percent
1960 ’64 ’68 ’72 ’76 ’80 ’84 ’88 ’92 ’96 ’00
Notes: W + S is wage and salaried. Monthly data. Shaded areas indicate
recessions as defined by the National Bureau of Economic Research.
Source U.S. Department of Labor, Bureau of Labor Statistics,
Current Population Survey.
4. Private W + S unemployment rate
also factor into the lessening of union
influence over wages in the construc-
tion industry. “Critics of these laws
generally claim that the creation of
an artificial (union-based) wage floor
reduces competition and tends to
inflate building costs.”13 However, in
1993 Congress increased the thresh-
olds on the size of construction pro-
jects to which the Davis-Bacon Act
of 1931 applies. For new construction
under $100,000 and repair projects
under $25,000 firms now do not have
to pay prevailing wages. This has al-
lowed construction firms to win more
federal contracts without paying union
wages, thus weakening union power.
Another area of change in prevailing
wage laws allows helpers to replace
higher paid apprentices at job sites.
The helpers are less skilled than ap-
prentices and can do more of the
manual labor that otherwise would
have to be done at greater cost. An
additional tactic to lower costs is to
hire apprentices outside of approved
programs. Both of these tactics have
led to court cases involving builders
and government entities. A Supreme
Court ruling in 1997 clarified that
apprenticeship programs need proper
certification at the state or federal lev-
el, which increases employer costs.14
Typically, the hiring of apprentices
or helpers still lowers wage bills,
compared with hiring journeymen.
Double-breasting by
firms permits a single
company to operate
union and nonunion
shops. “The open
shop branch of a
double-breasted firm
is supposed to be a
separate concern, with
its own offices, man-
agement, and payroll.
Unions have charged
that in many cases
these distinctions are
artificial and that the
union contract legally
applies to the non-
union subsidiary.”15
Still the practice has
spread as firms re-
spond to prevailing wages and vanish-
ing productivity advantages for union
labor. The added flexibility enables
a firm to bid for government con-
tracts under prevailing wage laws,
while also being competitive for
private contracts.
Conclusion
The labor market for the construc-
tion industry has been especially
tight after the construction boom of
the 1990s. This has resulted in wage
increases beyond those found in
other industries, departing from the
long-term trend of downward relative
wages for construction workers. How-
ever, the long-term trend suggests
continued de-skilling in the construc-
tion sector, which will lead to further
downward pressure on wages. In
view of this, the recent relative wage
gains for construction workers may
not be sustainable.
—David B. Oppedahl
Associate economist
11Michael H. Moskow, 1997, “Construction
industry wage controls during the Nixon Ad-
ministration,” paper presented before the
meeting of the Industrial Relations Research
Association, December.
2Bureau of Labor Statistics data.
3Calculated from the Bureau of Labor Statis-
tics, Current Population Survey.
4Available at http://stats.bls.gov/news.release/
wkyeng.t07.htm.
5Economic Report of the President, Feb. 2000, pp.
135-137.
6George J. Borjas, 2000, Issues in the Economics of
Immigration, University of Chicago Press, p. 6.
7Quote from Wally Randa in Matthew Power, 2000,
“Assembly required,” Builder, February, p. 67.
8Data from OSHA, available at www.bls.gov/
oshcfoi1.htm and www.bls.gov/special.requests/
ocwc/oshwc/osh/os/osnr0009.txt.
9Steven G. Allen, 1988, “Declining unionization in
construction: The facts and reasons,” Industrial
and Labor Relations Review, Vol. 41, No. 3, p. 357.
10Based on data from the Current Population Survey,
available on the Internet at http://stats.bls.gov/
news.release/union2.nws.htm.
11Albert Schwenk, 1996, “Trends in the differences
between union and nonunion workers in pay us-
ing the Employment Cost Index,” Compensation
and Working Conditions, September, pp. 27-33.
12Daniel Quinn Mills, 1972, Industrial Relations and
Manpower in Construction, MIT Press, p. 16.
13Gerald Finkel, 1997, The Economics of the Construc-
tion Industry, Armonk, NY: M.E. Sharpe, p. 129.
14Supreme Court of the United States, 1997, No.
95-789, February 18.
15Allen, op. cit., p. 358.
Michael H. Moskow, President; William C. Hunter,
Senior Vice President and Director of Research; Douglas
Evanoff, Vice President, financial studies; Charles
Evans, Vice President, macroeconomic policy research;
Daniel Sullivan, Vice President, microeconomic policy
research; William Testa, Vice President, regional
programs and economics editor; Helen O’D. Koshy,
Editor.
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