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Construction doublebreasted operations and pre-hire agreements: Assessing the issues

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Abstract

Labor relations in the construction industry are conducted under a legal framework that is both different and more favorable to unions than is that in industry generally. Thus, construction employers are more subject to challenge than those in other industries if they operate both union and nonunion subsidiaries; construction unions, but not those in most other industries, may enter into agreements before anyone is hired (“pre-hire agreements”), require employees to join unions after ten days of employment instead of thirty, and require the contractor to notify them of job openings. Despite these advantages, construction unions represented only 22.2 percent of all construction workers in 1987, down from 40.1 percent in 1973, while nonunion, or “open shop,” construction accounted for more than 70 percent of the construction dollar volume as early as 1984.

Attempting to overcome these trends, the construction unions have sponsored legislation in the current and last two congresses which would outlaw “doublebreasting,” i.e., one company owning both unionized and open shop subsidiaries, eliminate any restrictions on pre-hire agreements, and have the effect of forcing thousands of construction workers into unions regardless of their wishes. This article examines the reasons for the decline of construction unionism, analyzes the proposed legislation, discusses its probable impact, and concludes that it is lacking in justification for the common good.

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References

  1. This article utilizes and updates materials that first appeared in Herbert R. Northrup, Robert E. Williams, and Douglas S. McDowell,Doublebreasted Operations and Pre-Hire Agreements in Construction: The Facts and the Law, Major Industrial Research Unit Study No. 62a (Philadelphia: Industrial Research Unit, The Wharton School, University of Pennsylvania, 1987). The author is grateful to Messrs Williams and McDowell for their legal analysis.

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  2. Data from “Construction Outlook for 1988,”Construction Review 33 (November–December 1987): Table 2, 3; andEmployment and Earnings 34 (April 1987): 83, Table B-1.

  3. For a more elaborate discussion of the industry and its structure, see Herbert R. Northrup,Open Shop Construction Revisited, Major Industrial Research Unit Study No. 62 (Philadelphia: Industrial Research Unit, The Wharton School, University of Pennsylvania, 1984), Chapter I.

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  4. See Herbert R. Northrup and Howard G. Foster,Open Shop Construction, Major Industrial Research Unit Study No. 54 (Philadelphia: Industrial Research Unit, The Wharton School, University of Pennsylvania, 1976). This study concluded that the open shop contractors “control 50 to 60 percent of the total work” and that “there seems little doubt that open shop construction is the larger segment by a clear, and we believe growing margin” (p. 351).

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  5. Northrup inOpen Shop Construction Revisited, p. 575, stated: “In mid-1984, all the evidence indicates that open shop construction accounts for about 70 percent of construction volume in the United States. ...”

  6. These figures are reported by the U.S. Bureau of Labor Statistics and are published annually inEmployment and Earnings in the January or February issue.

  7. H.R. 281, 99th Cong., 2d sess. (1986); H.R. 281, 100th Cong. 1st sess. (1987); and S. 492, 100th Cong., 1st sess. (1987).

  8. Northrup,Open Shop Construction Revisited, pp. 348–49.

  9. For details on homebuilding and commercial constructions, see Northrup,Open Shop Construction Revisited, Chapters III and IV.

  10. For the use of violence by construction unions, see Northrup,Open Shop Construction Revisited, pp. 351–71. For violence as a general union tactic and the legal response, see Armand J. Thieblot, Jr., and Thomas R. Haggard,Union Violence: The Record and the Response by the Courts, Legislatures, and the NLRB, Labor Relations and Public Policy Series No. 25 (Philadelphia: Industrial Research Unit, The Wharton School, University of Pennsylvania, 1984).

  11. Northrup,Open Shop Construction Revisited, Chapter IV.

  12. Richard Koenig, “Toyota Learns to Live with the U.S. Unions,”Wall Street Journal, February 25, 1987, p. 12.

  13. On this point, see Northrup,Open Shop Construction Revisited, Chapter V.

  14. Ibid., pp. 209–11, Figures V-1 and V-2, and Table V-9.

  15. For a discussion of such legislation, see Armand J. Thieblot, Jr.,Prevailing Wage Legislation: The Davis-Bacon Act, State “Little Davis-Bacon” Acts, The Walsh-Healey Act, and the Service Contract Act, Labor Relations and Public Policy Series No. 27 (Philadelphia: Industrial Research Unit, The Wharton School, University of Pennsylvania, 1986). Nine states — Alabama, Arizona, Colorado, Florida, Idaho, Kansas, Louisiana, New Hampshire, and Utah — have repealed “Little Davis-Bacon” Acts in recent years — Kansas in 1987 and Louisiana in 1988, after Thieblot’s book was published.

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  16. The highway and heavy construction sector is discussed in Northrup,Open Shop Construction Revisited, Chapter VI.

  17. Regional variations between the open and union shop construction segments are discussed in Northrup,Open Shop Construction Revisited, Chapter VII.

  18. Boilermakers-Blacksmiths Reporter, July–August 1986, p. 3.

  19. Data from U.S. Bureau of Labor Statistics; see Northrup,Open Shop Construction Revisited, p. 106, Figure IV-4.

  20. Inside Electrical Construction Survey, an annual compilation prepared by the National Electrical Contractors Association.

  21. For data on these two unions and others, see Northrup,Open Shop Construction Revisited, pp. 124–36. More recent data compiled by the Sheet Metal and Air Conditioning Contractors’ National Association confirm the continued loss of market share by unionized firms.

  22. U.S. Bureau of Labor Statistics,Union Wages and Benefits: Building Trades, July 1, 1980, Bulletin No. 2091 (Washington, DC: U.S. Government Printing Office, 1981), p. 3.

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  23. “1988 Construction Labor Rate Trends and Outlook,” Construction Labor Research Council, February 1988.

  24. Data from these surveys are found in Northrup,Open Shop Construction Revisited, Chapter XI.

  25. This 1988 survey was summarized inCockshaw’s Labor News + Opinion 18 (June 1988): 6A.

  26. For details on these labor market issues, see Northrup,Open Shop Construction Revisited, Chapter IX.

  27. For open shop training and its comparison with union-controlled training and discussion of the use of local residents v. travelers, see Northrup,Open Shop Construction Revisited, Chapter X. See also Herbert R. Northrup,Skill and Supervisory Training Programs of Large Open Shop Contractors (Philadelphia: Industrial Research Unit, The Wharton School, University of Pennsylvania, 1985); andGovernment Limitations, Construction Industry Cost Effectiveness Report No. D-2 (New York: The Business Roundtable, 1982).

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  28. “William A. Canavan, chairman of the [New York] city’s Building Trades Employees Association, indicated that there are current shortages of union tradesmen, citing a figure of ‘120% employment.’ City construction workers are fully employed, and another 20% of their number come from outside the city, he said.” In “Unsnarling New York City Jobs,”Business Week, December 11, 1986, p. 12.

  29. Robert Jones, Deputy Assistant Secretary, U.S. Department of Labor, noted that the Port Authority of New York & New Jersey had found unemployment in that region to be the lowest ever, construction starts high, and general economic condition very good. Yet, a “significant portion of the population” was unemployed. “Need to Train More Building Tradesmen Aired Before Management, Labor Panels,”The Regional Economy Review, 1986, Outlook 1987 (New York: Port Authority of New York & New Jersey, 1987).

  30. For a more detailed discussion of the competitive factors, see Northrup,Open Shop Construction Revisited, pp. 44–57. In this section of the book, Northrup also discussed the rationale of those who claim that unionized construction is more efficient and, therefore, more economical than open shop construction. Of course, if that were correct, open shop contractors, who now control more than 70 percent of the construction dollar volume, would have been relegated to a small part of the market instead of gaining so much. It is interesting that Steven G. Allen, who has been the leading proponent of the view that union construction is more efficient, had modified his views — but for reasons that do not stand scrutiny. Allen claimed that unionized construction has lost its alleged advantages because union workers are now employed to such a large extent in open shop construction. In fact, he has put the cart before the horse. Union workers took jobs in open shop construction because there were no unionized jobs, which was the case because of the cost advantages of open shop builders. See Steven G. Allen, “Declining Unionization in Construction: The Facts and the Reasons,”Industrial and Labor Relations Review 41 (April 1988): 343–59. For a critique of Allen’s methodology, which notes that his works “yield ambiguous results because they do not formally distinguish the compensation, productivity, and factor-use effects,” see Rendell W. Eberts and Joe A. Stone, “Unionization and Cost of Production: Compensation, Productivity, and Factor-Use Effects” (working paper, Federal Reserve Bank of Cleveland, January 1987); and Barry T. Hirsh and John T. Addison,The Economic Analysis of Unions (Boston: Allen & Unwin, 1986), pp. 195–208.

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  31. Twenty-first Annual Report of the NLRB (1956), pp. 14–15.

  32. Radio & Television Broadcast Technicians Loca! Union 1264 v. Broadcast Service of Mobile, 330 U.S. 255 (1965).

  33. For typical cases applied to non-construction, seeMidwestern Mining and Reclamation, Inc., 277 NLRB No. 1 (1985) (mining industry);Las Villas Produce, Inc., 279 NLRB No. 120 (1986) (produce company);Strawsine Mfg. Co., Inc., 280 NLRB 63 (1986) (industrial manufacturing). See alsoPulitzer Publishing Co. v. NLRB 618 F.2d 1275 (8th Cir. 1980).

  34. The lead case wasGerace Construction, Inc., 193 NLRB 645 (1971). See alsoJ.J. Cook Construction, Inc., 3 NLRB 41 (1973).

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  35. See, e.g.,Neighborhood Roofing, 276 NLRB 81 (1985) (employer ordered to bargain with union, abide by contract, and make employees whole with back pay);Las Villas 279 NLRB No. 120 (1986) (company and individual found to be its alter ego ordered to pay $746,877.44 in net back pay, and health and pension fund payments);Strawsine 280 NLRB 63 (1986) (employer ordered to reinstate employees to substantially equivalent positions, pay traveling and moving expenses and back pay, and provide union with access to employee lists and company bulletin boards).

  36. The lead case on this aspect isPeter Kiewit Sons & Co., 206 NLRB 562 (1973);reversed, sub nom., Local 627, International Union of Operating Engineers v. NLRB, 518 F.2d 1040 (D.C. Cir. 1975); partially affirmed and partially reversed and remanded,South Prairie Construction Co. v. Local No. 627, International Union of Operating Engineers 425 U.S. 806 (1976).

  37. Northrup, Williams, and McDowell,Doublebreasted Operations and Pre-Hire Agreements in Construction, pp. 44–45.

  38. National Labor Relations Board v. Leonard B. Hebert, Jr. & Co. 696 F.2d 1120 (5th Cir. 1983); 703 F.2d 557 (5th Cir. 1983);cert. denied, 464 U.S. 817 (1983).

  39. California State Council of Carpenters v. Associated General Contractors of California, 648 F.2d 527 (9th Cir. 1980); reversed, 459 U.S. 519 (1983). On the issue, see Edward B. Miller,Antitrust Laws and Employee Relations, Labor Relations and Public Policy Series No. 26 (Philadelphia: Industrial Research Unit, The Wharton School, University of Pennsylvania, 1984), pp. 21–25.

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  40. For a detailed discussion of the hot cargo provision and its interpretation, see Ralph M. Dereshinsky, Alan D. Berkowitz, and Philip A. Miscimarra,The NLRB and Secondary Boycotts (rev. ed.), Labor Relations and Public Policy Series No. 4 (Philadelphia: Industrial Research Unit, The Wharton School, University of Pennsylvania, 1981), Chapter V.

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  41. SeeInternational Ladies’ Garment Workers Union v. NLRB, 366 U.S. 731 (1961): Where an employer “granted exclusive bargaining status to an agency selected by a minority of its employees, thereby impressing that agent upon the nonconsenting majority, ... there could be no clearer abridgment of Sec. 7 of the Act, assuring employees the right ‘to bargain collectively through representatives of their own choosing’ or ‘to refrain from’ such activity.”

  42. John Deklewa & Sons, 282 NLRB No. 184, 129 LRRM 1190 (1987); affirmedsub nom., International Association of Bridge, Structural and Ornamental Iron Workers, Local 3 v. NLRB, 843 F.2d 770 (3d Cir. April 12, 1988);cert. den., — U.S. — (October 12, 1988).

  43. For detailed analysis of court rulings affecting sections 8 (e) and 8(f), see Dereshinsky, Berkowitz, and Miscimarra,The NLRB and Secondary Boycotts, Chapter V; and Northrup, Williams, and McDowell,Doublebreasted Operations and Pre-Hire Agreements in Construction, Chapters VI and VII.

  44. For an analysis of the doctrine of fair representation, see Timothy J. Boyce and Ronald Turner,Fair Representation, the NLRB, and the Courts (rev. ed.), Labor Relations and Public Policy Series No. 18 (Philadelphia: Industrial Research Unit. The Wharton School, University of Pennsylvania, 1984).

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  45. See note 43.

  46. See the interview with Allen in Warren T. Brookes, “Construction Unions on Self-Destructive Campaign,”San Francisco Chronicle, May 5, 1987.

  47. The Teamsters, Laborers, Hotel and Restaurant Workers, and International Longshoremen’s Association have repeatedly been so charged by the U.S. Department of Justice and various congressional investigating committees. Most recently, the President’s Commission on Organized Crime has reported on the criminal infiltration of these four unions, including several local unions of the Teamsters in New York City and has declared that “organized crime’s influence” in the Laborers’ union ‘is most extensive at the local level. This control is particularly concentrated in large cities, such as Chicago, Cleveland, St. Louis, and New York as well as smaller cities such as in New Jersey.” The President’s Commission on Organized Crime, “The Edge: Organized Crime, Business and Labor Unions,”Report to the President and the Attorney General (Washington, DC: U.S. Government Printing Office, 1986), sections 5 and 6. The quotation is from Section 6, p. 149. For additional information on racketeering control of construction unions, seeCorruption and Racketeering in the New York City Construction Industry, Interim Report of the New York State Organized Crime Task Force (New York, June 1987).

  48. For the historic background on this issue, see Herbert R. Northrup,Organized Labor and the Negro (1944; reprinted Kraus Reprint Co., 1971), Chapter II. Also Northrup,Open Shop Construction Revisited, Chapter XII.

  49. Testimony of Howard Jenkins before the U.S. Senate Subcommittee on Labor on S. 492,One Hundredth Congress, First Session, June 4, 1987 (Washington, DC: U.S. Government Printing Office, 1987), pp. 150–51.

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    Herbert R. Northrup

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Northrup, H.R. Construction doublebreasted operations and pre-hire agreements: Assessing the issues. Journal of Labor Research 10, 215–238 (1989). https://doi.org/10.1007/BF02685266

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