CERN Meeting, April 2009: Wages and Benefits

CPWR Construction Economics Research Network (CERN)

Chair: David Weil, Ph.D.
Boston University School of Management

Coordinator: Dale Belman, Ph.D.
Michigan State University

Spring Meeting April 16-17, 2009
George Meany Center, Silver Spring MD

Meeting Topic: Wages and Benefits

  Jim Platner

Panel on Health and Pension Benefits in Construction

Randy DeFrehn: Executive Director of the National Coordinating Committee for Multi-Employer Plans (NCCMP)

National Inst. on Retirement Security:  Current Changes in Pension Plans
Beth Almeida

Dealing with Financial Problems in Benefit Funds or,
What Do You Do When All of Your Funds Were Invested with Bernie Madoff?
Richard Sigmond

Using National Compensation Survey Data to Understand Benefits
Stephanie Costo, BLS

Panel on Trends in Construction Wages

Current Trends in Collectively Bargained Wages and Benefits
Construction Labor Research Council Trends Paper
Robert Gasperow, Construction Labor Research Council

Comparing Union and Open Shop Wages Using the CPS 
Cihan Bilginsoy, University of Utah

Using the OES to Understand Occupational Wages
George Stamas, BLS Div. of Employment Standards

New Development in Research on the Open Shop
Allen Smith

Emerald Cities Project
Jeff Grabelsky, BCTD

The High Road to Greater Inclusion in the Construction Industry:
Problems and Prospects
​Todd Swanstrom

This meeting looked at current trends in wages and benefits in construction and the forces affecting those trends. Randy DeFrehn, Executive Director of the National Coordinating Committee for Multi-Employer Plans (NCCMP), led off the first panel with a discussion of the history and current situation of multiemployer plans. A particular issue with multi-employer plans is their weak coverage by Pension Benefit Guarantee. While the maximum payment to participants in single employer plans that have been taken over is about $45,000; multi-employer plan payments are much smaller, around $12,000. This makes the bankruptcy of plans a serious financial blow for participants in such plans. Some of the current issues with underfunding of plans have resulted from ERISA limits on over funding. Plans that become over funded have been compelled to increase benefits, or reduce contributions. This has made the current situation, in which assets have lost considerable value, more financially perilous (no power point)

Beth Almeida of the National Institute on Retirement Security reviewed current work by the Institute comparing the costs and returns on defined benefit and defined contribution plans. A main result is that defined contribution plans are less expensive and generally have superior financial performance (see the power point).

Richard Sigmond is an attorney specializing in employment and benefit law.  The focus of his discussion was about how problems with severe underfunding can be addressed.  The two cases he discussed were due to fraud by investments advisors.  In some cases, it is possible to develop plans that both protect plan participants and the industry.  In another case, in which almost all funds were invested with Bernard Madoff, it is only possible to protect the participating employers from the effects of the collapse of the fund on their joint liability (no power point available).

Stephanie Costo of the BLS discussed using the National Compensation Survey to better understand the structure of benefits in construction and how these related to benefits in the wider economy (see power point).

The wages panel was led by Robert Gasperow, who discussed current trends in construction wages in the union sector.  A key finding is that wages and benefits have not yet reflected the decline in the non-residential construction economy.  Cihan Bilginsoy presented his work comparing union and nonunion construction wages between 1983 and 2004 using CPS data.  A main finding was that the union-non-union wage differential has declined from 50 percent to 25 percent, but the return to workers characteristics in the union sector has risen, largely closing this differential.  The final presenters were George Stamas and Zack Warren of the BLS, Division of Occupational Employment Statistics.  The presentation provided a detailed overview of the OES methods and measures, some suggestions about the limitations of the OES, and possibilities for obtaining more detailed information on the construction trades from the OES.

Allen Smith presented on Benefits Fraud on Prevailing Wage Jobs.  Allen has been working on this issue for five years and has found extension violations of prevailing wage laws, ERISA and the tax code.  One of the more egregious forms is apply prevailing wage benefits payments to fund benefits for open shop workers on non-prevailing wage jobs.  The presentation outlines how to research employers for evidence of fraud in the use of prevailing wage benefit funds.

Todd Swanstrom presented his work on “The High Road to Greater Inclusion in the Construction Industry:  Problems and Prospects”.  In his paper (on the web site), Professor Swanstrom argues for greater inclusion of low income groups in construction training as beneficial to the communities from which these individuals come, and to the trades seeking workers to meet looming demands for additional workers.    Professor Swanstrom has worked with community groups on these issues and had success in using transportation funds to support pre-apprenticeship programs.

Jeff Grabelsky presented on the Emerald Cities project of the BCTD.  This project is both aimed a providing a workforce to weatherize existing structures in cities in the United States and serve as a means for workforce development and providing good jobs to those working in weatherization.  A key is to take advantage of the current flow of funds to weatherization to create a process for broad training for those moving into weatherization and maintaining employment standards for those workers (see powerpoint).