Wage levels take a hike A revised estimate of U.S. wage and benefit levels in the unionized construction industry predicts that first-year labor agreements in 2006 will increase 4.8 percent, or $1.87 per hour, according to the Construction Labor Research Council. Collectively bargained wages and benefits increased 4.2 percent a year ago, which was also revised upward

Wage levels take a hike
A revised estimate of U.S. wage and benefit levels in the unionized construction industry predicts that first-year labor agreements in 2006 will increase 4.8 percent, or $1.87 per hour, according to the Construction Labor Research Council. Collectively bargained wages and benefits increased 4.2 percent a year ago, which was also revised upward from earlier estimates.

Increases in the first year of contracts, which are typically three years, accounted for the spike in wages and benefits. Second and third year increases were "quite close" to the levels negotiated last year, the CLRC's Robert Gasperow told the Construction Labor Report.

That 4.8 increase amounts to the largest percentage increase in recent years for the unionized building trades. By area, the "East North Central Region," which includes Michigan, has 2006 settlements less than average, at 4.3 percent, or $1.73 per hour for the first year of contracts.


Material costs till plague construction
The building industry is continuing to have a difficult time getting a handle on rising construction material costs.

Earlier this month the Associated General Contractors warned of a 6-8 percent inflation rate for construction materials, with 10 percent hikes possible. Construction segments like highways, that are most dependent on volatile prices for petroleum products, are particularly vulnerable to such price increases.

"Private owners, public agencies that do budgeting and design, and contractors should all be aware that construction materials prices are likely to keep rising at a much faster rate than the three-to-four percent increase in the consumer price index or broad producer price index for finished goods," said AGC's Chief Economist Ken Simonson. "If these increases continue, I'm concerned that the inflation rate for construction materials could be double the rate of overall inflation."

Simonson continued, "The extreme cost increases or volatility of some construction inputs are proving troublesome to contractors because they have been sudden, extreme and unexpected."

For instance, the price of steel soared 50-to-60 percent in the first half of 2004 after years of flat or falling prices. Steel prices declined slightly in late 2004 and most of 2005 but have risen again in 2006. Meanwhile, other metals costs, particularly copper, have jumped even more than steel mill products.

The AGC said two factors make construction vulnerable to above-average cost increases. Contractors are generally locked into fixed quantities of materials, and construction costs are vulnerable to transportation costs and bottlenecks. Unlike consumer electronics makers, for example, contractors cannot generally make a building or a highway smaller or lighter. Contractors also require physical delivery of large quantities of goods to a specific location, in many cases from around the world and any number of influences can drive up delivered costs.

from earlier estimates. Increases in the first year of contracts, which are typically three years, accounted for the spike in wages and benefits. Second and third year increases were "quite close" to the levels negotiated last year, the CLRC's Robert Gasperow told the Construction Labor Report. That 4.8 increase amounts to the largest percentage increase in recent years for the unionized building trades. By area, the "East North Central Region," which includes Michigan, has 2006 settlements less than average, at 4.3 percent, or $1.73 per hour for the first year of contracts. Material costs till plague construction The building industry is continuing to have a difficult time getting a handle on rising construction material costs. Earlier this month the Associated General Contractors warned of a 6-8 percent inflation rate for construction materials, with 10 percent hikes possible. Construction segments like highways, that are most dependent on volatile prices for petroleum products, are particularly vulnerable to such price increases. "Private owners, public agencies that do budgeting and design, and contractors should all be aware that construction materials prices are likely to keep rising at a much faster rate than the three-to-four percent increase in the consumer price index or broad producer price index for finished goods," said AGC's Chief Economist Ken Simonson. "If these increases continue, I'm concerned that the inflation rate for construction materials could be double the rate of overall inflation." Simonson continued, "The extreme cost increases or volatility of some construction inputs are proving troublesome to contractors because they have been sudden, extreme and unexpected." For instance, the price of steel soared 50-to-60 percent in the first half of 2004 after years of flat or falling prices. Steel prices declined slightly in late 2004 and most of 2005 but have risen again in 2006. Meanwhile, other metals costs, particularly copper, have jumped even more than steel mill products. The AGC said two factors make construction vulnerable to above-average cost increases. Contractors are generally locked into fixed quantities of materials, and construction costs are vulnerable to transportation costs and bottlenecks. Unlike consumer electronics makers, for example, contractors cannot generally make a building or a highway smaller or lighter. Contractors also require physical delivery of large quantities of goods to a specific location, in many cases from around the world and any number of influences can drive up delivered costs.