Union workers see only part of big hourly markups at Convention Center

Whether the bulletproof-vested attendees at the Convention Center's National Homeland Security Conference last week knew it or not, their organization was paying $152.25 an hour per union rigger - the workers who set up heavy convention equipment.

But how much were the riggers earning?

They made $35.11 an hour - $59.70 with health insurance, pension, and union dues rolled in. On wages only, the $152.25 rate represents a quadruple-plus markup. On the total package, it's 2.5 times.

So who made money on the labor markups?

And what significance do the markups, which are applied to all union work done at the center, have at a time when city tourism officials are touting cost-saving changes in how the union workforce operates in the Convention Center?

The markups - charged by middleman companies, called decorators, that coordinate labor and other aspects of conventions - are standard industry practice, executives in the convention business say.

Standard practice or not, "these layers of costs create an impression of higher labor costs," said John Dougherty, business manager of Local 98 of the International Brotherhood of Electrical Workers.

Dougherty and Edward Coryell, leader of Local 8 of the Metropolitan Regional Council of Carpenters, don't agree on much, but they agree on that.

Coryell accuses Dougherty of engineering his union's ouster from the Convention Center earlier this month.

But, like Dougherty, Coryell says union carpenters in particular, and union labor in general, are "scapegoats," blamed for costs they didn't incur.

Union carpenters no longer work at the center, but when the Homeland Security Conference was being planned, they were still part of the workforce. Exhibitors would have been billed $130.20 per hour per carpenter and $195.30 per hour for work done after 4:30 p.m.

But what were the carpenters making? $39.90 an hour, $66.64 with benefits rolled in and, very likely, no weekday overtime.

Under Convention Center rules, the first eight weekdays hours on the job, whenever they occur, are at a straight rate.

Exhibitors would be billed at an overtime rate, but workers would not get overtime pay.

The overtime issue is particularly galling to the unions. "We were told it would reduce costs," and attract business, "so we agreed to it," Coryell said.

Some variety of markups apply to all the other unions at the center - stagehands, laborers, and electricians.

"Everybody marks everything up. Everybody focuses [on] 'Oh it's the union's fault,' " said Ira Rosen, assistant professor at Temple University's School of Tourism and Hospitality Management and a convention producer in Philadelphia and elsewhere.

"I do think the end-user believes [the worker] is taking home $170, $160 an hour," he said. "And they are thinking, 'This is crazy. I don't pay my doctor $170 an hour.' "

After an association figures out which elements it wants in its convention, it puts the convention specs out for bid.

The decorators respond, giving a price for arranging stages to be erected, organizing booth space for exhibitors, setting up registration desks, renting furniture, assembling computer and other telecom services, and managing all aspects of the show.

At the Homeland Securities convention, the decorating company was Vista Convention Services Inc. of Pleasantville, N.J.

Some decorating companies are local businesses. Others are global enterprises. The markups, their executives say, are standard industry practice, akin to the markup on the mechanic's labor at the local car-repair shop.

"It's labor plus a huge amount of other costs and a thin profit margin on top of that," said Aaron Bludworth, chief executive of Fern Exposition & Event Services Co., an Ohio decorating company that has run many conventions in Philadelphia, including the National Urban League's conference last July.

For example, an association may run multiple shows around the nation, shipping crates of exhibits to each show. If crates arrive early, they are stored in an off-site warehouse, then trucked to the convention center. Warehouse and truck rentals are built into the labor markup.

It may take a year for a decorating company to organize every aspect of a show. For perspective, consider how long it takes to create a relatively simple function - a wedding. All that planning is also part of the markup, organizers say.

Markups vary by city, reflecting local conditions.

In Chicago, for example, markups are higher in the winter because of expenses associated with snow and ice storms, said Larry Arnaudet, executive director of the Exhibition Services and Contractors Association, a trade group for decorators.

In Philadelphia, higher markups helped offset costs from having nonworking union supervisors on the convention floor, Arnaudet said. Under a new customer satisfaction agreement approved earlier in the month, those supervisors must also work.

The labor markups didn't come as a surprise to Fred Bowditch, the meeting planner for the 1,400 attendee Homeland Security Conference and the person who oversaw Vista's work as the conference's decorating company.

"It was not a shock to us," Bowditch said. "The prices are very comparable to every other [city] we've been in."

Vista's president, Kevin J. King, declined to comment on the markups.

Whether the markup system is fair or sufficiently transparent is another consideration - and one the unions would like the Convention Center's management to take up.

"I would like to see more transparency and as much cooperation from the decorators as we have in the labor market," said IBEW's Dougherty.

Gregory Fox, the lawyer who chairs the Pennsylvania Convention Center Authority board, said a better understanding of decorator billing practices was next on the board's agenda.

"I've heard the union concerns about this," he said. "These onerous markups may not be what they seem to be on paper."

Fox said the center has improved its management and work rules, with the aim of turning the center into a more cost-effective place to hold a convention. If the union workforce can set up and dismantle the conventions more quickly, costs will decline, Fox said.

"We want to make sure," Fox said, that "the customers are getting the cost savings generated" by the changes.

Source: Philly.com