Dive Brief:
- Nearly 1,000 construction trade workers marched through downtown San Jose, CA, Thursday to demand higher wages and insist that developers use more union labor, according to NBC Bay Area.
- Organizers said the protest's goal was to stop high-rise developers like KT Urban from hiring less expensive labor from outside the area and to give union-affiliated companies a chance to bid on the work.
- Union workers who participated in the march said that, in some cases, nonunion wage rates are more than 50% lower than union scale.
Dive Insight
The story in San Jose is the same as it is in many areas of the country, even in union strongholds like New York City. Some of the biggest construction names in the Big Apple — such as Tishman Construction and Turner Construction — are using less union labor for their privately funded projects and choosing lower-priced, nonunion workers, according to The Wall Street Journal. However, trade unions are not taking this move lying down. For example, Gilbane Construction Co., which reportedly has more than $1 billion of work underway in New York and uses some nonunion labor, is a favorite target of union protestors, who have picketed its projects and headquarters. However, unions still dominate public work in the city, which is estimated to be $13 billion annually.
Last year, New York's trade organizations, the Real Estate Board of New York and Mayor Bill de Blasio locked horns over wage rates tied to the 421-a tax credit, which expired because they couldn't come to an agreement. The tax credit provided a break to developers of multifamily units, so it was considered vital to the success of the mayor's $2 billion, 80,000-unit affordable housing plan. A New York City Independent Budget Office report earlier this year determined that paying union scale on de Blasio’s housing initiative would jack up costs by 23%. Developers for other private city projects said using union labor increased their costs by 20%-30%, but union representatives disputed that finding. Last month, in an effort to revive the tax credit, New York Gov. Andrew Cuomo proposed a state subsidy to help bridge the gap between what unions wanted and what developers were willing to pay.
Recently, a court took a minor swing at union labor with a ruling that could spell the end of mandated, tax-incentive-based, union Project Labor Agreements in Jersey City, NJ. The city requires that a developer enter into a union-labor PLA in exchange for a tax abatement, even on privately funded work. The Associated Builders and Contractors, New Jersey Chapter and some members sued the city claiming that nonunion workers couldn't be excluded from these projects. Although a district court sided with Jersey City, an appeals court did not. It said that Jersey City was a regulator in these projects and not a market participant; therefore, it could not demand that developers enter into a union PLA.
