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Study: Construction Unions Strengthen Economy

April 16, 2010

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Most construction workers know that union membership translates into higher wages and better benefits.

But a new study finds that the economic benefits of union construction are not just limited to the job site. The economic spinoff benefits communities at large.

According to the report, “The Socio-Economic Impacts of Construction Unionization in Massachusetts,” put out by Cornell University:

This research finds that unionization in [construction] not only increases the incomes of union workers but also yields economic benefits that ripple through the economy ... These benefits include, but are not limited to, the positive economic impacts of higher union wages, as well as the stimulating effects of real estate investments of union pension funds.

Authors Maria Figueroa and Jeff Grabelsky, members of Cornell’s School of Industrial and Labor Relations, looked at construction unionization in Massachusetts, a state with one of the highest union market shares in the country.

They found that union workers earn an average of $13 dollars more per hour than nonunion workers in the Bay State’s construction industry. When benefits are included, they average $28.35 more per hour than their nonunion counterparts.

Higher wages not only provide union members with a solid middle-class career opportunity, they  generate countless benefits for the Massachusetts economy, resulting in more than $2 billion in additional income for building trades’ members, amounting to a total income gain of $1.74 billion for all Massachusetts families.

Anti-union groups, like Associated Builders and Contractors, routinely denounce union labor for its higher wages, but the study finds that nonunion labor isn’t necessarily cost-effective.

There are economic and social costs assocated with the lower quality of the training provided to nonunion workers, and the consequent higher number of occupational injuries they endure … Labor cost savings, however, can translate into costs being shifted onto taxpayers and society as a whole, when employers fail to pay appropriate levels of payroll taxes and workers compensation premiums.

For example, the study finds that 88 percent of OSHA violations in the Massachusetts construction industry were committed by nonunion contractors.

Figueroa and Grabelsky also looked at the economic effects of union pension fund investment in Massachusetts. They found that more than $1 billion of union pension fund investments went into real estate and commercial development projects – investments which have boosted the state’s economy and helped create more good-paying construction jobs.

Said IBEW International President Edwin D. Hill:

It isn’t just in Massachusetts, the study’s findings holds true everywhere: union construction means good jobs and good jobs mean a growing economy that benefits all working families.

To read the whole report, click here.