Non-union contractors bring a raft of legal fees, hefty fines, costly delays and hidden costs into New York City construction.

Despite paying their workers less than unions do, the host of problems that non-union contractors cart into a project end up costing developers more.

By Mark Colangelo

The most pernicious myth in New York City construction is that building with union labor costs more than building with non-union labor. This is categorically false. The idea likely persists due to the fact that union workers receive relatively higher pay and better benefits. While it’s true that union workers are better taken care of than their non-union counterparts, their skill and efficiency more than make up for the cost of their larger paychecks. On a union worksite, fewer workers do the job faster and better. The result: on average a union project costs 4% less than a non-union project. 

With the facts laid out on the table, let’s take a closer look at the hidden inefficiencies driving non-union costs higher. 

Safety Lapses Hurt More Than Workers

Safety issues are a significant hidden cost. According to the New York Committee for Occupational Safety (NYCOSH), non-union construction sites have significantly higher accident rates due to inadequate training and lax safety standards. This can result in investigations, legal action, project slowdowns, and increased insurance premiums, which can drastically drive up the costs of a project. This does not even take into account the incalculable emotional and physical toll on non-union workers and their families. 

Legal Nightmares

Legal costs often plague non-union construction projects. They can be triggered by disputes between contractors and developers, wage theft claims from workers, fines due to OSHA violations and more. These issues not only lead to expensive lawsuits, back pay, overtime settlements, and hefty fines but also generate indirect costs. For example, legal disputes can cause project delays, which exacerbate financial strain through accrued interest on loans.

Here are four reasons that no one should believe in the myth that non-union labor is cheaper than union labor.

High Employee Turnover

On non-union job sites, workers often feel underpaid and mistreated, leading to high turnover rates. The constant need to hire and train new employees is costly and can lead to inconsistencies in work quality, posing yet another hidden cost.

Compromised Work Quality

The  hidden cost of non-union labor most relevant to real estate buyers is the quality of the work. Non-union workers receive far  less training, which frequently leads to mistakes and inefficiencies. These can translate into costly repairs and project delays. But far too often, these mistakes are hidden behind a nice sheetrock job. The costs are then passed along to unsuspecting New York City real estate buyers who will pay down the line. 

Don’t be fooled by the myth of cheap non-union labor. Don’t be left holding the bag on the costs of shoddy non-union construction. If you’re shopping for real estate in New York City, ask your realtor: “who built this building?”