Agenda - Council Work Session - 07/28/2026

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This split into high -road and low -road sectors in construction began in the late 1960s and tracked with sharp declines in unionization in the industry.5 In 1971, 42% of construction workers were union members; by 2019 the rate had fallen to 12.6%.6 Erlich and Grabelsky (2005) explain major regional differences in unionization: building trades unions have a relatively strong presence in urban areas of the Northeast, Midwest, and West Coast. However, the number of such markets is shrinking and, even in these markets, there are "large and growing segments of the industry [that] are outside the union sphere of influence."' In residential construction specifically, according to Ormiston et al. (2020), unionization was as high as 50% in 1950, but it fell swiftly to around 20% in the 1970s. "Currently in the single digits industry -wide, the residential sector operates virtually union -free in many trades and regions."8 Significantly, these union -free cities, primarily in the Sunbelt, are some of the fastest growing in the country.9 The low -road model is not confined to residential construction, however; it has spread into the commercial and industrial sectors as well.10 The decline in union density significantly eroded the quality of construction jobs overall. Between 1973 and 2006, there was a 17% drop in average real hourly earnings for all construction workers.11 From 1980 to 1991, the percent of construction workers with employer -provided health insurance declined from 55% to 45%.12 Participation in employment -based retirement plans went from 39% in 2000 to 27% in 2015.13 Unionized construction workers are in a far better situation than nonunion workers; in 2015, their wages were 42% higher and their total compensation 78% higher than their non -union counterparts.14 Regionally, blue-collar construction workers in the South earn wages around 18% lower than those in the West, 20% lower than wages in the Midwest, and 21% lower than wages in the Northeast.15 A survey of construction workers in six major Southern cities found that over half (57%) earn less than $15 per hour.16 Besides depressing wages and benefits in the industry, the decline of unionization also diminished the role unions have been able to play in protecting against exploitative labor practices. This is an especially problematic development given the weakness at all levels of government in enforcement of labor standards, combined with structural incentives that put lawful construction employers at a significant competitive disadvantage. Throughout the country, construction is a highly competitive industry in which projects are frequently awarded on the sole basis of the lowest bid.17 One of the most effective ways to minimize costs and win contracts is to "reduce labor costs through whatever means possible."18 The primary strategies to this end are paying low wages without benefits, misclassifying employees as independent contractors, and paying workers under the table. Mark Erlich calls construction "the original gig economy," noting that while independent contractors comprise 7% of the national workforce, around 20% of all independent contractors are construction workers.19 A significant portion of these workers are misclassified. State -level studies have found misclassification rates in construction of almost 15% in New York and 30% in Virginia.20 In 2011 an estimated 19% of California construction workers who were independent contractors were misclassified; these workers earned only 67 cents for every dollar earned by comparable workers with employee status.21 An investigation by McClatchy news found that more than a third of construction workers in Southern states were misclassified.22 The reason for the excessive use of independent contractors and the high levels of misclassification is obvious. Around one-third of labor costs can be eliminated by classifying workers as independent contractors; employers do not have to pay unemployment insurance, Social Security, Medicare, or workers' compensation premiums.23 The Public Cost of Low -Wage Jobs in the US Construction Industry