Union construction builds strong economy
Collective bargaining agreements benefit workers, spread impact through local economy, says study
Workers pour concrete in constructing the Chicago Riverwalk in 2016. (Shutterstock)
By Ted Cox
A new study finds that union construction projects under collective bargaining agreements not only benefit workers, but have a larger impact on the local economy.
The Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign joined Tuesday in releasing the study, “The Economic and Fiscal Impacts of Collective Bargaining Agreements in Construction.” It examined the economic impact stemming from eight construction-industry collective bargaining agreements, or CBAs, in Chicago and its suburbs.
“While much is known about the impact of collective bargaining on the wages of represented workers and the apprenticeship programs that train most of our state’s skilled construction workforce, this report details broader economic, fiscal, and social impacts that are too often overlooked by policymakers,” said ILEPI Policy Director Frank Manzo IV, a co-author of the study. “In northeastern Illinois alone, construction-union contracts aren’t just reducing poverty, they are creating jobs and spurring growth across all sectors of the economy while providing state and local governments with a reliable tax base to fund schools, police, fire, and other vital public services.”
According to a news release touting the study’s release, “The report reviews and analyzes collective bargaining agreements between the Mid-America Regional Bargaining Association, a multi-employer association of union contractors, and eight construction trades unions representing 97,234 skilled trade workers in the Chicago metropolitan area. It includes comparative analysis using U.S. Department of Labor, U.S. Census Bureau, and 9 (the bureau’s) American Community Survey data.”
To no one’s surprise, the study finds that CBAs benefit union workers. “The typical union journeyworker earns $77,300 per year,” it states, “on par with the average annual income for full- time workers with bachelor’s degrees in Illinois’s urban areas ($79,000 per year).” Wages increase 11 percent on average over three years under the CBAs, ahead of inflation, set at 6 percent, and union construction workers also earn between $10 and $15 in health insurance benefits per hour.
But the most profound and persistent effects are seen comparing construction projects under CBAs with those without them. “To truly understand the importance of these CBAs to the region and to Illinois, we set out to examine what would happen if these agreements were not in place,” said UIUC Professor Robert Bruno, director of the Project for Middle Class Renewal and a co-author. “In addition to dramatic reductions in wages and health-care coverage for represented workers, we found that the region would have created 13,000 fewer jobs, economic output would shrink by over $2 billion, and the state and local tax base would contract by more than half a billion dollars every year.”
According to the study, workers without CBAs earn just $49,000, more than a third less than their union counterparts under CBAs. They also receive far fewer apprenticeship hours, with a lower apprenticeship completion rate: 31 percent to the more than half, 54 percent, under CBAs.
The study finds that “construction-industry CBAs fund the largest privately financed system of higher education in Illinois,” in the form of those joint labor-management apprenticeship programs, accounting for 97 percent of all construction apprentices. “The eight joint labor-management apprenticeship programs in the Chicago metro area case study invest at least $69 million per year training the next generation of skilled construction workers,” it states.
But the greater impact was on the larger local economy. “CBAs supported $7.5 billion in total wages for 97,000 union construction workers in northeastern Illinois in 2019,” according to the study, “saving or creating an additional 49,000 jobs per year — particularly in hospitals, retail stores, and food service.”
It added: “Construction-industry CBAs in the Chicago area support more than $1.6 billion in total state income-tax revenues, state sales-tax revenues, and local property-tax revenues each year.”
The overall economic impact of projects not under CBAs was greatly reduced.
“The data underscores the fact that collective bargaining agreements in the construction sector are producing benefits that extend far beyond the individual paychecks of represented workers,” added ILEPI Policy Researcher Jill Gigstad, a co-author. “And as Illinois emerges from the COVID-19 pandemic, policymakers should consider this industry’s experience with collective bargaining as a way to promote more family-sustaining careers, economic growth, and improved social and community outcomes.”
According to U.S. Department of Labor data over the last decade, “construction unionization promotes a strong middle class and reduces poverty in Illinois’s construction industry,” the study states, finding that union construction workers have a higher homeownership rate (76-73 percent), are more likely to be married (63-57 percent), and are more likely to have private health insurance (98-70 percent). Only 3 percent of union construction workers received the Earned Income Tax Credit, a federal and state program providing tax rebates for low-wage workers, while 12 percent of nonunion construction workers received EITC benefits.
The study estimated that, without construction-industry CBAs, “economic activity would decrease by $2.2 billion annually and employment would shrink by 13,000 jobs” statewide, Illinois would lose $315 million in combined income tax and sales tax revenues, local governments would lose $251 million in property tax revenues, more than 27,000 construction workers would lose their private health insurance coverage, and more than 8,000 construction workers would qualify for the EITC.