Building Nevada - October 2009

Construction Labor

Unions Adjust to the Recession

by Jeanne Lauf Walpole

    With the unemployment rate in Nevada continuing to hover around 12 percent, more and more union construction workers are finding themselves on the bench. “I’m guessing almost 15,000 union people are unemployed {in Clark County},” says Richard Rizzo, vice chairman of Perini Building Company, the primary contractor for CityCenter. Although CityCenter currently employs around 10,000 union workers, many of them will join the ranks of the unemployed when the massive project is finished in the coming months. “We are the largest employer of union workers now,” Rizzo says.

    The employment figures for members of the Plumbers, Pipefitters & Service Technicians Local 525 parallels the crash of the construction industry in Southern Nevada with only around 1,800 members working today compared to about 3,300 a year ago, according to the local’s business manager, Brett McCoy. As grim as this may be for the thousands of workers and their families who depend upon union construction jobs for their livelihood, perhaps the worst is yet to come. “All of the crafts are hurting, but it’s not as bad as it will be in January,” explains Dana Wiggins, labor relations director for Associated General Contractors.

History of Unions

    Responding to poor working conditions around the early 1900s, labor unions grew throughout the country as groups became dedicated to improving wages, benefits and working conditions for skilled craftsmen. As in many other areas of the nation, union workers have played a prominent role in the growth of Nevada, most especially in the south. By 1964 about 33 percent of the workers in the state claimed union membership. “Unions have been very involved in building Southern Nevada,” Wiggins says. “They’ve built almost everything on The Strip.” Although the percentage of union workers in Nevada’s total workforce has dipped to the teens since the 1960s, the most recent building boom in Nevada created thousands of union jobs all over the state.

    Because of the size and complexity of recent construction in Nevada, major contractors say they’ve relied upon unions to provide large numbers of highly trained craftsmen who are very conscious of safety and are up-to-date on the latest materials and trends in construction. “We’ve been very loyal to the unions over the years because we do significant work that requires a high level of skill. Just the sheer numbers they offer is huge to us,” Rizzo explains. “The unions also have the most sophisticated training programs.” With contracts for a specific amount of time and work, contractors can manage the labor component of a project very efficiently by using workers provided by the unions. “When he’s through with them, he {the contractor} can lay them off,” Wiggins says.

    Although thousands of union craftsmen in Nevada have enjoyed jobs with good wages, excellent health insurance and stable retirement programs, the current recession has caused the employment picture to be bleak for many highly trained workers. “Some of the jobs have been shut down and what’s worse, architects aren’t drawing new projects. This is the first time I’ve seen a big shutdown where neither union or non-union have work,” Wiggins says. “The big boom won’t be back for 20 years. I wouldn’t be surprised to see 40 to 50 percent of contractors go out of business by 2010 to 2011.”

    Rizzo says he worries because of the economic uncertainty and the lack of large projects coming along to replace CityCenter and the Cosmopolitan Resort & Casino. “I have great reservations now because no one really knows what’s going to happen,” he says.

    In the meantime, unions are scrambling to get their members off the bench by being more flexible in the types of jobs they bid and by developing different rates. “Unions are trying to be more competitive in the market now,” Rizzo says. “Carpenters and laborers have separate rates and will target smaller work.” The reality of the labor situation dictates that workers will no longer be able to enjoy five to seven percent increases, according to Wiggins. Workers on the bench have also been encouraged to use the time for further training and education in order to be at the top of their game, according to McCoy. In many cases it comes down to simply looking for any kind of work, even if it’s outside their specific area of expertise. “I would tell them to find a job wherever they can find it. Go to Lowe’s or Home Depot,” Wiggins says.

Lady Luck Smiles

    After 28 years of union work, a Reno home builder, Mike Vanderhoef, found himself without a job in April. “The housing market tanked and finally they just had to let me go,” he says. It was obvious that he could no longer rely upon the union construction jobs that had been his bread and butter for many years. Luckier than most, however, Vanderhoef was offered a position within weeks as project manager for Reno-based MARCOR Environmental, a company that specializes in environmental remediation. “I couldn’t have gotten luckier. I was blessed to have it happen,” he says. Because of prior experience in mold remediation during his construction career, he was uniquely qualified for the job. “For the past five or six years we had a bad mold problem in our homes. I was overseeing the remediation,” he explains.

    Although his new job is non-union and doesn’t pay quite as much, Vanderhoef says he loves the intensity and challenge of the position. “I’ve never been so busy in my life. My basic knowledge of construction really helps me,” he says. As he looks to the future, he emphasizes the importance of being aware of the changes in the building industry. “I see the future in energy. People should get themselves some training in reusable energy to use their skills in another way. If you want to stay in the trades, get trained on how to build green,” he explains.

    Like Vanderhoef, McCoy is also looking to the coming wave of green construction as a major source of employment, especially considering that members of his union have been on the cutting edge of green technologies for some time. “There’s going to be a tremendous amount of replacement. People want to live that kind of lifestyle and want to change things around,” he says. “It’s going to save a lot of jobs because in Las Vegas there’s not a lot of water. We’ll see a lot of retrofitting.” He’s also bullish on future employment because most gaming properties regularly schedule retrofitting about every seven years. “All the major players are looking for an edge,” he explains. Wiggins worries that without major projects in the near future, the unemployment rate will continue to be high, but he acknowledges that competition from CityCenter might cause other resorts to jump on the remodel bandwagon. “I’m scared of what happens when CityCenter opens because it might cannibalize other places on The Strip. But it might force other places to have to remodel,” he says.

    Although a lot of media ink has gone into adding up the amount of stimulus money coming Nevada’s way, it hasn’t had much affect on union jobs (at least not yet), according to Rizzo. “The stimulus money hasn’t helped union jobs to any degree,” he says. “It was not given to create new jobs. We need to find programs to allow people to hire people.” Wiggins says the stimulus money wasn’t enough to make a dent in the impact of the jobs that have been lost. “We didn’t get more because it went to infrastructure and ours is new here,” he says.

Washoe County   

    While it’s far from rosy, the employment situation in Washoe County is somewhat better than in Clark County, according to Steve Muchicko, district representative of the Southwest Regional Council of Carpenters in Reno. “I feel we’re better off in Northern Nevada,” he says. About 20 percent of the 1,800 members of the carpenters’ union are unemployed now compared with around five percent a year ago. The lack of full employment has caused some members to leave the area and/or look for other types of work opportunities. “We’ve explained to members that there aren’t enough jobs so some of the guys have to find another job,” Muchicko explains. Dealing with the thin job market on a daily basis hasn’t been easy, he admits. “When you have 1,800 families that depend on you, you try to give them hope,” he says.

    On a more positive note, however, Muchicko points to a number of large public works and infrastructure projects that are either in process or scheduled for the near future. These include the widening of US Highway 395 and the construction of the Meadowood Mall Interchange along with the completion of the math science and molecular science buildings at the University of Nevada, Reno. In addition, the passage of SB 152 (the Green Jobs Initiative) during the last session of the state legislature will create jobs through the retrofitting and weatherization of homes, schools and public buildings.

    Some construction movers and shakers remain worried that despite green building and stimulus funds, the jobs will be slow in coming back. “I’ve been predicting this shutdown for three years. We’re so overbuilt in this town,” Wiggins says. “I hope I’m wrong, but I don’t see it [economic turnaround next year] happening. We’re going to see major change in the construction industry.”

    Rizzo points out that until financing becomes more readily available, building will continue to be on hold. “There’s a unique situation in banking for funding large projects. People are trying to find private funding for financing because conventional banks aren’t doing it,” he says. He suggests that a potential source of funds could be unions, who already have a history of having financed large projects all over the country. “There’s been some discussion recently where unions are considering using some of their pension funds to help fund new construction,” Rizzo says. “I think that’s the right way to do it. It would put people back to work.”

    On the other hand, some union officials are more optimistic about a recovery in the job market. “Construction is a bust-boom industry,” Muchicko says. “It always comes back. We’ll see a gradual pickup by spring of next year.”

    Likewise McCoy sees better times ahead, especially for those workers who can respond to the changes in the construction industry and the economy. “One year from now I think we’ll be recovering. There are other areas for work through retrofits and the growing industrial market,” he says. “You can never bet against Las Vegas. We’ll continue to reinvent ourselves.”

Jeanne Lauf Walpole
Jeanne Lauf Walpole is a freelance writer based in Reno.