The roots of the growth of the open shop can be traced to the spiraling construction costs of the 1960s. In an attempt to control costs, 200 of the nation's top CEOs formed the Business Roundtable in 1969 in order to put a lid on construction costs. A common objective these CEOs shared was a desire to blunt union power. In 1974, they were joined in their effort to curb union power by the most severe recession in postwar history. National construction unemployment hit 22 percent by May 1975 and continued in double-digit levels through the 1980s. Nonunion contractors took advantage of their lower labor costs to underbid union contractors for the shrinking number of jobs, and most unions turned to concessions in an attempt to compete with the open shop.
Coupled with this attack was the attempt to eliminate the Davis-Bacon Act, both nationally and at the state level, where many states have "mini Davis-Bacon" laws in effect. Union contractors also increasingly turned to "double-breasting" to take advantage of lower labor costs by operating nonunion.
Finally, it can be argued that none of this would have been successful had not corporate clients provided subsidies to the nonunion firms in their efforts to destroy union power in the construction industry. Many large companies went so far as to adopt policies that actually barred union contractors from bidding on their projects.
The growth of the open shop not only weakened the union's ability to secure work for its members; it in many ways significantly altered the way that work is done. ABC leaders are replacing the relatively autonomous nature of construction work, based on pride in craftsmanship,
with a more conventional hierarchical division of labor. This vision of the organization of work is made possible by recent technological and organizational changes in industry. Prefabrication and specialization have transformed construction management techniques as well as the traditional role of the construction worker, which is increasingly moving away from being a fabricator to becoming an installer. Preassembled materials and modular components simplify the process of construction and reduce the need for an all-around skilled craftsman. Instead, what is needed is more specialization in a particular area of the craft. ABC training has adapted to this development by focusing in on short modules of highly specialized instruction as opposed to the union's generalist three and four year apprenticeship training.This development of specialization is motivated by a desire to cut cost and boost production, yet its other effect is to threaten the ability of the union to maintain a wage structure that pays all journeymen identical wages. Open shops are able to hire a few experienced and relatively well paid craftsmen to oversee a large number of unskilled, poorly trained, and relatively young workers.
In many ways, unions were totally unprepared for this type of employer offensive. As unions enjoyed a period of unprecedented prosperity in the years leading up to the 1970s, local union business agents' responsibilities were defined to include little more than referring members to job sites, managing the books, and negotiating periodic contracts. More traditional union tasks, such as internal education, organizing, and working with other sectors of the labor movement in their struggle - once a tradition in much of the building trades - fell by the wayside. In many cases, the prosperity prompted union officials to identify their success with the prospects and the views of the employers. And when the situation soured, they turned to industry for answers.
Early responses, such as the Market Recovery Program for Union Construction, relied heavily on meeting the needs of the employer, such as eliminating jurisdictional disputes, increasing productivity, and cost containment. In addition, large wage concessions were granted to try and become more competitive. These attempts generally proved fruitless. At best, they retained some jobs at lower wages. At worst, they lowered pay without any effect on the proportion of jobs that went to union workers.
In the past few years, some building trades unions have adopted a more aggressive approach toward nonunion builders. Increased political activity, the use of economic leverage, corporate campaigns, and a new orientation toward organizing are now becoming increasingly adopted as part of a building trades strategy. The question of what to do must be addressed by all local unions, as well as by the national unions and the Building Trades Department of the AFL-CIO.
Discussion Questions
Labor unions have been negotiating pension funds for their members for many years. They now have $ 1.3 trillion dollars in union negotiated funds. Approximately 50% of all outstanding stock is owned by worker pension funds. Union pension funds account for more in assets than the entire Gross National Product of Great Britain and France combined. The funds connected with union pension funds are staggering.
How is that money invested? Too often it is invested by professional managers with little or no interest in the union or in efforts that support the union. It is often invested in notorious anti-union firms such as J.P. Stevens or Brown & Root, or is used to finance construction projects like the building of the National Right-To-Work Committee headquarters in Virginia (built non-union, of course). Some unions are beginning to question this misuse of union pension funds and are taking the initiative in utilizing pension funds to help build the union while getting better returns on the money than was being done by leaving it for professional managers.
On example of this approach is Local 675 of the Operating Engineers in South Florida. Beginning in 1978, the local began examining how their pension fund was being used and discovered that it was being used to finance construction projects being built with scabs. Worse, the return on their money was averaging a paltry 1.8% per year. The union decided take back their fund to use it to act as both developer and banker, investing in projects that would be built 100% union. Management trustees originally balked at the idea, but the union was eventually successful in convincing them to cooperate with the union's plan.
One of the first acts was to fire the fund managers and locate dedicated financial and legal staff who were committed to the labor movement. The pension fund set up a mortgage program that offered discount rates for members. It also began investing in major construction projects that were built completely union. Within ten years, the fund had leveraged hundreds of millions of dollars of construction work for local unions totaling millions of man hours of work. Interestingly enough, the fund grew four fold, to the maximum allowable under IRS rules without being taxed. The local was able to reduce employers' pension costs and transfer those contributions to the health and welfare funds.
As part of their overall strategy, Local 675 utilized their Labor Management Committee to explore setting up worker-owned companies. This enabled the local to help find more work for members, increase efficiency and competitiveness by having the LMC assist in the management of the firm, and help workers buy out existing contractors who wanted to retire and sell their company. Crucial to the success of the worker ownership activities was to directly involve workers in the ownership of the company. Democratically operated committees of workers were formed and trained to deal with traditional management functions, such as finance, communications and developing the by-laws and structures of the enterprises.
Other building trades entities are also taking the initiative in capital strategies. In Florida, they have established the Florida Affirmative Investment Roundtable (FAIR) which enables member unions to sit at the table and participate in investment opportunities in major all-union construction projects. Others, such as the New York AFL-CIO have joined forces with sympathetic investors to work on community-based investing. And in Kansas City, the building trades have targeted local banks for asset transfers when they discover that local banks are financing non-union construction projects. Although capital strategies are relatively new phenomena, it seems to hold promise of helping to level the playing field between construction unions and the open shop.
Discussion Questions
Concessions became nearly a universal response to the crisis facing labor in the late 1970's and the 1980's. With increasingly larger numbers of workers working non-union, a hostile political environment, and employers on the offensive to reduce workers wages and working conditions, unions were forced to respond to a much more difficult environment than they had faced since the 1930's. No where was this more evident than in the building trades, which had to adapt to competing against open shop construction firm. Many unions took reductions in wages and benefits, attempted to reduce jurisdictional disputes, lowered safety standards and changed work rules in an attempt to keep their members working.
Over time, however, building trades unions around the country began to develop some alternatives to concessions that had the same effect of making union workers more competitive while reducing or eliminating the negative effects of concession bargaining. One such strategy involves targeting jobs with the intention of utilizing the financial resources of the union to "buy the job." Targeting is actually quite simple. It is simply a local union subsidy to union contractors that make it easier for the contractor to win bids on construction projects.
A number of different targeting models have evolved. One of the earliest is known as the "Kansas City Plan." In this plan, the contractor pays below union scale and the local uses its target fund to make up the difference between what the contractor pays and the union scale. The union then issues checks for that amount to each worker employed on the targeted project. The "Elgin I" is a variation of targeting that provides for the union to determine the total amount of the subsidy that the contractor would need to get the work at a reduced scale, have the contractor pay workers at full scale, and when the project is completed, mail a subsidy check to the contractor for the difference between full scale and the reduced rate. "Elgin II" is another variation that involves the customer rather than the contractor. Here the union offers a cash "rebate" to the customer if the customer awards the contract to a union contractor.
If a union is involved in a targeting program, especially one based on granting subsidies or rebates, it must take a couple of actions to insure the legality of its program. The subsidy must be offered to whichever contractor wins the bid, whether union or non-union, though signing a union contract is a condition for receiving the subsidy. Secondly, the target fund must be authorized by the affected part of the union's membership. In addition it is necessary for the union to raise the target fund and that involves a dues increase for the affected membership.
The economic effect of targeting upon the membership is the same as giving concessions; that is it cost them money and transfers that money to the contractor. Importantly, the principles are quite different. Targeting "shares the pain" equally among all members of the union. Everyone gives up a little rather than having some members working at full scale while others work for significantly less. Targeting maintains the integrity of the wage scale through lump-sum payments to contractors. In addition the lump sum payments give the union potential power over the employer that giving away pieces of the contract do not, since the union is free to offer the subsidy when it chooses and can withhold it as circumstances permit. Finally, the union is not in a position to have to win back wages and work rule changes that it has already admitted were "too high" or "too rigid."
DISCUSSION QUESTIONS
Construction locals have always been involved in the building permit process. Normally, they are allied with the builders with the goal being the creation of union construction jobs. Often, this has put locals in conflict with others in the community, particularly environmentalist, who were opposed to constructing new Facilities. Over the last two decades, however, developers who sought union support in the construction permit process have increasingly turned to nonunion contractors after securing those permits. Therefore, unions have made enemies with environmentalists while simultaneously seeing the fruits of their labor go to nonunion contractors.
Some in the Building Trades have begun to re-examine their position in the permitting process. For example, the California Pipe trades developed the Job and Community Protection Program to fight job and environmental blackmail by employers. Their program has three separate components:
The California group has been engaged in a number of projects since 1985. For example, they took on Allied Signal Energy Systems on a woodwaste-fired power plant in Anderson, California. By intervening in the permit process, they forced Allied to prepare an Environmental Impact Statement that raised questions not only about ozone problems, but also with particles to be released in the air. As a result, Allied made significant improvements in emission control equipment and, although the plant was built nonunion, Allied agreed to use union labor in building six other plants in California.
In West Virginia, the Building Trades have established the Affiliated Building Trades (ACT) which are confronting the use of nonunion labor in the petrochemical industry. Utilizing a mass media advertising campaign, permit intervention and community organizing, they are turning up the heat on both the nonunion contractors (which includes Brown & Root) and on the plants themselves by exposing the dangers to the communities posed by having an unskilled work force build and maintain these plants. It is too early to tell if their effort will result in gaining new work for their members, but it signals to industry that the labor movement is a force to be reckoned with.
Jobs vs. The Environment
Discussion Questions