to journeymen used by contractors on sites (unions typically support lower ratios and employers higher ratios). Setting the size of incoming apprentice classes can also be a controversial area, particularly during periods of construction growth. Employers on the one hand may seek to expand apprentice programs in order to meet growing labor needs. On the other hand, unions may be reluctant to expand programs rapidly because of concerns about the long-term consequences of increasing the number of people on the bench in the event of economic downturns.

 Weil, ‘Rebuilding Market Share.’

 The exception to this would be workers trained via technical high schools or vocational two-year college programs. In fact, the Nixon administration increased funding and support for the community college system in part to create an alternative to the union apprenticeship system at a time of significant labor shortages in construction in the early 1970s (see Linder, Wars of Attrition, for a discussion of this issue).

 These tables are based on a random, stratified survey of 53 union and 97 nonunion contractors undertaken by Peter B. Hart Associates, a major survey research firm, in 2002. Results are weighted averages based on overall employment by union status in the specialty trade.

 Dunlop, Industrial Relations Systems, 17. Although he used the comparative statics approach in the core chapters of Industrial Relations Systems to examine national differences in a set of industries (including construction), Dunlop was uncomfortable with stopping there. Instead, he described the importance of historical evaluation of the ‘development pathway’ of industrial relations systems as they evolved in different national systems. This reflected his work with Clark Kerr, Frederick Harbison, and Charles Meyers regarding the convergence of economic and industrial relations systems generally. See Kerr et al., Industrialism and Industrial Man.

 Business Roundtable, More Construction, 35.

 Business Roundtable, Construction Workforce Shortage, 1.

 See, for example, Bilingsoy, ‘The Hazards of Training.’ A recently released report by the AFL-CIO's Building and Construction Trades Department, using data from the Registered Apprentice Information System of the Office of Apprenticeship, Training, Employer and Labor Services of the US Department of Labor, concludes that ‘almost every Associated Builders and Contractors apprenticeship program fails to provide this training to the majority of its apprentices,’ based on the extremely low completion rate among ABC-sponsored programs (see Building and Construction Trades Department, ‘A Final Report,’ 1).

 Weil, ‘Building’.

 Sum et al., ‘New Immigrants,’ estimate that more than 13 percent of all new immigrants in the US in 2003 worked in the construction industry as a whole.

 This includes the practice of misclassifying construction workers as ‘independent contractors’ to avoid among other things unemployment insurance and workers’ compensation costs (see Carre and Wilson, ‘Social and Economic Costs,’ for an analysis of the extent of this problem in Massachusetts).