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As many artisans grapple with the lingering effects of recent high inflation rates, employers continue to offer historically high wage increases. Union deals and open shop wages continue to rise, not only to keep current workers happy, but to help combat labor shortages.
By the end of 2023, first-year increases in union agreements reached 4.7%, up from about 3% in previous years, according to data from the Construction Labor Research Council. By the end of the second quarter of this year, first-year increases had settled slightly to 4.6%, and subsequent settlements suggest this year’s settlements could land in that same range.
Carey Peters, executive director of CLRC, notes that 76% of all settlements occur between May and July, providing a strong indicator of overall settlements for the year. “For the third quarter, we expect to be probably within one or two tenths of that 4.6% figure,” he adds.
Peters says much of the current level of increases is a continued “lagged effect” of high inflation rates in 2022. The average length of the deals is about three years, meaning many union members have been working under agreements made in 2021. the percentage of settlements last year was concentrated around 4.5%, CLRC data shows a greater disparity in the range. In the first half of the year, 23% of first-year settlements were 6% or higher. By 2023, only 5% of settlements exceeded 6%.
“Two or three years ago, a 6% increase was almost unheard of,” Peters says. “Now, they have to get some ground and the negotiating parties realize that’s what they have to do.”
Some of the biggest increases have occurred in southern states, which in CLRC data include Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia. Last year, first-year increases in this region reached 5.1%. During the second quarter of this year, the average rose to 6.1%. In particular, in terms of dollar amount, settlements in the southern region are in the middle of the range, near the national average of $2.94.
The Northeast, which includes Connecticut, the District of Columbia, Delaware, Maine, Maryland, Massachusetts, New Jersey, New Hampshire, New York, Pennsylvania, Rhode Island and Vermont, remains at the lowest level of increases, with 3 .8% in 2023 and 3.9%. % until the second quarter of this year.
Among the specific trades, operating engineers, plumbers/plumbers, laborers, sheeters, roofers, electricians and insulators reached agreements during the first half of this year with first-year increases equal to or greater than 5%. Iron and plaster workers were at the lowest end of the scale, averaging less than 3.5%.
Current economic pressures have made negotiations difficult this year. In southern Nevada, sheet metal workers reached a four-year tentative agreement with labor groups in June, but it was rejected by union members and went to arbitration. Meanwhile, the state’s plumbers and plumbers are taking negotiations with the employers to the end, as the current agreement is set to expire at the end of September. No deal was in place at press time.
Mandi Wilkins, executive vice president of the Las Vegas Mechanical Contractors Association, says that while the area is seeing a lull in construction and there is no labor shortage, union members remain very concerned about inflationary pressures. “At this point, I think it’s really about the check,” he says. “The fringe benefits and trust funds for [the plumbers and pipefitters] they are well funded and well managed.”
Wilkins says employers are trying to find ways to ease workers’ concerns by raising wages through a higher percentage increase in the first year, followed by slightly lower percentage increases in the remaining years. “I think from management, people are trying to bite the bullet up front [of an agreement]. That helps offset some inflationary pain.”
Merit store workers also continue to see strong wage increases. Last year, companies that offered salary increases saw an average increase of 4.4 percent nationally, according to the 2024 Merit Shop Salaries and Benefits Survey, conducted by PAS. In the survey, employers expected increases of 4.1% this year. However, Jeff Robinson, the company’s president, says that’s probably a conservative estimate and should be closer to 4.4%.
“I hesitate to even predict where things are headed next year, but at this point I think it’s safe to say that 2025 will look a lot like 2024,” he adds.
Robinson says that while short-term changes in the cost of living rarely have a strong impact on wages, current inflationary pressures cannot be ignored. Robinson says the data shows that pay rises from 2021 have not kept pace with inflation and are significantly reducing the “purchasing power” of workers. Based on 2,080 hours of work per year, the purchasing power from 2021 for merit shop workers is down $3,660 for pipe fitters; $3,120 reduction for carpenters and $3,040 for heavy equipment operators.
Labor shortages remain a critical concern. In August, unemployment in construction reached 3.2%, according to data from the Bureau of Labor Statistics. That’s the lowest August rate in the 25-year history of the data, according to an analysis by the Associated General Contractors of America.
“Something has to change if unemployment is staying this low [next summer]”, he says. “At some point, wages are going to go up. There aren’t enough people to do the work.”
