If you want a construction project finished on time without worker shortages, hire a unionized crew, a new report says

Business Insider, by Juliana Kaplan

May 10, 2022

Like businesses across the country, construction contractors say they’re dealing with a labor shortage.

Despite rising wages, the Associated Builders and Contractors said the industry still needs nearly 650,000 workers after 3.2% of the workforce quit in March 2022, the second-highest rate since the Bureau of Labor Statistics began measuring it. Amidst a hot real estate market, employers struggle to hire enough workers to keep up.

“The construction worker shortage has reached crisis level,” Home Builder Institute president and CEO said in November 2021.

But the authors of a new report from the Illinois Economic Policy Institute (ILEPI) and Project for Middle Class Renewal (PMCR) at the University of Illinois at Urbana Champaign argue that the labor supply crunch is nothing new. There is, however, one factor that seems to make the difference in whether contractors can keep their workers and finish projects on time: If their workers are unionized.

“Union contractors are significantly less likely to have delays in completion times due to shortages of workers — and they’ve actually been more likely to add workers in this tight labor market,” Frank Manzo IV, the executive director of ILEPI and co-author of the report, told Insider.

Manzo, PMCR director Robert Bruno, and PMCR fellow Larissa Petrucci analyzed the results of the Associated General Contractors of America (AGC) surveys from 2018 to 2021. The annual survey polls about 2,000 firms on what’s happening in the world of construction labor; beginning in 2018, the survey broke out specific data from union and nonunion contractors.

The results: Nonunion contractors were 16% more likely to say they had difficulty filling open roles than union contractors. They were also 21% more likely to see their project completion delayed because of worker shortages, and 13% more likely to lose craft workers to other industries.

“Union contractors have been significantly less likely to be losing their workers to other industries. So the non-union side is losing their workers to other industries at much higher rates than the union side,” Manzo said. “That’s because the union segment of the industry offers competitive annual earnings, health insurance coverage, retirement benefits, all of which rival bachelor’s degrees.”

“Union contractors are significantly less likely to have delays in completion times due to shortages of workers — and they’ve actually been more likely to add workers in this tight labor market,” Frank Manzo IV, the executive director of ILEPI and co-author of the report, told Insider.

Manzo, PMCR director Robert Bruno, and PMCR fellow Larissa Petrucci analyzed the results of the Associated General Contractors of America (AGC) surveys from 2018 to 2021. The annual survey polls about 2,000 firms on what’s happening in the world of construction labor; beginning in 2018, the survey broke out specific data from union and nonunion contractors.

The results: Nonunion contractors were 16% more likely to say they had difficulty filling open roles than union contractors. They were also 21% more likely to see their project completion delayed because of worker shortages, and 13% more likely to lose craft workers to other industries.

“Union contractors have been significantly less likely to be losing their workers to other industries. So the non-union side is losing their workers to other industries at much higher rates than the union side,” Manzo said. “That’s because the union segment of the industry offers competitive annual earnings, health insurance coverage, retirement benefits, all of which rival bachelor’s degrees.”

For instance, according to the Bureau of Labor Statistics, unionized construction workers made a median of $1,322 a week in 2021. Their non-union peers made just $922 weekly. However, union membership is still low, with just 13.6% of construction workers represented by a union, according to BLS. That’s higher than the national average, but still means the majority of construction workers are not union.

Part of the current pipeline issue — which nonunion contractors said was more likely to be “poor” — may stem from unions’ investments in rigorous training programs.

“Union contractors invest in both job quality and apprenticeship training,” Manzo said. “Their joint labor management apprenticeship programs deliver a more robust training regimen, higher completion rates and, and better earnings than the employer-only kind of nonunion apprenticeship programs.”

According to Petrucci, union contractors are more likely to be women, Black, or military veterans compared to nonunion workers — “which you can imagine is going to attract and retain more diverse apprentices.”

The report authors say that some fixes to the labor shortage could include promoting access to joint labor management apprenticeship programs, bringing back prevailing wage laws to set standard wages, and making it less “onerous” to organize workers. Other fixes also include things like accessible childcare, and paid leave.

“The data reveal that if you want to increase the chances that a project will be completed on time and safely, you should look to the union contractors who have access to this readily available pool of highly trained, skilled workers,” Manzo said.