A leading intellectual advocate for government policies that favor and benefit construction trade unions is on sabbatical from his home university and spending several months in proximity to one of California’s union-oriented labor institutes, the Institute for Labor and Employment (an affiliate of the Miguel Contreras Labor Program) based at the University of California, Berkeley.

IMG_5333Over the past 20 years, University of Utah economics professor Peter Philips has become the nation’s preeminent academic in support of government-mandated construction wage rates (so-called “prevailing wage”). Construction union leaders appreciate his studies that purport to show that prevailing wage did not increase the cost of school construction in Ohio, Michigan, Kentucky, and other states in the 1990s. In addition, they appreciate his testimony before state legislative committees and local governments throughout the country. His article about prevailing wage in British Columbia was published this month, and his article about prevailing wage (“common wage”) in Indiana is supposed to be published in January 2015.

Some of his recent work has argued that California’s charter cities do not benefit from using their constitutional authority to enact municipal prevailing wage policies that deviate from state prevailing wage law. His study entitled The Effect of Prevailing Wage Regulations on Contractor Bid Participation and Behavior: A Comparison of Palo Alto, California with Four Nearby Prevailing Wage Municipalities was published in Industrial Relations: A Journal of Economy and Society, described as “the Institute for Research on Labor and Employment’s top-ranked academic journal.”

(For a response to this article, see the www.UnionWatch.org article Journal Article on Prevailing Wage Debunked, But Only Outside Academia and my analysis entitled University of Utah Study on Government-Mandated Construction Wage Rate (“Prevailing Wage”) Policies in Five California Cities: Not a Reliable Tool for Policymakers. Also, see Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions? – 4th Edition.)

Professor Philips has also written studies on other construction labor issues. For example, he released The Economic and Environmental Impact of the California Environmental Quality Act (CEQA) in March 2013, when the State Building and Construction Trades Council of California was opposing proposed changes to environmental laws that would hinder their ability to exploit these laws to obtain Project Labor Agreements from developers. This study was reported in www.UnionWatch.org in the article Opponents of CEQA Reform Cite New Study with Union Connections(For examples of this practice of environment permit extortion, or “greenmail,” see the www.UnionWatch.org article Revised List of Union Actions in 2013 Under the California Environmental Quality Act (CEQA).)

Professor Philips reports that his study on the employment impact of solar power plant construction in California will be released in November 2014, in conjunction with a press conference in Oakland featuring the Sierra Club, Obama Administration officials, and construction union leaders. Most solar developers in California have signed Project Labor Agreements with construction unions to avoid delays caused by union objections to the projects under the California Environmental Quality Act. (See the www.UnionWatch.org articles Unions Extensively Interfere with California Solar Photovoltaic Power Plant Permitting and Did Unions Hasten Demise of California’s Solar Thermal Power Plants?)

On October 13, 2014, Professor Philips was the lecturer for a colloquium at the Institute for Research on Labor and Employment at the University of California, Berkeley entitled Prevailing Wage Laws in Construction: Wage Mandates as a Means of Promoting Collective Bargaining. Attendees appeared to be predominately graduate students and labor institute personnel, although a researcher of the union-affiliated organization Smart Cities Prevail was also there.

I reserved a spot in advance for myself, as instructed in the announcement for the colloquium, and no one hassled me about being there. In fact, Professor Philips asked me a question at the end of the colloquium. I was able to make a few remarks at a forum where different views about the fundamental roles of government and unions are probably quite uncommon.

Here are some of my observations from the hour-long presentation on prevailing wage by Professor Philips.

    Labor Institute director Michael Reich introduces Professor Peter Philips.

    Labor Institute director Michael Reich introduces Professor Peter Philips.

  • Professor Philips was introduced by Michael Reich, Professor of Economics and Director of the Institute for Research on Labor and Employment. They met in the 1970s in the very room where this colloquium was held 40 years later. Older generations seem to dominate the fading academic field of what was once called “industrial relations.”
  • Professor Philips genuinely believes in the “virtues” of collective bargaining and supports the concept of government intervention to encourage collective bargaining in the construction industry. He frequently refers to the development and support of “human capital” in a “turbulent” industry and believes unions fulfill that role by providing sustained employee benefits and training. One of his slides appeared to show a “Non-Union” maid throwing bathwater out the window with “human capital” in it. (A slide showing a union official throwing bathwater out the window with “taxpayer money” in it was not included in the presentation.)
  • He emphasized to the PhD students at the colloquium that “being effective” requires speaking and crossing three arenas: economic, legal, and political. This conforms to the contemporary idea of university labor institutes as not merely research operations, but activist programs meant to pursue advancement of society through a progressive political agenda. (Your tax money in action.)
  • He asserted that groups such as Associated Builders and Contractors (my former employer) and conservative think tanks claim to oppose government-mandated prevailing wages because of concern for fiscal responsibility, but in reality are motivated by a desire to eliminate government policies that allow unions and unionized contractors to be competitive. At the same time, he claims prevailing wage does not increase costs of construction. A few students asked about this apparent contradiction: why does government need to impose a prevailing wage to help unions if prevailing wage does not increase costs? In response, Professor Philips hedged his bets and suggested that prevailing wage raises the cost of construction about 5%. Then he claimed that prevailing wage opponents cite higher percentages of savings because 5% does not inspire elected officials to eliminate the policy.
  • He contended that “Merit Shop” was a much better “descriptor” for non-union construction than “non-union,” because in this system workers are paid “variegated” wages based on merit, rather than a common wage based on collective bargaining. (Obviously he does not regard this particular recognition of “merit” as beneficial to human capital.) He briefly discussed the rise of the Associated Builders and Contractors construction trade association from its founding in 1950 through its dramatic expansion in the 1970s as it worked with the Business Roundtable to curb inflation.
  • He contended that class lines were blurred in construction: someone who starts in the industry as an apprentice can become a company owner. This is a challenging statement for union activists and academic advocates of unionism who believe class consciousness is essential to establishing “workplace democracy” through collectivism. It reminded me of claims I’ve heard over 20 years from both union and non-union officials that the ultimate ambition of a union apprentice is to become a union business agent, while the ultimate ambition of a non-union apprentice is to become a company owner.
  • Professor Philips is critical of what he sees as non-union efforts to infect construction with “Taylorism,” that is, breaking the work process down into small distinct responsibilities within a mass production system. He sees “human capital” developed through comprehensive union-sponsored apprenticeship training as a contrast to Taylorism. He also describes the non-union business model as “myopic bidding,” which I took to mean narrow consideration for a specific project without consideration of long-term costs.

It seems that Professor Philips is spending some of his time in California working on a project to describe how the Merit Shop operates, with the intent of contrasting it to the alleged virtues of a collective workforce. Here’s how Professor Philips seems to perceive Merit Shop construction:

  • A large Merit Shop company has a core workforce of very-well-paid, exceptionally talented and motivated long-term employees who travel regionally to work on significant construction projects. Some of these workers participated in or graduated from union apprenticeship programs but ultimately become disgruntled with their unions for ideological reasons or personal grievances. They tend to be zealous backers of the Merit Shop movement.
  • Below these core workers are two systems: (1) workers hired through a traditional process of submitting resumes in order to perform single jobs and then casually released at the end of the project without health insurance or other benefits; and (2) an extensive “highly articulated” network of small non-union subcontractors, either self-employed or with a small number of loyal, closely-tied employees.
  • For training, Professor Philips claims that the Merit Shop wants government to provide subsidies to train workers in vocational programs, as opposed to choosing to fund worker training themselves through employer payments to formal apprenticeship programs.

While Professor Philips is in California, he would like to talk with some Merit Shop contractors about their business practices. Keeping in mind that Professor Philips has some presuppositions about labor relations (as all people have), you may contact me as an intermediary if you are interested in talking to him about your business.


Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

 

One Response to Now in California: Nation’s Most Prominent Union-Oriented Prevailing Wage Scholar

  1. Scott Littlehale says:

    KD, you pivoted away from the central point of Philips’ presentation; you need to provide evidence that the following argument is wrong and/or & that the empirical findings are wrong.

    The construction industry must confront the problem of how to build & maintain a stable workforce of skilled labor, and the deck is stacked against doing so (due to numerous sources of volatility of labor demand [“turbulence”]; the danger of the job; and the fact that employer incentives to win today’s bid push against the industry’s collective need for longer-term investment in workforce skills & retention).

    One solution to the predictable tendency of contractors to *underinvest* in skilled labor is to Taylorize the work (break down the work into de-skilled, assembly-line-like processes), but that strategy can only succeed so far and for so long. Construction work always requires a smart workforce to adapt to unique challenges that usually arise at each job & jobsite. Open shop employers can only poach workers who received thorough training thanks to joint labor-management apprenticeship programs for so long …

    The other solution is for *many employers* to have enforceable commitments to invest in training & worker retention (health & retirement benefits that are portable across employers & jobs).

    In the USA, the practical vehicles for such commitments have been prevailing wage laws and multi-employer collective bargaining agreements. Where prevailing wage laws don’t exist or are weak, and collective bargaining is weak (the southern US), we predictably hear greater wailing about skilled worker shortages.

    Besides helping meet the industry’s demand for skilled labor, the happy side effects of prevailing wage laws and collective bargaining are: wages & benefits that put construction workers in the middle class rather than among the working poor; higher levels of worker education; lower dependence on government welfare programs; lower accident rates.

    Where we see those labor market institutions undermined, we see construction (1) worker wages much lower than mid-point wages; (2) lower levels of education; (3) greater government expenditures per construction worker on assistance programs. (see http://illinoisepi.org/countrysidenonprofit/wp-content/themes/12/docs/Self%20Sufficent%20Construction%20Workers_ManzoCarroll.pdf )

    So there is your challenge: show me evidence that those points are incorrect. Philips and others who can wrangle survey data with statistical software have plenty of evidence from household Census surveys and firm-based Economic Census surveys that says those points are accurate.

    Note: KD, google “david marsden” “public goods” “labor market” firm transferable and you’ll find a short summary of the basic economic framework that explains shortages or the absences of shortages in construction labor markets.

Leave a Reply

Your email address will not be published. Required fields are marked *

Time limit is exhausted. Please reload the CAPTCHA.

Set your Twitter account name in your settings to use the TwitterBar Section.
UNIONWATCH WEEKLY NEWSLETTER
Yes! Please send me your weekly email with more articles like these.
NEVER DISPLAY THIS AGAIN.