Construction unions are reaching a serious crossroads in New York. For years, utilizing political muscle and other forms of intimidation, they dominated building in the city-squashing non-union efforts easily like a bug. But then things began to change as the death grip of organized labor was slowly removed and contractors began to see how costly and inefficient the building trades had become.
Another factor involved in creating labor’s dominance was its total control over skills training. Let’s be clear, some of the massive building projects in NYC simply cannot be done without very skilled labor-and the unions had a monopoly on that for a long time. Not anymore.
As one shrewd observer points out:
“Those sounds you hear are the screams of agony emanating from the labor unions in the construction industry in New York City. For the first time in recent history, three major contractors, Turner, Tishman and Plaza Construction have joined with several lesser-known companies to open their private sector sites to non-union labor.
“This is a move that, in the recent past, would not have been considered on commercial and residential projects in New York, long a hotbed of union labor in the construction unions. This is an especially critical change in a market like New York City where densities and construction rules for both public and private sector projects have long mandated that construction workers on the major sites must have apprentice training in order to be employed.” (http://www.constructioncitizen.com/blog/wowee-batman/1606221)
Why the shift? The change can be attributed to a couple of factors. In the first place, like all monopolies, the unionized building trades got sloppy and complacent: “The developers also claim that the unions have been slow to upgrade their training and technology and that non-union subs are adapting faster in order to be more productive and to compete.”
The other major factor, of course, is cost. Monopolies are inherently uncompetitive and raise the cost of doing business because they have no countervailing force pushing them to be more efficient and cost effective:
“Why has this happened? According to the WSJ, developers who use solely union labor find that their costs are 20-30% higher than when they are “open-shop.” The “low cost” model that emerged during the downturn is becoming the norm in NYC, and those companies who have been strictly union shop will have to find a new model if they want to compete as the economy recovers.” (http://www.wsj.com/articles/construction-unions-grip-on-new-york-begins-to-show-cracks-1460759134)
BuildingNYC, an organization comprised of merit based contractors, has been formed to take advantage of the opening that has been provided by the protectionist Old Guard. One of its first acts was to launch an unprecedented training program to rival the monopoly of the building trades:
“BuildingNYC, a coalition of 12 “merit-based” developers and contractors, is partnering with the Associated Builders and Contractors, a national federation of nonunion companies whose members provide training in the trades. Last year saw a spike in deaths on construction sites—with 11 killed on the job according to the city, and 16 if you believe the federal government—prompting a labor-driven push to create new rules and tighten standards for the industry.
“This program is a direct rebuttal to those who believe that quality training can only be found in the existing guild system,” said BuildingNYC spokesman Brad Gerstman, arguing that the group was standing up for nonwhite workers against the predominantly Caucasian unions. “The thousands of mostly minority workers that we represent will be able to get the skills training that will put them on par with any worker in the construction industry.” (http://observer.com/2016/02/amid-spike-in-deaths-and-spat-with-labor-nonunion-builders-launch-training-program/)
The next major hurdle-or shoe to drop-is with the union dominated public works projects:
“At the same time, the public sector projects in New York City and most of the other major cities are still mainly union jobs and it appears that they will remain union shop for the foreseeable future. Some critics are beginning to wonder why the public is required to pay 20-30% more for the institutional construction when the private sector is quickly moving to a new model. We have not heard the last of these arguments, especially in this election year.” (http://www.constructioncitizen.com/blog/wowee-batman/1606221)
As we can plainly see, labor dominance of construction is eroding-slip sliding away as the song goes. As merit based contractors develop more sophisticated and better trained workers, employ innovative methods and reduce costly featherbedding, the last grip that union have on the key NYC industry will be destroyed forever.