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Shortchanging workers is a flawed business model

Millions are quitting their jobs or are going on strike. This doesn’t mean there’s a labor shortage. It means there’s a shortage of good paying, family sustaining jobs.

A Panda Express restaurant in Tampa, Florida, displaying a "Now Hiring" sign.
A Panda Express restaurant in Tampa, Florida, displaying a "Now Hiring" sign.
REUTERS/Octavio Jones

Whether you call it “Striketober,” “Strikevember” or something else, there’s no denying the fact that American workers are having a moment.

After enduring decades of wage stagnation, rising economic inequality and an unrelenting assault on their rights in statehouses and the courts, workers are finally pushing back.

Millions are quitting their jobs or are going on strike. This doesn’t mean there’s a labor shortage.  It means there’s a shortage of good paying, family sustaining jobs.

It shouldn’t require a once in a century pandemic to remind us that the cost of labor is not just whatever the boss is willing to pay. It should reflect the cost of ensuring employees have the requisite skills, and that their work sites are safe. It should enable workers to afford housing, health care, food, transportation and other basic needs near their jobs.

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Yet too often it does not. And when that happens, these costs are pushed onto the backs of taxpayers in the form of food stamps, housing vouchers and Medicaid.

This hasn’t helped more Americans achieve social or economic mobility. Instead, it has forced more taxpayers to subsidize businesses that have failed to invest in their most important asset — their workers.

For years, some special interests have argued that labor standards artificially inflate the cost of everything from hamburgers to building bridges.

In doing so, they are asking us to ignore the things that really drive up the cost of goods: like facilities, equipment, materials, land acquisition, the electric bill, logistics, the cost of having to replace workers who get hurt or quit to pursue better opportunities elsewhere, stock buybacks, golden parachutes or record profit margins.

A recent study on Minnesota’s construction industry shed new light on these false assertions.

It found that unionized construction workers earned 32% higher wages, were 43% more likely to be covered by private health insurance, were 24% more likely to have access to a pension plan, paid 48% more in state income taxes and were 13% less likely to rely on government assistance programs than non-union construction workers.

Jason George
Jason George
Yet the same study examined 640 school construction projects in the Minneapolis-St. Paul region and found no overall cost difference between those built by union firms, and those built by non-union firms.

The reason why is because labor comprises less than a quarter of total construction project costs.  Union workers complete years of apprenticeship training, through programs that are jointly financed and administered through collective bargaining agreements with their employers. This results in a higher skilled workforce, more employee retention, higher levels of productivity and improved safety outcomes on the jobsite. It means less waste of things like fuel and materials, not to mention less reliance on public assistance programs.

Midwest Economic Policy Institute’s research shows that union programs produce 93% of our state’s construction apprentices, and offer them considerably more training than a two- or four-year college. Upon graduation, participants are not only free of debt, they are also earning wages on par with workers in other industries that have bachelor’s degrees.

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In the non-union construction model, many workers are paid cut-rate wages with few benefits.

Discretionary investments in apprenticeship training often jettisoned as a means of winning short-term project bids. Research shows that this can invite outcomes ranging from outright wage theft, to lower workforce productivity, more turnover, more accidents and safety violations, and more full-time workers reliant on welfare to subsidize jobs that don’t pay enough to support a family.

The differing worlds within the construction industry underlie a broader trend in our economy — between those who prioritize investment in our workforce, and those who do not.

If our current labor market unrest has taught us anything, it’s that shortchanging workers is simply not a cost-effective or sustainable business model.

Jason George is the business manager and financial secretary for the International Union of Operating Engineers, Local 49. He lives in St. Paul.