The construction industry prospers

INTRO TEXT

Growth & Develpment Extra 2006

Both public and private projects are
keeping hardhats busy.

With the Big Dig winding down, Boston Harbor (mostly) cleaned up, and the new convention center built, where have all the hardhat jobs gone? Not as far as you might think. In fact, construction workers are likely to be toiling at a college, hospital, or residential development near you. If there’s a concern in the construction industry, it’s about where some of those workers are coming from.

For all its history of volatility, the Bay State construction industry has been a steadfast source of employment in recent years. As the state’s economy slumped at the start of this decade, recovering only slowly since, building continued to boom. “Construction has done well and has been pretty insulated from the economic downturn,” says Elliot Winer, chief economist for the Department of Workforce Development. In September, 142,900 people were working in construction in Massachusetts, down 600 from August but still well above the recent low of 135,300 recorded in March 2003. The sector’s current employment level is even close to the all-time high of 144,900 workers recorded during the peak of the previous boom, in 1988.

It’s not just the head count that tells the construction worker story. “We measure work by hours rather than by members,” says John Laughlin, communications director of the International Union of Painters and Allied Trades, District 35. “For more than three years now, we’ve held steady at about 3 million hours a year.” And those hours mean a big boost to both union members and the economy. According to Laughlin, painters working on new construction projects in downtown Boston last year received a wage-and-benefits package worth $50.82 an hour. Those 3 million hours thus translate into more than $152 million of direct economic activity.

A slump in construction employment was widely expected when the mega-projects of the past decade approached completion, but Joe Dart, president of the Massachusetts Building Trades Council, says it hasn’t happened. “We have not experienced the sharp drop-off in work that everyone thinks we have,” says Dart. That’s because the Central Artery/ Tunnel, Deer Island sewage treatment plant, and Boston convention center were never the only games in town. While the Big Dig employed as many as 5,000 union tradesmen at one time, Dart points out that the combination of seven power plant construction projects in the region puts even more union members to work.

Now, a mix of public- and private-sector work is keeping union hardhats busy, says Dart, though busier in some places than in others. The mega-projects drew construction workers from weaker labor markets to Boston, but most of those non-local hardhats have now left, says Dart. He estimates that the unemployment rate for union construction workers is between 5 and 10 percent in the Boston area but as high as 20 percent in some regions beyond Route 128.

Non-union construction workers may be even busier, according to Nathan Little, spokesman for Associated Builders & Contractors of Massachusetts, which represents more than 400 non-union contractors. “While organized labor was busy on the mega-projects, it left a vacuum in the rest of the state for open shop and merit shop firms to compete on a level playing field,” he says. “What’s happened is that 15 years of relationships that have been built between ABC contractors and clients have allowed our firms to grow.”

Dart and Little both see plenty of work ahead, in road, bridge, and other infrastructure projects that have been deferred as federal transportation dollars have flowed to the Big Dig. They also agree that, in the meantime, one of construction’s most fertile territories—for union and non-union firms alike—is the college campus.

“For the construction industry, the baton of the Big Dig has been passed off to higher education,” says Evan Dobelle, president and CEO of the New England Board of Higher Education. “In 2004 alone, $800 million was spent on capital projects on 28 colleges just in the Boston area.” Much of that has been in private institutions, but the public colleges and university are in building mode as well, he says. “An extraordinary amount of money is being spent by the Commonwealth, in either cash or bonds, on campuses across the state,” says Dobelle. “I hope that continues, because it would mean a continuing investment in public higher education, which, along with health care, is driving the New England economy.”

But all that work has drawn into the Bay State a source of construction labor that has labor and industry leaders worried. “The biggest threat facing the industry—union and non-union alike—is not a downturn in the economy, but the extraordinary influx of a new, undocumented labor force that is being exploited by contractors who are driving down not only wages, but safety and other standards,” says Mark Erlich, executive secretary-treasurer of the 26,000-member New England Regional Council of Carpenters. “The challenge is to resurrect a level playing field, where everyone has to play by the rules.”

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In November, Attorney General Thomas Reilly announced that he was probing a Peabody contractor for allegedly paying construction workers—some of them illegal immigrants—as subcontractors, rather than as regular employees for whom the company would have to pay benefits and employer’s taxes.

Union and non-union builders agree on the seriousness of the undocumented worker issue. “An underground economy distorts the free market,” says Little. “You can run a strong, legitimate business, but if you hire lousy subcontractors, your reputation is quickly tarnished. And that’s not good for business.”