April 29, 2009

U.S. Construction

Contractors, builders take issue with U.S. union subsidies

IAN HARVEY

correspondent

A coalition of U.S. contractors and builders claims American unions have spent more than US$1 billion subsidizing union employers unfairly bidding against non-union shops and artificially inflating wages on public-sector jobs.

The Associated Builders and Contractors (ABC) recently released a study by Armand Thieblot, director of the Olin Institute Advisory Board at George Mason University that tracked $1 billion in spending by construction unions between 2000 and 2007, using compulsory financial statements filed with the federal government.

The ABC said job-targeting programs, also known as market recovery funds, unfairly inflate non-union wages by funnelling union dues to union contractors.

The money is used to subsidize their labour costs and allows them to low-ball bids by non-union contractors.

“The result is needlessly inflating construction costs especially for public sector construction like hospitals and schools,” Jim Elmer ABC chairman said in a conference call.

“They’re robbing Peter to pay Peter.”

He said the artificially high rates cause the prevailing rate to rise, so that when non-union companies work on public-sector jobs, they are forced by federal law to pay their workers a rate comparable to the rate paid in the region for that job.

The issue of job targeting has been a thorn in the ABC’s side for many years.

The anti-union lobby group launched a lawsuit in 1991 making many of the same allegations, but the suit went nowhere.

Indeed, different variations on the theme trace back to the 1980s, when unions began offering wage concessions to allow union companies to make competitive bids against non-union contractors.

Some union members pay into what in Canada are called market enhancement recovery funds (MERF), which are used to subsidize contractors, who need assistance winning work.

“At a time when our country is experiencing serious economic difficulties and many union pension programs are severely underfunded, it is difficult to understand why financial expenditures like this are permitted to continue,” said Elmer.

“More than 84 per cent of (U.S.) construction workers do not belong to a union and deserve every opportunity to support their families and get this country moving again — to the benefit of the vast majority of taxpayers, not just a few.”

Officials at the American Federation of Labour-Congress of Industrial Organizations did not return calls or emails asking for comment.

“A wall is a wall and it will be built to spec and it doesn’t matter who builds it,” said the report’s author.

“It doesn’t matter if they are union or non-union labour, left-handed or right-handed workers.”

Canadian Construction Association president Michael Atkinson said the issue isn’t really on the radar here.

“There’s lots of weird and wonderful things going on in the U.S. construction union scene,” he said.

“But up here, it’s the opposite. In places like Alberta, where it is mostly non-union or union alternative, those shops pay more than the union contracts to keep their workers.”

While there is a similar law for fair wages at the prevailing rate for public-sector contracts, he said, in a hot labour market and before the current downturn, competition for skilled labour led to higher wages.

“Besides, the rates can change every six weeks let alone six months and the collective bargaining rates are there for everyone to see,” he said.

The Alberta government’s Labour Relations Amendment Act 2008 brought revisions restricting the practices of salting and MERFs in the construction sector — similar to job targeting.

The law requires workers to have worked for an employer for 30 days before they can participate in a union certification vote and employees have 90 days to reconsider their decision in a certification vote.

MERFs creation is also restricted. Direct payments from employers to unions, and unions to contractors from these funds are prohibited and there are other provisions protecting workers who don’t want to pay MERF levies.

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