Could the UAW strike be a canary in the coal mine for the construction industry?
The UAW strike against automakers has been a game-changer. Not only has UAW President Shawn Fain thrown away the old playbook of negotiating, but he’s gambled that the union had enough power to hurt the makers enough to get big gains. And big gains are what he’s gotten so far.
Fain utilized social media and the public’s discontent. He highlighted how executive compensation has skyrocketed compared to worker salaries. He threw out the old opaque version of negotiating between the union and the big makers, which included tearing up an offer from Chrysler.
Big Pay Increases
The UAW negotiated a 25% increase at GM and a 20% increase at Ford with other concessions.
It’s not just the UAW. The Teamsters negotiated a very lucrative deal that raises certain employee pay by 55% over five years.
SAG-AFTRA recently reached a deal with studios totaling approximately one billion dollars in additional compensation.
These strikes haven’t directly affected the construction industry, but the increasing strength of the labor will.
Union participation in the construction is historically low at 12.4%. In spite of that, union membership in the construction industry turns out to be higher than in all other industries. Unions represent about 10% of workers across all industries, versus construction’s 12.4%.
The construction industry has already had to deal with labor shortages by pushing up wages. In the last year, pay climbed by 5.4% to $36.64 / hour, according to the AGC.
Some construction unions have already negotiated higher rates going forward.
In October, the Mid-Atlantic Carpenters Regional Council agreed to a five-year contract extension with a representative of local union contractors that provided 4% annual increases divided among wage and benefits, according to the Chicago Sun-Times. *
What it Means
One of the risks of unexpectedly strong wage growth for the industry is in projecting future costs.
Since many large projects have to be budgeted months or years in advance, the danger to employers is in not factoring in significantly higher expenses for labor and benefits.
Popular sentiment around the country supports the pro-labor movement.
Two in three Americans approve of labor unions, according to an August Gallup poll. That’s down slightly from a 2022 high of 71% approval but marks the fifth straight year in a row higher than the long-time average of 62%.
“Workers feel that they are able to take more risk and to be bolder because there’s now a friendly administration in the White House,” said Logan. Biden has touted his administration as the most pro-labor in history. *
The success of the UAW, the Teamsters, SAG_AFTRA, and others will contribute to an empowered workforce. Their wins have come fairly quickly, have come at a relatively low cost to members, and have been bolstered by popular support. More unionizing efforts like at Amazon and Starbucks have gained momentum.
Construction is also dealing with an aging workforce with fewer young workers joining. Twenty percent of construction workers are 55 or older. This means the supply of workers will continue to shrink unless something is done. (Please see our other article this month for some hopeful news on that front.)