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Research Has Proven Our Efficiency

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A case study of the effects of unions on the resident ional construction industry by Allen B. Mandelstamm, published in the Industrial and Labor Relations Review (Vol. 18, No. 4, 1965) showed that union contractors could complete their jobs in less time with lower material costs than their non-union competitors, resulting in consistently lower bids for the same work.

The National Bureau of Economic Research of Cambridge Massachusetts recently completed a study for the U.S. Department of Labor which showed that the productivity of union construction workers on commercial and retail buildings was at least 31% , and as much as 51% higher than non-union workers. This study also showed union workers to be better trained.

In a series of studies conducted between 1984 and 1988, Steven G. Allen, Professor of Economics at North Carolina State University, found that union contractors in the private sector are 35% to 50% more productive than their non-union counterparts.

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Unionized Construction Workers Are More Productive - A Summary

Unions are predominantly viewed by economists as monopolies whose only objectives are to raise wages and guarantee jobs for their members. Such a view ignores the widespread effects of collective bargaining on the operation of the workplace. Unions are concerned not only with wages and employment opportunities, but also with the physical conditions of the workplace, the systems used to assign workers to jobs, the provision of training, and the availability of channels to settle disputes between workers and the employer, along with a host of other facets of the employment relationship. Thus to evaluate the total impact of unions on society, one cannot focus entirely on wage differences between the union and non-union sector, strikes and jurisdictional disputes, although this is exactly what most academicians and the news media have been doing for some time.

A number of recent studies have attempted to obtain quantitative estimates of the effects of of unions on numerous non wage aspects of employment including fringe benefits, turnover, safety, absenteeism, job satisfaction, productivity, layoffs, and income inequality within establishments. This paper uses an econometric approach developed by Charles Brown of the University of Maryland and James Medoff of Harvard University to estimate the effect of unons on productivity in the construction industry. Brown and Medoff found that output per manhour was 24 percent greater in unionized establishments in manufacturing holding capital, capital recentness, firm size, region, industry, and measurable elements of labor quality ( age and schooling ) constant.

The nature of unionism in construction is quite different than in manufacturing because of the predominanace of locally defined markets and the absence of long-term employee-employer relationships. Craft unions have played an active role in training new workers and reducing job search costs for both contractors and members, which should serve to increase productivity. On the other hand, make-work provisions in some contracts and the greater likelihood of strikes tend to have the opposite effect. Case studies of the impact of unions on productivity have yielded ambiguous results, as one might expect. The net impact of unions on productivity can only be determined by examining quantitatively a large representative example. The 1972 Census of Construction Industries was used in this study. It covers all sectors of the industry across the nation.

This study finds that output per employee is at least 29 percent greater in unionized establishments in construction. If this extra productivity is entirely attributable to labor, then union members are at least 38 percent more productive than other workers in construction. Differences in capital, capital recentness, firm size, measurable labor quality ( age, schooling, and occupation ), geographical price differences, sector within construction, and region have been constant in the study. Such controls are necessary so that one cannot claim that union members are more productive merely because unions tend to organize, for example, the largest firms or the capital- intensive sectors.

Since the difference in output per employee might result from differences in hours worked rather than differences in productivity, the effect of unions on annual hours worked was examined using a small sample of individuals from the 1973 wave of the Panel Survey of Income dynamics. It has been frequently argued that union members work fewer hours because (1) higher wages make it more difficult to find work and (2) strikes reduce employment opportunities. Contrary to popular impressions there is no significant difference in annual hours worked between union and nonunion construction workers.

An additional finding of interest in this study is that controlling for age, schooling, occupation, urban residence, region and sector of construction, wages of male union construction workers are 43 percent higher than otherwise comparable nonunion workers. The wages of female union members also seem to be higher than those of comparable nonunion construction workers but this difference could not be measured precisely. The productivity results imply that these wage differences reflect differences in efficiency rather than monopolistic control over the workplace.

These findings point out the need to re-examine the popular opinion that unions have a negative impact on society. Construction unions provide public or collective services benefiting both contractors and workers such as training, job information, and esprit de corps which would otherwise not be produced in their absence. If these services are ignored, an unbalanced and inaccurate view of unions necessarily results.