Study: Union Construction Delivers Superior Value for Minnesota Workers, Economy, and Taxpayers—Without Increasing Project Costs

Chicago:  Minnesota’s unionized construction sector is no more costly than its non-union alternative—though it produces higher wages, greater equality, safer worksites, and less reliance on social assistance while training more than 90% of the state’s skilled trade apprentices according to a new study by researchers at the Midwest Economic Policy Institute (MEPI), the Project for Middle Class Renewal (PMCR) at the University of Illinois at Urbana-Champaign, and Colorado State University-Pueblo. 

Read the Report, “Building a Strong Minnesota:  An Analysis of Minnesota’s Union Construction Industry.”

Minnesota’s $16 billion construction industry has grown by 69% since 2000, employing more than 130,000 workers.  Its current workforce unionization rate is more than double the comparable national average of 18%, and is higher than every other Upper Midwest or Great Plains state except Illinois.

“In analyzing data on both the union and non-union segments of Minnesota’s construction workforce, it is clear that the unionized sector delivers far superior outcomes for workers, their families, the industry, and for taxpayers as well,” said study co-author and MEPI Policy Director Frank Manzo IV.  “Unionized construction workers not only earn higher wages with less income inequality and better benefits, they contribute considerably more in income taxes, rely substantially less on public subsidies, and jointly manage programs that train almost all of the state’s skilled trade apprentices.” 

“Beyond its ability to lift more blue-collar workers into the middle class, data also strongly correlates construction unionization with workplace safety and productivity,” added study co-author, Professor at the University of Illinois at Urbana-Champaign, and PMCR Director Dr. Robert Bruno.  “That’s why, when compared to its seven Upper Midwest and Great Plains neighbors, Minnesota has the second-highest construction unionization rate, the third-highest rate of per-worker productivity and the second-lowest jobsite fatality rate.”

In addition to measuring impacts specific to workers and the industry, researchers also examined the effects of unionization on both the broader economy and the overall cost of construction projects.

Noting that wages paid to workers are ultimately recirculated throughout the economy, researchers used industry-standard IMPLAN economic modeling to estimate the downstream economic impacts of the state’s unionized construction sector.  In total, they concluded that Minnesota construction workers covered by collective bargaining agreements support more than 15,000 additional jobs across all economic sectors, while boosting the state’s overall GDP by nearly $2.7 billion per year.

To assess the impact on project costs, researchers examined 640 school construction projects in the seven-county Minneapolis-St. Paul region between 2015 and 2017.  In total, 71% of the bids were awarded to union contractors, and 29% were awarded to non-union contractors.  After accounting for observable factors such as project complexity and whether it involved new construction, researchers concluded that “there was no statistically significant cost difference between union contractors and non-union contractors… [and] prevailing wage standards also had no statistically significant effect on school construction costs.”

“Union contractors generally offset spending on higher skilled workers with comparatively lower spending on other cost components, while non-union contractors do just the opposite,” concluded study co-author, Distinguished University Professor and Professor of Economics at Colorado State University-Pueblo Dr. Kevin Duncan.  “While the data shows that there is overall project cost parity between the union and non-union models of school construction in Minnesota, it’s important to remember that there remains a substantial difference in terms of social and economic impacts on workers, the social assistance costs borne by taxpayers, and industrywide safety, productivity, and workforce development outcomes.”

Finally, researchers noted that while the unionized sector of Minnesota’s construction industry tends to focus on highways, schools, and other types of public infrastructure projects, it has yet to gain a significant foothold in emerging sectors—such as clean energy.  Despite rapid growth and investment in these technologies across Minnesota, workers in the clean energy sector currently earn an average of 22% less than those working on fossil fuel power generation.

“As lawmakers consider expansion of the state’s clean energy capacity, Minnesota has an opportunity to attract a new generation of skilled workers and to extend the economic and social benefits it has already realized on other types of vital infrastructure by attaching labor standards to any public investments,” noted study co-author and MEPI’s Midwest Policy Researcher Jill Gigstad.  “It is clear that such investments could not only advance the state’s environmental and public health goals, they could promote an expansion of the union construction model that is clearly serving the Gopher State well.” 

The Midwest Economic Policy Institute (MEPI) is a nonpartisan nonprofit organization which uses advanced statistics and the latest forecasting models to promote thoughtful economic growth for businesses and working families across the Midwest.

The Project for Middle Class Renewal (PMCR) at the University of Illinois investigates the working conditions of workers in today’s economy to elevate public discourse aimed at reducing poverty, create more stable forms of employment, and promote middle-class jobs.