Union Labor is More Affordable than Non-Union. Seriously.
A new report proves that hiring unions to build your building is the safest cost calculation a developer can make.
Union laborers are more efficient than non-union laborers, which makes labor costs on union jobs more predictable and overall lower than those same costs on non-union jobs.
“There’s a general belief in the industry, and it’s a misinformed belief, that non-union contractors are cheaper than union contractors.” That tidbit was shared with Union-Built Matters by a construction project estimator who represents bids submitted to developers for projects in New York City.
“Now, with this report, we finally know that to be [false],” he added, using a more colorful and unprintable description. According to the report’s findings, when all costs are considered, projects that employ union labor are 4% cheaper than those that employ non-union labor.
The report, Quantifying the Value of Union Labor in Construction Projects, was created by Independent Project Analysis (IPA), a global construction project researcher.
To measure the cost of labor on projects from $200,000 to $6 billion, IPA examined 20 years worth of data from 1,550 union, non-union, and mixed labor projects. They analyzed two thousand performance metrics. In the end, they found union contractors to be more productive than non-union contractors resulting in overall project cost savings.
Projects that employ union labor are 4% cheaper than those that employ non-union labor
Data from the IPA report shows that hiring union labor is more cost-efficient and makes the costs on a project more predictable than hiring non-union labor.
Wait, Doesn’t Union Labor Get Paid Better than Non-union?
The savings comes despite the fact that union laborers, because of their standard living wage and universal health benefits, earn on average 30% more than non-union laborers, who have no such traditional wage and benefit protections.
The main cause of the ultimate project cost difference is that union workers are faster and make fewer mistakes that will cause slowdowns. That’s according to the New York Committee for Occupational Safety and Health (NYCOSH) and the New York City Department of Buildings (DOB), which issue reports regularly showing union work sites to be more efficient and far safer than non-union work sites.
The difference in labor quality comes from the training and maintenance of skills. Every union puts their members through a grinding apprenticeship and annual refresher requirements that assure that they will be the best in the business. Meanwhile, there are no established standardization requirements for non-union workers.
And while the IPA data scrub reveals the superiority of union efficiency by the numbers, that supremacy can be plainly seen every day on New York City work sites. Paul Primiano, the Training Director for the LIUNA facility in Astoria that serves local concrete unions, told Union-Built Matters, “We’re putting up a floor every two days. We’re up in the sky in a matter of weeks. We have the super structure ready for cladding [the application of an outer layer] faster than anybody.”
The IPA study also concludes that union labor delivers more predictable project costs and schedules because unions are 40% less likely to experience labor shortages, a leading cause of project slowdowns on non-union projects.
One example of the superior efficiency of unions is the 2-day construction cycle in which union workers add one new floor to a building every two days. -- Photo Jin Lee, Bloomberg
A Union Labor vs Non-Union Labor Case Study
Consider the comparison of two buildings put up across the street from one another in Brooklyn. The projects were both permitted to build by the DOB the same week in July 2014. At 33 Bond, unions completed a massive 600,000 sq-ft, 25-story, multi-function building in just over three years. At 61 Bond, it took non-unions over seven years to complete the much-smaller 157,000 sq-ft, 13-story Ace hotel. (Side note: In the process of building 61 Bond a worker was killed on the site and the contractor was indicted for fraud.)
The IPA conclusion: Union labor is on-time and on-budget. Non-unions are more often not.
The multi-use 600,000 sq-ft building at 33 Bond Street in Brooklyn was completed by unions in 3 years, compared to the 7+ years it took non-unions to build the much smaller Ace Hotel across the street.
Why Hire Non-Union?
So if union labor is better-trained, more efficient, and more on-time — and they complete their projects more affordably than non-union labor — then why are so many developers still hiring non-union contractors?
The project estimator has a theory. “I think that some of these developers just want total control of their project. They’re putting up a lot of money, so that’s understandable. And maybe they have a perception that they’ll have more control if they hire a contractor who will do whatever they ask, especially when it comes to labor and timing. I hear it a lot - ‘get that hourly rate down.’”
“But this report,” he continued, “shows the truth of the numbers and proves that perception of theirs to be false. Yes, union members will get a higher hourly. Yes, they’ll get health benefits, overtime, all that stuff. And why not, don’t they deserve that? These are professionally trained men and women doing very hard work. But even when you factor those costs in, the unions still finish the job more affordably than the non-unions.” Choosing unions “should be a no-brainer," he said. “I can only guess at why it isn’t.”
Thanks to the IPA report, it is now statistically proven, union labor is actually more affordable than non-union. When shopping for real estate in New York City, ask to see union-built buildings.
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