Developers and general contractors have complained many months now of high subcontracting prices. The explanation for high subcontracting prices is multifarious and debatable, but one factor I have cited frequently to developers and contractors has met no argument.
And while there is little answer to it in the short term, one longer-term necessity in addressing it may seem counterintuitive: Raise construction wages.
No one can blame subcontractors that suffered through the 2008-2012 construction industry depression for wanting lately to grab what they can while the grabbing is good, for squirreling away acorns furiously in fear of another winter as hard and long.
Their shops, trucks, office staff, and equipment are calibrated to a certain volume of work. Expansion brings expense. Taking on new expense might be easier to contemplate in view of a steady rise of work, but every subcontractor must fear that just around the curve the road will collapse down another 2008 cliff. Given the present market's opportunities, many a sub will pick and choose jobs rather than expand.
Halls are empty, or nearly so. Unionized Building Trades through their apprenticeships and national networks can respond to shortages of skilled labor, and much more quickly and effectively than the non-union sector. Top hands will command top dollar more readily in a boom than out, but this would have a marginal effect on subcontractor expenses, and one offset in real degree by the greater productivity that makes a top hand. Even so, productivity overall suffers somewhat in a boom.
All these issues are real, but I have told developers and contractors that the much greater issue is a shortage of skilled and experienced supervision.
For good reason, our foremen, general foremen, and superintendents come from our ranks and remain members of our unions.
They need to have had done our work to understand it. As valuable as the classroom may be in our apprenticeships, things teach a different knowledge than books; books cannot teach how the right feel of a drill bit working differs with materials or how a puddle of molten weld metal should flow.
They need also to know that if they stand for the hands against the sometimes unreasonable demands of employers or project managers, the hall will back them, or at least have an out-of-work list through which they can take their next job.
Some of what a good foreman, general foreman or superintendent needs to know can be taught. Some cannot, but must come from experience. Judging what the particular skills of a particular worker are and how they can best be utilized: Experience. Judging what will motivate and what frustrate a crew: Experience, mostly, along with a good jug of social intelligence. Judging when to cooperate with a general contractor superintendent and when to tell him or her to go to hell: Experience.
Anyone who has done the work will know I could go on.
Foremen who had attained effective experience by the end of the last decade's condo boom faced ugly choices in 2008. Some bailed for steadier work in other industries or related public employment. Some already close to retirement decided the moment had arrived. Some just kept their retirement accruals alive until the 2012 turnaround, then worked all available overtime until they had enough credits to get out the door.
This left both general contractors and subcontractors with a dearth of experienced supervision relative to a greatly increased volume of work.
Among general contractors, recently-minted superintendents on some projects didn't understand the work of their subs, or how to sequence it efficiently, or how to cure quickly the inevitable and innumerable hiccups that come on any job, and on some more than others. Subcontractors saw a higher risk of their work being slowed, hours increased, material wasted, and built the risk into their bids.
Subcontractors saw also that they now had more work than could go to experienced and trusted supervision, and built the risk of new supervision into their bids.
Some of this problem may work itself out over time, as supervision gains experience and as contractors learn who can run work well and who cannot.
Some of it may remain difficult to solve. Recruitment of young workers into our Trades remains a challenge. A bias against our careers in influential sectors of the professional class – including, ironically, educators and journalists, who earn on average much less already than we do – has kept shops out of schools and students ignorant of our work.
But one thing that will certainly help is better pay. Addressing higher construction costs by better pay might in a shallow take seem nonsensical, but it will help recruit and retain the young. It will mean more of the best and brightest come to us. It will convince more experienced workers – including supervision – to gut out coming recessions rather than seek opportunity elsewhere. It may even persuade some to postpone retirement.
So often, developers and contractors look only at the short term. We in the union Trades, with our 120-year history in the City, must take a longer view. When we demand better wages, that is just what we are doing.