The Building Tradesman Current Issue | Back Issues Index

March 30, 2007

Chasing low wages won't fix what ails Michigan

Building trades pension funding improves, mostly

Pension watchdog a habitual snoozer

Marriott tower adds to Grand Rapids skyline

Labor Monument to be dedicated April 19

Trades handle the air handlers

News Briefs


Chasing low wages won't fix what ails Michigan

By Mark Gaffney
Michigan AFL-CIO President
A Viewpoint

Labor union members in Michigan find themselves injected into a debate about how to fix Michigan's economy and make our state more "competitive."

Some voices suggest that there are too many union members. These voices say unions are too strong, and our wages and benefits make our employers uncompetitive. These comments lead to suggestions to cut workers' benefits and pass legislation such as right-to-work laws, which reduce wages and weaken collective bargaining.

Let me ask a few questions. First, compete with whom? The Chinese manufacturing worker who makes between 39 cents and 80 cents an hour and has no benefits? The jobs lost to Chinese manufacturing are not due only to uncompetitive wages. We simply cannot expect our American workers to work for 39 cents an hour.

Jobs lost to China are caused by greed and a lack of American industrial policy. Blaming wages and labor costs alone is too simple of an answer.

Who are the American consumers who fuel more than 60 percent of our economy? They are largely middle-class workers. Reducing workers' ability to spend in our economy and reducing workers' ability to be consumers cannot be an overall good thing.

Reducing or eliminating pensions and retiree health care coverage tends to make paupers out of the retired, formerly robust consumers.

There is a line that we must not cross in our economy. If the middle class is forced to reduce its discretionary spending below a level that helps grow our national economy, consumer spending then decreases to a point that actually slows the overall economic activity. A recession would result.

Why are certain Michigan proponents calling for weaker unions? States without much union density, so-called right-to-work states, have median household incomes of $6,000 less than states like Michigan, according to the Economic Policy Institute. Less money for families, more profits for business.

Union-organized states have more of their citizens covered by health insurance (16.1 percent compared with 13.4 percent). Again, more out-of-pocket costs by individuals, more savings and profits for their employers. Those calling for weaker unions have a vested interest, that of putting more coins into their own vest.

Would workers feel safer in a state without strong unions? They shouldn't. In 2004, the rate of workplace fatalities was 41 percent higher in right-to-work states. In nonunion coal mines last year, a miner was almost 10 times more likely to die if he or she was not in a union. Last year, 42 out of 47 American coal miner deaths were in nonunion mines.

Does union membership and high union density make workers in a state like Michigan the only ones who suffer from cheap competition? Not necessarily.

The furniture, manufacturing and textile industry in North Carolina, a state with only a few union members, has lost well more than 200,000 jobs since the passage of the North American Free Trade Agreement. Do high rates of unionization make companies leave their home states? Not necessarily.

Two major Michigan corporations have announced their relocation outside of Michigan. Neither of the companies, Pfizer nor Comerica, were unionized companies. Wages were not an issue. Unionization was not an issue.

Families need adequate income to have a high quality of life. Trying to reduce our way to prosperity by cutting wages and benefits and weakening unions just doesn't work. Michigan's most recent plant closing is Pine River Plastics of St. Clair, where more than 400 nonunion workers made $10.50 per hour, almost 50 percent below Michigan's average wage. No union, less-than-average wages and the plant still closed. Instead, Michigan needs to grow out of our problems. Worker training and education and, yes, high-wage and high-skill jobs are what our state needs.

The New York Times said in a March 2007 editorial that "Labor unions have a role to play in helping to fix today's economic ills - most notably, (the) worsening income equality, a problem that's caused in part by unions' decline and the workers' resulting lack of bargaining power." The Times has it right. Those who want to fix Michigan only by seeking to attract businesses to a low-wage state have it wrong.
(This first appeared in the Detroit News "Labor Voices" column)


Building trades pension funding improves, mostly

A cycle of relative instability in the nation's multi-employer pension plans - a category which covers all the building trades unions - may be drawing to a close.

A report released Feb. 27 by the Segal Co., the "2006 Survey of the Funded Position of Multi-employer Plans," found that the "average withdrawal liability funded ratio of multi-employer pension plans has stabilized following several years of decline."

That's accountant-speak for "good news." But according to John Tesija, a funds attorney for a dozen Michigan-based pension plans, some international and individual local-union-based plans are still going to be faced with "belt-tightening," especially in the wake of softening contributions to funds brought on by lower work hours.

Overall, the study found that multi-employer plans on average were 98 percent funded as recently as 2001, a number which dipped to 80 percent by 2005. With information not yet compiled for 2006, that number was projected to increase to 88 percent by the end of last year.

The uptick in the stock market is the primary reason for the increase in funding levels, said a Segal vice president. Tesija agreed.

"When stock market returns go up, the funding in the plans usually improve," Tesija said. "But of course the other critical component is hours worked. There are a lot of building trades plans that haven't quite turned the corner yet, primarily because of the lack of work opportunities."

Tesija said multi-employer plans haven't been in nearly as much financial trouble as single-employer pension plans like those of some bankrupt steelmakers or airlines, "but they may need to be doing some belt-tightening in the short term to reflect Pension Protection Act guidelines."

The Pension Protection Act adopted by Congress last year will impose stringent investment and benefit rules on pension plans that drop below certain funding levels, to make sure that they don't drop even further or require a federal bailout.

"The study shows that plans are moving into the high-80 percent funding area, and that's good," Tesija said. "I think it shows that if they're funded and managed properly, multi-employer defined benefit plans are here to stay and will continue to do what they're designed to do: provide a good retirement for workers."


Pension watchdog a habitual snoozer

Report: Labor Dept's. Pension enforcement still lacking

WASHINGTON (PAI) - The Department of Labor agency that enforces the law covering workers' pension plans has holes in its enforcement, regularly loses investigators to the private sector and does not coordinate well with other federal financial regulators that oversee the same companies, a new report says.

The early-March report, by the nonpartisan Government Accountability Office - the prime independent auditor of federal programs - adds DOL's Employee Benefits Security Administration (EBSA) has improved its enforcement in the last five years, but not enough.

The Government Accountability Office found:

  • EBSA "is not positioned to focus its resources on key areas of noncompliance." In other words, Bush's Labor Department lacks both goals and data to judge how many firms are obeying federal law and adequately funding pension plans for their workers.
  • EBSA has only 385 investigators, many with less than three years' experience, to oversee 730,000 private pension plans.
  • Other financially oriented federal agencies… have "routine compliance programs" to unmask problems and "identify emerging trends that may warrant enforcement," the report added. Those agencies also reach out to other information sources. And those agencies routinely look at corporations' books and financial records to spot flaws, trends or both, GAO said. EBSA does not.
  • The report says the pension watchdog is more inclined to react to problems, rather than be proactive. "EBSA does not conduct routine compliance examinations and broad, ongoing risk assessments to focus its enforcement efforts, like other agencies (do)," the report said.


Marriott tower adds to Grand Rapids skyline

By Marty Mulcahy
Managing Editor

GRAND RAPIDS - The city's skyline can already boast the addition of the new 24-story, $120 million J.W. Marriott Hotel - even though it won't be completed until this fall.

The new hotel reached its final height of 256 feet in January, filling in another place in the city's downtown that is undergoing a nice construction boom. The design for the 340-room hotel was unveiled in January 2005, complete with one of the largest ballrooms in the region - able to seat 1,000 - plus two restaurants, a fitness center, a pool, a hot tub and whirlpool.

The new hotel is located next to the Grand River near the corner of Pearl Street and Campeau Ave. An adjacent 700-space parking ramp will serve the hotel.

"We've got a great crew of guys here, and our portion of the job will be on schedule or ahead of schedule," said Joe Bryant, plumbing foreman for Andy J. Egan and Plumbers, Pipe Fitters and Service Trades Local 174. He said the project's crew has included 53 plumbers and fitters.

The construction of the hotel, which is primarily being performed by nonunion trades, was initiated by Alticor, and is being built in a joint venture between Rockford Construction Company, Inc. of Grand Rapids, and Pepper Construction Group of Chicago. "We worked hard to design a hotel that is unique and appropriate for Grand Rapids and the riverfront site," said John Arzarian Jr. of Lohan Caprile Goettsch, the project's associate principal and senior designer.

Alticor chairman Steve Van Andel said the design of the new Marriott "is the latest chapter in the continuing revitalization of downtown Grand Rapids. We are introducing a modern and sophisticated structure that will grace our skyline for decades to come."

Hotel construction began in 2005 with the demolition of the former Israels Designs for Living furniture building and site work. Vertical tower construction began following four months of installing micropiles and heavy foundation work to support the structure. During the peak of construction, the team raised the hotel at an average of one floor per five-day week.

"There remains much work to be done to bring this project across the finish line," said Mike VanGessel, president of Rockford Construction and principal in charge of the JW Marriott project. "But the topping off of the hotel marks a significant milestone for us and for the city, as the Grand Rapids skyline is now forever changed."

According to Emporis, the Marriott hotel is the city's fourth tallest building. The 34-story Plaza Towers, completed in 1991, is the tallest structure.

RE-BAR ATOP a parking deck that will serve the new Marriott (looming behind him) is installed by Harold Richards of Iron Workers Local 340, working for Granger Construction.

PLUMBERS Joe Bryant (l) and Joe Turner of Plumbers, Pipe Fitters and Service Trades Local 174 stand in an area of the new Grand Rapids Marriott where they will be placing a considerable amount of plumbing: a first-floor bar area that faces the Grand River.


Labor Monument to be dedicated April 19

GRAND RAPIDS - The unveiling of the "Spirit of Solidarity" monument in Ah-Nab- Awen Park near the Gerald R. Ford Presidential Museum near downtown will take place Thursday, April 19 at 9 a.m.

The nine-foot-tall monument of three bronze figures representing striking furniture workers is the product of ten years of planning and seven years of fund raising.

"The Spirit of Solidarity monument is dedicated to the workers who risked their livelihoods to stand up for the rights for good working conditions and a nine-hour day," reads the invitation to the unveiling. "This event changed the political, social, and religious fabric of Grand Rapids like no other event."

According to UAW Region 1D, the "event" refers to the city's historic furniture strike of 1911. In this strike, 4,000 Dutch, Polish, Lithuanian, and German men and boys left their workbenches on April 19, 1911 and for four months stood up to the furniture barons without a single striker crossing the picket line. By August, scabs, starvation, and the raw economic power of the manufacturers forced their surrender.

Over time, unions became more of a force, and the UAW organized the Royal Furniture Co. in 1937.


Trades handle the air handlers

ANN ARBOR - A major program to replace chillers at the University of Michigan Hospital is wrapping up, all under the noses of the facility's patients and staff.

Since mid-November, a cadre of Hardhats have been quietly working on the third level (the mechanical floor) of the massive hospital, performing Phase III of a program to replace the main cooling air handlers and associated equipment during the off-season for air conditioning.

The $3.1 million project is expected to wrap up the first week of April. Phases 1 and 2 increased the system's cooling capacity and reliability.

"We're replacing equipment that's about 27 or 28 years old that has come to the end of the line," said Doug Mayher of Plumbers and Pipe Fitters Local 190, foreman for John Darr Mechanical. "Hopefully what we're putting in will give the hospital another 25 years of service."

Steve Carroll of IBEW Local 252, foreman for J.C. Squared Electric, said in addition to wiring in the new air handlers, sparkies spent a considerable amount of time "moving conduit around so that this will be a lot easier to do in the future."

TIGHTENING an electrical box cover is Steve Carroll of IBEW 252.

Doug Mayher of Local 190, behind three new air handling coils.


News Briefs

Congress upholds prevailing wage
WASHINGTON, D.C. - Every now and then, a vote comes up in our nation's capitol that measures support for the Davis-Bacon Act, which is the single most important law affecting construction worker wages.

The most recent vote took place on March 9, when an amendment failed to strip Davis-Bacon/prevailing wage provisions from a $14 billion clean water construction bill. The vote on the House amendment was defeated 280-140, and included support from 50 Republicans.

"The anti-worker amendment was defeated soundly because a bi-partisan majority of Representatives clearly recognized that prevailing wage protections rightfully belong in this legislation," said AFL-CIO Building Trades Department President Edward Sullivan. "We are hopeful that this is just the first of many victories for American workers in this new pro-worker Congress."

The attempt was made to add the anti-prevailing wage amendment to H.R. 720, the Water Quality Financing Act of 2007. It's a $14 billion reauthorization bill that will fund tens of thousands of construction jobs on projects that will improve water quality in the U.S.

Even with complete Republican control of Congress and the presidency earlier this decade, the federal prevailing wage law was never seriously threatened. As evidenced by the clean water amendment vote, a significant bloc of Republican lawmakers have seen the value of prevailing wage in upholding pay standards for construction workers.

"We are hopeful that this is just the first of many victories for American workers in this new pro-worker Congress," Sullivan said.

Solid gains for worker wages
The average hourly wage/benefit rate for all union construction workers is $42.64 as of Jan. 1, 2007, according to the Construction Labor Research Council via the Construction Labor Report.

Last year, wages and benefits in the organized construction sector rose 4.2 percent for all trades - a rate which is historically on the high end and "marked a reversal of three years of declines in the rate of escalation," according to the report. Wage/benefit settlements in the next two years are also expected to be in that higher end. Those rates reflect average increases of $1.85 each year.

Hikes expected in material costs
Washington, D.C. - While building trades labor prices go up (see above), construction material costs are taking a hike, too.

The March 15 Producer Price Index from the U.S. government showed construction materials and components only rose 0.1 percent in February. But Ken Simonson, chief economist for the Associated General Contractors of America (AGC), said earlier this month that steel and diesel fuel costs are among the "notable price increases" that have taken place since that report was released.

For example, he said by April 1, structural and reinforcing steel are expected to increase by nearly 40 percent compared to the beginning of the year.

"These steel increases are roughly as extreme as in early 2004, the year that kicked off a three-year binge of materials cost escalation," Simonson said. "This year, as in 2004, price hikes for other materials, such as diesel fuel and asphalt, are going to hit construction especially hard."



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