America is entering a period in which construction performance matters more than ever. We are making generational public investments in roads, bridges, schools and water systems. At the same time, the construction industry is facing stubborn cost pressures, supply chain disruptions, workforce shortages and a myriad of other variables that can throw projects off track.
For a taxpaying public relying on these investments, the question is simple: Who is best positioned to ensure that projects are delivered on time and on budget?
A growing body of research has argued that projects built with union labor are meeting this standard by delivering superior workforce supply, productivity and safety outcomes that help contractors better control overall costs and meet project deadlines.
In a recent study, Larissa Petrucci of NorCal Construction Industry Compliance and I teamed up to test this hypothesis. We examined 128 public works projects completed in Sacramento County, Calif., between 2018 and 2022. Seventy-five projects were led by unionized contractors, while 53 were led by non-union contractors.
On controlling costs, the difference was substantial. Across all projects, final costs averaged about $236,000 above those laid out in initial contracts. But projects led by non-union contractors experienced average cost overruns that were more than 10 times larger than those on union-led projects.
On timeliness, unionized contractors also outperformed. While the average project in our data set took 274 days to complete, union-led projects were completed in an average of 268 days, compared to an average of 283 days for non-union-led projects.
To better isolate these effects, we then employed industry-standard regression analysis to control for factors such as project size, construction type, agency type, project type, location, start year and other relevant characteristics. This analysis showed that projects led by unionized contractors had cost increases that were up to 6.3 percentage points smaller than comparable non-union projects. Union-led projects were also completed 14 to 22 percent faster, which translates to 38 to 60 days faster on an average-duration project. These are not marginal differences.
Much of the public debate on whom to hire for public works focuses on labor costs. However, labor typically accounts for only about one-fifth of a project’s total price tag, and the projects examined in our study were all governed by California law requiring contractors to pay local prevailing wages to all workers on most public works projects.
The data suggests that it is the workforce investments of unionized firms that can reduce the overall project price tag by improving productivity, staffing reliability and safety outcomes essential to completing projects on time and on budget.
The difference between union and non-union firms in this regard is how they participate in the registered apprenticeship system that trains and attaches new workers to careers in the skilled trades. In the union model that produces most registered construction apprentices, these training and labor supply investments are institutionalized as part of every collective bargaining agreement. In the non-union construct, these investments are voluntary and often jettisoned as a way to cut costs in an environment where the lowest bid wins.
For complex and often dangerous projects, there are real consequences to underinvestment. A contractor that cannot staff a job reliably is more likely to face costly delays. A workforce that lacks sufficient training increases the risk of safety incidents, mistakes and rework. These problems may not show up in the initial bid, but they often do show up in the form of delays or unexpected cost overruns.
As America invests billions in new infrastructure, success should be defined by what happens after the contract is awarded — not simply by who submits the lowest bid. The ability to control costs and accelerate delivery are the core measurements of performance. And our findings suggest that unionized contractors are delivering a superior value for taxpayers.
Matthew Hinkel is an assistant professor of economics at Alma College in Alma, Mich.
Governing’s opinion columns reflect the views of their authors and not necessarily those of Governing’s editors or management.