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Latest News - August 2012

August 6, 2012
Unions Retaliate Against Philly Construction Company
Source: The Heritage
By: James Sherk

Beaten workers. Blocked deliveries. Late-night vandalism. The news surrounding the Goldtex construction project in Philadelphia reads like a script for The Sopranos. What is going on?
In early March, Post Brothers Construction, owned by brothers Matt and Mike Pestronk, began converting a 10-story loft building into 163 apartments. They decided to hire non-union workers—in defiance of Philadelphia’s construction trade unions, which control the city’s market.

Post Brothers pays its employees well: $35–$45 an hour. But that is less than the union rate, and the jobs are going to non-union workers. So the union movement is trying to shut them down by any means necessary. They want to send the message that union members are the only source of labor in Philadelphia. Anything else is sponsored by “ruthless, irresponsible developers.”

The results have not been pretty. Nail “bombs”—nails welded together to puncture tires—have been thrown on the road leading to the work site. Union protestors have followed female employees and the wives of the brothers to their homes. Police arrested two protestors for allegedly assaulting a construction worker.

Security cameras at the Goldtex construction site have also recorded union protestors shoving security guards, pouring oil in front of the loading dock, and blocking deliveries to the site. Post Brothers has had to spend almost $1 million on extra security.

This nonetheless beat meeting the union’s demands. The Philadelphia carpenter’s union charges nearly double ($63/hour) the rate of the Washington, D.C., Carpenters union ($34/hour), even though D.C.’s cost of living is 12 percent higher. Consequently, Philadelphia has the fourth highest construction costs in the country. Using union labor would have added $10 million to the project’s cost.
The unions can charge so much because they have operated Philly’s construction market like a cartel: Their members build projects or no one does. This has benefitted their members at the expense of everyone else. As Kevin Gillen, economist at Econsult (a Philadelphia-based research firm) explains, “Developers can’t just eat those costs, they get passed on in the form of higher rents they have to charge people. And if you’re not willing to pay, then stuff doesn’t get built.”

The construction labor cartel in Philadelphia means much higher pay for union members, but higher rent and fewer jobs for everyone else. If Post Brothers succeeds, it will have broken the union lock on Philly’s construction market. Both renters and unemployed non-union workers should hope they do.

 

 


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