Unions and Efficiency in Private Sector Construction: Further Evidence

Previous studies using micro data to estimate the impact of unions on productivity in construction in the early 1970's have found productivity to be higher for union than nonunion contractors in the private sector. The validity of these studies has been questioned in light of the declining market share of union contractors. This study re-examines union-nonunion productivity differences over a sample of retail stores and shopping centers built in the late 1970's. It finds that square footage put in place per hour is 51 percent greater for union than nonunion contractors. Lacking data on wage rates by occupation, the impact of unions on efficiency can be gauged only by looking at how unions affect costs, profit rates, and prices. This study finds no mean cost per square foot difference between union and nonunion contractors and offers mixed econometric evidence on translog cost functions. There is no difference in profit rates or prices between union and nonunion contractors in this sample.