Philadelphia Business Journal Editor: Philadelphia should follow NYC's open shop example

When we start talking about the pursuit of big economic development projects, Philadelphia's businesspeople will often talk frankly about our challenges — things like onerous statutory regulations, wage and net income taxes and pockets of extreme poverty.

But, it's important to note, other cities have their own challenges, and most of them don't have more than 100 universities, a top-notch transit network or a downtown loaded with permanent residents. One subject remains mostly taboo among our business advocates, though, and it's perplexing. We rarely here of any effort to break up the union hegemony in the city's construction industry. When we do, it's whispered — as if it's a secret that Philadelphia's construction costs are high because we're not an "open shop" town.

Enlarge

Builder worker with pneumatic hammer drill equipment breaking asphalt at construction…

Hate to break it to you, Philadelphia, but it's no secret. The city's costs are undeniably higher than other locales that have a healthy market competition between union and nonunion contractors and subcontractors. BuildingJournal.com offers a real-time comparison of building costs in U.S. cities. I did a search for the per-square-foot cost of the general trades for a 200,000-square-foot office building, and the results were unsurprising. We're about 20 percent more expensive than Atlanta and 15 percent more expensive than Denver, Baltimore and Washington.

The most expensive place to build in the world, New York City, has now effectively become an open shop in response to rising costs. The Commercial Observer, a New York real estate publication, noted in a June article: "Thirty years ago, it would be unfathomable for big projects by huge construction companies to be subcontracted to nonunion firms. But, today, landlords and developers are pushing for even greater expansion of the open-shop concept."

Construction unions haven't disappeared in New York as a result, although they've been weakened. Rightfully, construction union officials have long argued that their members have excellent training in skills and safety, but the nonunion contractors are catching up.

"Nonunion construction has steadily increased in recent years ... because union contractors and trade organizations have refused to take steps to become more competitive, while their nonunion counterparts have become much more skilled," Real Estate Board of New York President John Banks told the Commercial Observer.

The debate, of course, rages on. But what's conspicuously absent in New York is an implicit threat of violence or sabotage if nonunion contractors are used. In Philadelphia in 2015, members of Philadelphia Ironworkers Local 401 were sent to prison for a campaign of "violence, sabotage and intimidation" during the construction of a Quaker Meeting House in Chestnut Hill.

We're now down the road a couple years and Philadelphia construction is still exclusively union. Only ideological purists would want to see the unions disappear from the local landscape. They do serve a community and, in most cases, do it well. But I would bet most people who run private businesses in our city would support more competition in the building trades.

The business community — starting with the Chamber of Commerce for Greater Philadelphia — needs to stand up and strongly support open shop in Philadelphia. The rest of us need to support developers and contractors who are willing to open up projects to nonunion subcontractors. They need us to have their backs if they're going to change the business culture.

Hey, you know what they say in New York: If you can do it there, you can do it anywhere.

Craig Ey is the Editor-in-Chief of the Philadelphia Business Journal.

Source: Philadelphia Business Journal