Building trades and the failure of labor reproduction

or, the irony of blaming workers for high housing prices

A common trope in writing about the US’s problems with developing a sufficient amount of housing is to pit implicitly-overpaid unionized construction labor against the moral imperative to build affordable housing. In California in particular, pro-development forces have aligned to castigate the construction trade unions as a barrier to progress in advancing their pet zoning and development reform legislations. The unions’ approach is in the context where less than 19% of CA construction workers are unionized. Labor unions therefore come to rely on legislation to maintain relevance, working to ensure state laws that mandate the hiring of “skilled and trained” construction workers. Skilled in this instance refers specifically to the role labor unions play in ensuring stability among construction workers through their once hegemonic apprenticeship programs. The legislative approach has been useful for unions playing defense, as California’s legislature (which has attempted to regulate gig workers’ employers as well) has helped the state maintain among the highest rates of union density among states of its kind, edged out only by the smaller holdover of labor rights, New York.  

What if we approach this issue from the opposite angle however: understanding labor costs are not just an ancillary feature but part of the core consolidation of real estate capital in the hands of certain kinds of firms and profit models. Construction has been a crucible of the economy as employment has grown, unlike manufacturing and more like service work, in share over the course of the 20th century. In that time, unionization rates among the building trades peaked later but have been decimated ever since the 1970s. Coupled with the huge dominance of real estate profit in greasing the wheels of our economy, the evisceration and continued marginalization of building trade unions might be a big part of the housing shortage story.   

In a new piece, labor historian Andrews Elrod details that the building trades suffer from a nesting set of labor problems that have their crux in the anti-union campaigns of US manufacturers and contracting companies themselves.  In the 1960s, Elrod shows vietnam era inflation, the reticence of contractors to agree to profit controls and the power of the unionized trade to win wage increases all led to soaring construction costs. 

Business leaders impacted by high construction costs (at DuPont, General Electric, US Steel, among others) organized to address the situation. Through the efforts of the Business Roundtable, anti-union business associations representing construction firms doubled during the 1970s. They precipitated a huge decline in union membership among contractors from a strong majority to the industry average of 12-13% today. 

Long before the gig economy existed, these efforts involved early experimentation with independent contracting beginning in 1978. 

Consequently the construction industry today is plagued by an inability to reproduce a skilled workforce. Unions apprenticeship programs were crucial to developing and retaining a labor pool that is plagued by shortages and extremely high turnover. That workers are driven away is not a surprise: amid the casualization of their work, there is now widespread payroll fraud as non unionized firms face few consequences for screwing over immigrant and migrant laborers. 

Construction has been a star sector of the pandemic economy with the housing industry raking in huge profits… but still the industry somehow pleads it is on the brink of collapse.  Losses to commercial real estate appear to be offset by the huge number of developers involved in converting retail (namely, malls) into warehouses and mixed-use projects. In housing, critics have rightly focused on the failure of the market to produce enough inventory to meet demand (leading to astronomical sale prices) as well as the consolidation of corporate landlords in the rental markets. Examining the failure of labor reproduction coupled with the virulent anti-regulatory lobbying by large construction firms (with many more sane voices in the industry recognizing they have shot themselves in the foot in terms to retaining workers) helps explain many more of the contradictions of the situation.

Elrod’s piece raises some great questions for housing and real estate thinkers, many of which we can only begin to speculate on. The geographically fragmented nature of the construction industry coupled with the huge political lobbying against labor protections likely means we should think about construction labor costs as part of a matrix (along with land prices) of local considerations. For example, it seems to follow that cities with a high union density like New York and San Francisco have higher labor costs, alongside land prices, and trouble competing with contractors in the sunbelt with dramatically smaller labor costs. Additionally, market skeptics should understand that homebuilding in these regions are not just unsustainable in terms of suburban and exurban sprawl but also in terms of labor practices. Maybe most importantly, the history of multiple groups of capitalists teaming up to eviscerate the union power of the construction industry must be invoked to pour cold waters on claims that workers are to blame for high housing costs. This ought to be an important dimension of our understanding of the entrenched political power of real estate and guide efforts to build left coalitions for development that benefits both the people who build and use the built environment. Among the many challenges to pulling this coalition off, we need to recognize the need to re-unionize construction (necessary to addressing the sector’s stability) while at the same time regulating land prices and developers’ political influence.