Unionization and Productivity in Office Building and School Construction

This paper examines the difference in productivity between union and nonunion contractors in the construction industry over a sample of 83 commercial office buildings and another sample of 68 elementary and secondary schools. The popular belief that the building trades unions reduce productivity in the industry is soundly rejected in both samples. Square footage per man hour is 38 percent higher in office buildings built predominantly by union labor, controlling for differences in capital-labor ratios, observable labor quality, region, and building characteristics. Estimates of the union-nonunion productivity difference in the school sample range from zero (when output is measured in physical units) to 20 percent greater for union contractors (when output is measured as value added deflatedby regional price differences), controlling for the same factors. Possible sources of higher union productivity in the office building sample are explored. A lower ratio of supervision to production worker hours and use of technologies and materials that economize on labor account for as much as 25 percent of the higher productivity observed in the union sample. The remainder is probably attributable to apprenticeship training, unobserved labor quality, economies of recruiting and screening, and improved manangement.