Sunday, July 20, 2008

How Trade Unions Are Using Democrats to Kill the Union-Free Construction Industry

On Tuesday, November 4th, Americans will learn whether U.S. labor unions’ spending upwards of $1 billion of their members’ money on the general election will have paid off. You see, unbeknownst to most Americans, American voters have become the victims of the largest and most expensive union campaign in history. If the union bosses in Washington and their hand-picked candidates within the Democratic Party succeed in taking over the nation’s federal government, it will have long lasting and, in many cases, devastating consequences to employers and their workers across nearly every industry. However, none will be more ravaged than the union-free construction industry.

The reason unions are spending so much to buy their way into power is that they have gotten a 100% commitment from their Democratic political picks to pass the delusionally-named Employee Free Choice Act (EFCA). EFCA is an extremely anti-business/anti-jobs bill that passed the House of Representatives on March 1, 2007 but later failed in the U.S. Senate.

EFCA is designed to strip workers of a secret-ballot vote on the subject of unionization, relying instead on a manipulative process of unionization called “card-check” which subjects workers to union exploitation, coercion and trickery. Following a union’s successful takeover of a company’s workers under EFCA’s card-check provision, the bill also states that, if a company cannot agree with a union’s demands (regardless if the demands are realistic or not), the employer is then forced into process called “binding arbitration,” which means the negotiating process is turned over to a federally-appointed arbitrator. The arbitrator’s duty will be to decide what the terms and conditions of the first contract will be between the union and the company—whether the contract is competitive or not.

When companies are destroyed, who will provide jobs? While so-called “card-check” will have a detrimental effect on American companies and the jobs they provide, the second component (binding arbitration) is what will kill a vast number of American workers’ jobs, as it will force many employers out of business and others to outsource in order to remain viable. In the construction industry, it will simply and quickly force union-free construction companies out of business.

Unions Like Herpes?

In the mid-90s, while his company Whole Foods was under siege by the United Food & Commercial Workers, company co-founder & CEO John Mackey made an oft-quoted statement that unions and many of their followers still find appalling today: “The union is like having herpes,” Mr. Mackey stated. “It doesn't kill you, but it's unpleasant and inconvenient, and it stops a lot of people from becoming your lover." Well, if unions are like herpes in the grocery industry, trade unions are like AIDS to the union-free construction industry—and just as deadly. For when a union-free construction company becomes unionized, it is all-too-often a death sentence for that company and its workers…And the death of a union-free construction company that becomes unionized usually comes fairly quickly.

There is no other industry in America where the difference between being union or union-free is as stark as night and day. In construction, you’re either union or you’re union-free. For the union-free contractor, he gets almost all of his work based on three things: 1) Price, 2) Productivity (union-free jobsites are rarely, if ever, shut down over such things as union jurisdictional disputes) and 3) because he and his workers are union-free (see numbers one and two).

Unionized construction work is largely uncompetitive. In fact, according to one recent study[1], the costs of building “union-only” can increase the costs by as much as 35%. As a result gross cost of having a union on a jobsite, as well as the separation of union vs. union-free in the industry, it is the union trades that have been on the losing end of the competitive marketplace, as union-free work has grown significantly in the last three decades.. In fact, today, 86% of all construction- industry workers in the United States are union-free.

General contractors that have chosen to use union-free subcontractors know that hiring a union subcontractor or having a union-free subcontractor become unionized will infect the other sub-contractors on his jobsite and, in most cases, put the job costs (or completion of the job) in jeopardy. And, because the construction industry is a fairly tight knit industry where companies know one another and which are unionized or union-free, there is a tendency for union-free general contractors to shun unionized subcontractors and vice versa.

Organize ‘Em Or Put ‘Em Out of Business

Years ago, the AFL-CIO’s Building and Construction Trades Department recognized that the trade unions were losing market share to union-free construction companies. As a result, it was decreed that the unions must either unionize the union-free construction companies or put them out of business. Since then, and in large measure, the unions have failed to do either and the union-free construction industry has continued to blossom.

Today, the climate has become so abysmal for trade unions that many union locals have more members on their “bench” (out of work) than have working. As a result, many union pension funds have become underfunded and, in many cases, union workers are losing their paid health benefits due to the lack of hours working in order to maintain the benefits.

In many cases, trade unions have become so desperate for work that they have begun a questionable practice of paying hundreds of thousands of dollars from the union’s treasury to union contractors to enable to the contractor the ability to lower its price in order to get compete. The practice is called “job recovery” or “job targeting” and it is essentially unions subsidizing their own work.

EFCA: A Death Sentence for Union-Free Construction Companies

As stated above, the Orwellian-named Employee Free Choice Act has two main components that will have a damaging impact on the union-free construction industry: First, card-check recognition which eliminates secret-ballot elections, forcing a union-free companies to become unionized based solely on unions obtaining a majority of signatures from workers; Second, binding arbitration which forces a contract upon an employer.

Unionization under card-check makes bidding for new work impossible. Under card-check recognition, unions often use misleading and deceptive tactics to trick workers into signing union authorization cards. In fact, the majority of workers today sign union authorization cards without full knowledge about unions or the process of collective bargaining. In many cases, unions send in union “salts” or union “moles” (which are workers paid by the union to unionize a targeted company) into companies. Indeed, some unions even make “salting” a requirement for union apprentices before they can be sent to union job sites. Despite unions’ underhanded tactics, today’s system allows for workers to have a secret-ballot election wherein the workers can decide after hearing from both the union and the employer whether to unionize or not. Under EFCA, the union will decide if there is to be an election and the vast majority of unions will opt not to have an election, since they stand a greater chance to lose.

Unfortunately, under EFCA, a union-free construction company that becomes unionized under card-check will immediately be put into economic peril. The reason is the nature of the construction industry itself as most construction jobs are short in duration. Immediately upon unionization, the former union-free construction company will be unable to bid on new work as it will be unable to accurately predict its labor costs, since the company is either still negotiating or waiting for an arbitrator to decide its labor costs.

Binding Arbitration Destroys Free-Market Economics. Since 1935, one of the cornerstones of the National Labor Relations Act has been the process of collective bargaining between an employer and the representative of its employees. Under the Act, while it is mandatory for a company to bargain in good-faith with a union over wages, hours of work and other terms and conditions of employment, the Act does not require either party to agree to the other’s proposals. EFCA, however, effectively guts the collective bargaining process by using the state to impose a binding two-year agreement.

Since unions have been failing nearly 50% of the time to win contracts after unionizing workers
[2], it is understandable why unions would wish to have state coercion. However, the issue becomes more complicated in the construction industry due to the fact that most trade unions have what are referred to as “area-wide” agreements. Area-wide agreements cover all of the local union’s members in the trade with the employers that are signatory to the union’s contract. Under area-wide agreements, most unions have agreements that contain what are commonly called “most-favored nation” clauses which state that the union will not agree to any other contract with any other employer that is different than what is contained in the union’s area-wide agreement.

Typically, under area-wide agreements, in addition to hourly wage rates, union provisions include such things as union pension, health and welfare benefits paid into the union’s fund, as well as the union’s hiring hall provisions (which mean that employers contract to hire workers through the union hall, as opposed to the open market). Since most trade unions cannot accept anything other than what is specified in its area-wide agreement, it is these provisions that will put the union-free construction company out of business.

Conclusion—Construction Workers’ Unemployment is in the Cards

As unions mount the largest and most expensive union organizing campaign in history, the union-free construction industry will be the first to suffer and fail if the unions and the Democrats succeed with their plans. Under the oxy-moronic Employee Free Choice Act and its coercive card-check provisions and binding arbitration, trade unions will be in a position to shut down companies within a matter of months of unionization, placing a greater number of construction workers on the unemployment lines. Unfortunately, too many union-free companies and their employees remain in the dark about the plan that unions have for them.


[1] Project Labor Agreements and Financing Public School Construction in Massachusetts. David G Tuerck, PhD & Paul Bachman MSIE, Beacon Hill Institute at Suffolk University. December 2006.
[2] Source: Wall Street Journal 2006. Federal Mediation and Conciliation Service, 2004. Brent Garren, Chief Counsel to UNITE-HERE, before the American Bar Association’s Secion on Labor and Employment, August, 2003.


Tom Owens said...

Nice prose...too bad you don't know much about the construction industry. When's the last time you saw a union orgnaizze in the construction industry by using the NLRB process. Pretty much never...the tranistory nature of the construction industry makes it damn near impossible to organize that way.

In fact, had you bothered to do any research on this issue at all (as opposed to just re-constituting the worn-out arguments of groups like the National Right to Work Committess or the Assoc. Builders and Contractors), you would have noticed that America's building trades unions are not putting hardly any effort into lobbying for the passage of EFCA.

I love the fact that people like you seem to want to retain the status quo...where upwards of 25% of the US construction labor force is comprised of undocumented, and heinously exploited, workers, and as such are working to drvie down wages and benefits for American skilled trades workers.

That kind of attitude, my friend, is the cancer (or the herpes or the AIDS) that is destroying our society. said...


We're not sure what state you live in, but clearly you have no idea what you're talking about.

As we track and are involved in union campaigns across the country, we can assure you that the Building Trades are very active in the filing of RC petitions with the NLRB, especially the IBEW, LIUNA, IUOE and, to a lesser degree, the Carpenters and Plumbers & Pipefitters.

Granted, in some states, they have all but abandoned the traditional means of organizing and have opted for the top-down model. However, on the East Coast, as well as certain states in the West, the Trades are active.

That said, Tom, you apparently do not read our blogs too much because, if you did, you would know we are completely against the infiltration of the American workplace by those who disrespect our nation's laws...We agree with legal immigration and disagree wholeheartedly with illegal immigration.

However, that is a problem that has been and continues to be perpetrated this nation's government and the do-nothingness of both Republicans and Democrats.

Unfortunately, too many apologists on the Right and the Left blame "corporate America" for the broken down system.

And, to make matters worse, the whore-mongers of today's union bosses have adopted the belief and practice that the illegal aliens ("undocumented workers") should now be unionized!...Talk about a SELL-OUT.

You see, if you think we don't know what we're talking about, Tom, you are very much mistaken.

Most of us at are former union leaders who decided years ago that the bastardization of today's union movement was causing workers more harm than good. That is why we left. The only difference between people like you, Tom, and us is the fact that we spit out the union Kool-Aid years ago after finding out today's union bosses are poisoning America's workers.

Go on...Keep believing the dope they're feeding you, Tom. Maybe some day you and your kind in the union movement will wake up and realize that when you kill the creators of jobs, you won't have jobs...which is what is happening today.

You might want to read Atlas Shrugged, perhaps it will help your development.

John O. said...

As a worker in the construction industry myself, I have to agree with Tom here. You may look at the RC petitions for IUOE, LIUNA, etc, EmployerReport, but that certainly doesn't mean that those petitions are being filed for construction jobs - those unions focus on other work as well.
Tom is in fact correct that most union construction jobs are done through straight employer recognition, avoiding the NLRB already.

And I see that you are avoiding his second point about the fact that construction unions are NOT a major sponsor of EFCA - it rather proves his point.

Erik Donaldsen said...

I think your article stopped making sense at this point:

"the bill also states that, if a company cannot agree with a union’s demands (regardless if the demands are realistic or not), the employer is then forced into process called “binding arbitration,” which means the negotiating process is turned over to a federally-appointed arbitrator. The arbitrator’s duty will be to decide what the terms and conditions of the first contract will be between the union and the company—whether the contract is competitive or not."

You are critical of EFCA because it it's giving unions too much power, I understand that. But binding arbitration ensures that the NLRB has the final say in whether a contract is reasonable; you say yourself that "the arbitrator’s duty will be to decide ... whether the contract is competitive or not."
So it gives a decent contract to the workers, while protecting the business's sustainability. Seems like a good thing in my book!

erik donaldsen said...

And one more quick point:
I admire your passionate concern for non-union employers that will be forced out of business, but actually, your reasoning again doesn't make sense. Even if all those non-union employers were to suddenly have unions, all that does is to put all such employers on an even playing field with those already dealing with unions.
The statement that "in the construction industry, [EFCA] will simply and quickly force union-free construction companies out of business," is moving, but ultimately it's just plain wrong.

RA said...

Erik -
Actually, the way "binding arbitration" usually works is that the two sides make their demands, the arbitrator tries to find a compromise in the middle and both parties end up with less than what they initially asked for in the deal.
The problem with this kind of process is that the unions will almost always ask for much, much more than is reasonable, forcing the employer to come up much more than he or she originally intended. The unions don't get the incredible silly things they initially ask for but they do end up getting what they really wanted: Unreasonable and unsustainable wages, more union dues taken from workers unfairly and more money to line the pockets of the union bosses and politicians they regularly purchase to pass legislation like EFCA.
And it's not a negotiating technique, it's criminal and typical of the way unions operate in America and always have.

Erik Donaldsen said...

OK, let's be honest - We both know that in bargaining, BOTH sides ask for more than they expect to receive. That's the whole point of bargaining! So unions ask for high wages, employers ask for low wages, and - through either negotiation or through arbitration - they meet in the middle.
I don't think you seriously believe that the first deal a company puts on the table is its absolute last offer before it has to go bankrupt - do you?

Erik Donaldsen said...

And furthermore, are you saying that the article is incorrect in asserting that a company's sustainability is a factor in an arbiter's decision? said...


After nearly 25 years of dealing with unions, it seems you live in some sort of delusional fantasyland. You've missed the point about area-wide agreements, as well as GCs who purposefully do not wish to use union subs.

There can be no 'middle ground' with binding arbitration in the trades. Any deviation from an area-wide agreement would shatter the agreement with the unionized contractors.

In addition, if you think that a union will be able to unionize all of the union-free companies, you're mistaken. If one falls, another will take its place. It's what is called capitalism (a word you probably misunderstand completely).

With respect to the subs who become unionized, their GCs will move on to the remaining non-union subs.

Last point: For those of you unionists who think that government interference is okay and/or desired, you apparently have no knowledge of labor history (Think 1947, or 1959, or 1981).

When you invite the government into your union world, it will only be good for as long as you have a union-friendly government. As labor power will grow, so too will the ire of the general public, who will then elect an unfriendly government (again), and the pendulum will swing again. This is why Samuel Gompers hated the idea of government in labor relations. He knew the government reprieve was a temporary and false securtiy.

The problem with today's unions is, in part, their socialist ideals, as well as their leadership. They cannot compete in a free market and, as a result, need the government to coerce and compel a fixed market--which will result in an overall decline in economic well-being.

EFCA is bad law, period. Instead of relying on government largesse, what unions need to do is restructure their business model.

Joe638NYC said...

Where is this nonunion construction firm that obeys the laws of the United States and doesn't hire undocumented workers?

Don't get me wrong, I actually appreciate your blog, as opposed to the one way nature of most 'union avoidance' style blogs, but I can tell that if you did work in any type of construction trade here in the North-East as of recent times, you would notice that the non-union workforce is comprised of at least 90% undocumented workers.

So, which is it, you dislike the Employee Free Choice Act because it will actually help American workers get back on track, or you fear that your business will decline if it is enacted?

I mean, really, whatever your former dislike of unions was, you know in your heart that this legislation would help American workers and American businesses alike. When we have a nation that is quickly falling below the poverty line, it would be nice if they had some disposable income.

Another fact most people seem to forget is that if there is not a binding arbitration, situations like the workers in the Goya factory who voted to be union 11 years ago and finally this year got a contract would not happen.

Don't worry bro, even when the Employee Free Choice Act is passed next year there will still be a ton of work for you in employer relations, maybe even more. You should wholeheartedly support The Employee Free Choice Act, maybe some of the smaller guys will have a bit of capitol to invest into their own business and need you to help them out. Remember the huge multi-nationals aren't knocking down your doors, that's obvious with all the responses you personally have made, they already got the likes of Burke and Berman.

You need smaller companies to be terrified of using American citizens and union workers. The Employee Free Choice Act will allow people like you and I to go into business, did you at least read some of stories on my site?

I agree with you that nonunion construction continue to pop up like a hydra if workers get organized, because this corporate ruled government has opened the borders to all nations allowing the new slave class, that helps in dividing and separating the workers in this country to the advantage of all employers.

While I absolutely do not agree with your choice to write with an ignorant spin against today's unions, by not mentioning that after a card check most employers use Union Avoidance firms to terrorize the workers, and failing to mention recent news about a nonunion construction company that owed wages to almost 300 of its employees here in New York, and minimizing the amount of abuse towards undocumented workers here in New York construction, at the tax payers expense, I will still check out your blog from time to time, maybe we can add a link exchange for our sites, we both would probably create a new category, I'd like to think "Opposing Views", hell the Main Stream Media doesn't bother doing that anymore, we could show them a thing or two.

NOTE: The user RA is obviously a shill, I know exactly where my union dues are going, get rid of the script jackass, employerreport speaks from his heart and owns his own business, whereas RA's robotic US Chamber Of Commerce-esque response tells us his firm is making tons of money but he/she is just the employee who has to make posts on websites that the offices Google blog search RSS of "employee free choice' points out. Nice job, better do it better or you might be looking for another one soon.


Jon said...

Just a thought... while the arguments presented here make some sense on both sides, there is a middle ground. There is a reality to this notion of the government support pendulum. However, my read on history shows that there has only been one cycle in the US. The organized labor movement had almost no strength at the turn of the twentieth century. The industrial revolution created jobs, which in turn created a strong labor movement, which saw its apex around the 1960’s. Since then, membership across the board has slipped; one cycle of gain and loss. Today, membership numbers seem to be bottoming out, and in some industries they are on the rise.

Let us not lose focus on the purposes to which employees ban together to form labor organizations. The issues that top the list are tied to injustice in the workplace. Maybe I am naive, but inequality and unfair conditions still exists in many places of employment.

My point… I believe that the modern labor movement is changing its business model. As a construction organizer in a heavily non-union state, my local’s ability to provide measureable profit to a potential partner contractor has trumped the non-union “we may show up, we may not” attitude on the job. Competition is great, and the contractors who partner with labor enjoy a competitive edge when the end-user customer demands professionalism, on-time and under budget, drug free work places. The “low bid” is never truly the low bid as many non-union contractors are not flexible enough to fluctuate their man power needs as the market demands. This leads to cost overruns, dangerous worksites, and higher insurance premiums.

At the end of the day, the second cycle of the American labor movement is in its infancy. We have learned from the mistakes of the past, and the market will test our resolve. It can be a good thing, something to foster and support. The EFCA may or may not enter into it, but the factors I mentioned above most certainly will.

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