The economic and tax effects of collective agreements in the construction industry

New data released by the Bureau of Labor Statistics shows that 10.8% of American workers were unionized in 2020, up from 10.3% in 2019. This was the first increase in the union rate in the US a decade by the decline in total wage employment by 9.6 million workers per year. Last week, the Illinois Economic Policy Institute released a report on the impact of collective bargaining in construction unions in northeast Illinois as the economic impact of the COVID-19 pandemic highlighted the importance of well-paying jobs across the state’s economic recovery from the economic stranglehold of the pandemic.

  • Collective bargaining in construction creates family support careers for union construction workers and sustainable economies in northeast Illinois, according to a report from the Illinois Economic Policy Institute and the Middle Class Renewal Project at the University of Illinois at Urbana-Champaign.
  • Analysis of the collective agreements between an association of union companies and eight construction companies in the Chicago metropolitan area shows that they “provide labor ladders for the middle class,” with a typical union travel worker making $ 77,300 a year, the average annual salary of temporary workers with a bachelor’s degree in the urban areas of Illinois ($ 79,000 per year).
  • 97,000 union construction workers in northeast Illinois earned a total of $ 7.5 billion in wages supported by CBAs in 2019. This has moved or created 49,000 middle-class jobs downstream with an average annual income of $ 58,800 per employee. Union construction jobs generate more than $ 1.6 billion in state and local tax revenue each year.

The report’s authors say that the coronavirus pandemic has “exposed structural economic inequalities in Illinois, with key workers and those in” personal “sectors most at risk from the virus also earning lower wages and among the highest job volatility and most likely to lose their employer-sponsored health insurance. The pandemic also emerged in the wake of increasing inequality. Illinois top 1% inflation-adjusted incomes have increased 35% since 2000, compared to a 3% decrease in median household income.

“The recovery from the severe economic recession caused by the public health emergency requires rapid growth of good jobs that offer not only family support but also access to quality health insurance, paid family and health insurance Ensure sick leave arrangements and pension plans. ”

An important industry that has consistently created middle-class jobs is construction, with around 232,000 wage earners in Illinois. In 2019, the construction industry contributed $ 30.9 billion to Illinois’ gross domestic product (GDP).

“The main reason the Illinois construction industry has good middle class jobs is because it is heavily unionized with strong collective agreements,” the report said.

Collective bargaining is the process by which workers form unions and negotiate contracts with their employers that set out terms and conditions of employment such as pay, hours, time off, health insurance benefits, retirement benefits, safety procedures and other workplace guidelines.

  • 46% of Illinois construction and production workers are union members
  • The union rate in Illinois is nearly three times the US average of 17%
  • Union members earn, on average, 11% more than non-union workers in Illinois

Construction CBAs fund the largest privately funded higher education system in Illinois and support apprenticeship programs jointly administered by unions and employers who are signatories.

  • Joint labor management apprenticeship programs account for 97% of all construction apprentices
  • These apprenticeship programs have a graduation rate of 54%, which is significantly higher than the 31% graduation rate for employer-only programs
  • The eight joint labor management apprenticeship programs in the Greater Chicago Case Study invest at least $ 69 million annually in training the next generation of skilled construction workers

Collective bargaining is constitutionally protected by the United States. The National Labor Relations Act of 1935 granted collective bargaining and organizational rights in the private sector. However, these rights have become increasingly inaccessible to the vast majority of the US workforce over the next 86 years.

Numerous studies have shown that collective bargaining raises wages for workers, especially low-income workers, middle-class workers and people of color. On average, union households earn between 10% and 20% more than non-union households – an income premium that has been constant since the 1930s. In Illinois, for every $ 1 in union dues paid, union members are returned more than $ 6 as after-tax income each year.

A recent study of three Midwestern states with “right to work” laws that weaken the right to collective bargaining found that the average worker in these states earns 8% less and the average worker 6% less per hour than in states with free tariff laws.

The report’s authors used a comparative model that simulates results when all 97,000 construction workers in Chicagoland suddenly started working without collective agreements. The data shows that without CBAs, the total income of skilled construction workers would decrease by $ 2.8 billion annually. These workers would experience wage cuts that would move them from a solid middle class to the lower middle class.

  • Lower-income workers spend a larger percentage of their income, so Illinois economic revenue would only decrease by $ 2.2 billion a year
  • More than 13,000 jobs would be lost in indirectly affected sectors
  • The state of Illinois would waive $ 315 million in taxes annually, and local governments would lose an estimated $ 251 million in property tax revenue annually

The report’s authors conclude: “Across Illinois, collective agreements are promoting the American dream, expanding health coverage, reducing poverty and reducing the reliance of skilled construction workers on government aid programs. At a time when the state is in desperate need of good jobs following the COVID-19 pandemic, elected officials, the media, and the public should look to the example of Illinois’ more unionized construction industry as a way to promote family careers and economic growth. “