It’s funny how things work. Everyone is watching Boston Mayor Marty Walsh like a hawk to see if the longtime labor boss opens the coffers to the city’s powerful police and fire unions.
Yet the first big test of Walsh’s mettle as mayor may actually not come from the public employee unions, but from the Boston-area construction unions he used to lead.
Just a few miles south, Quincy officials are battling to save a promising, $1.6 billion revamp threatened by a major escalation in construction costs.
Somewhat more costly union labor, combined with a sudden shortage of union hard hats, is driving the cost escalation that is threatening to derail this landmark project. Quincy Mayor Tom Koch blames the spike in costs on a range of factors, including but not solely limited to labor.
“We signed this (project agreement) three and a half years ago,” Koch noted. “The market was a little different. It is really going crazy in the Boston area.”
And there’s little chance of what is happening in Quincy staying in Quincy, with spiraling costs that have helped swamp the much-touted remake of the City of Presidents a preview of things to come as billions upon billions in big new projects move forward in Boston.
“What we have been seeing across the board on all union projects are increases that range from 7 to 9 percent,” one top Boston area construction consultant told me.
Similar Challenges
Brace yourself, for we are likely to see a repeat this year, with another 5 or 6 percent jump, according to the construction consultant.
And this cost surge is likely to hit Boston’s much bigger development market in much the same way it has wreaked havoc in Quincy.
Now Quincy is not Boston and Boston is not Quincy, with the Hub about five to six times bigger.
That said, both are at heart blue collar, lunch bucket cities, where union support runs strong.
And in Quincy, like Boston, all major projects – and lots of minor ones too – are built with union labor, with open shop contractors likely to get run out of town by city officials.
There is no big culprit to blame in Quincy, but rather a confluence of factors, arguably exacerbated by the strict reliance on union labor.
The problem facing Quincy’s big redevelopment project is not just that union wages are higher, which they are. Nor is it just wage increases, which, while they have gone up 2 or 3 percent a year, are modest compared to what public sector unions are grabbing.
But when you mix in what has suddenly become a very tight labor market in the construction trades, the costs start to mount.
Gone are the grim, Great Recession days when the jobless rate for workers in the construction trades topped 30 percent, and thank God for that.
Still, as the development market heats up across Massachusetts, and especially inside I-495, the labor market has gone from slack to taut.
And in Quincy, where the only option is union labor all the way, contractors are struggling to find the workers they need to get the job done.
Moreover, even when builders are able to find enough live bodies at their local union halls, these aren’t the recession-hardened workers of a few years ago.
What kind of difference are we talking about? Basically, it can mean an hour’s less work getting done each day compared to a seasoned, motivated worker.
We are talking a 12 percent hit in efficiency, with contractors winding up having to hire more hardhats to get the same job done.
And what’s happened in Quincy is likely to be replicated in Boston, just on a larger scale.
“As the workforce gets busier the cream of the crop of the trades starts to get diluted by the rank and file,” the consultant said. “The average production per man day declines. You have to put more total hours in a project. It’s very noticeable in construction.”
New Mayor On The Hot Seat
In fact, the warning signs are already there. Spooked by rising construction costs, some investors are looking hard at whether they are going to put money into Boston development projects, according to the consultant, who specializes in pegging the cost of big jobs.
Meanwhile, to cope with rising costs, developers are pushing prices to the limit. Just look at the sudden explosion in high-priced rental towers sporting $3,000-a-month studios and $11,000-a-month penthouses.
Beyond the super luxury façade, downtown Boston tower owners are scrambling to fill empty units, offering free rent and other incentives amid warnings that rents have been pushed too far.
And other big projects – including a $1 billion-plus expansion of the Boston Convention & Exhibition Center, are warming up on the runaway. The convention hall was almost shutdown in mid-construction back in 2001 during a previous construction price increase.
Don’t bet against history pulling a nasty repeat here.
All of this leaves Walsh, Boston’s new mayor and former secretary-treasurer of the Boston Metropolitan District Building Trades Council, in a very awkward spot indeed.
It’s going to be hard enough as it is for Walsh to push back against the hyper-aggressive firefighters union, which resorted to hooliganism (picketing is too nice a word) in an unsuccessful attempt to intimidate Mayor Thomas M. Menino during his annual state of the city address.
However, it’s going to be a lot harder for Walsh to stand up to what amounts to his own flesh and blood – the construction trades.
The idea of opening Boston to nonunion construction firms – which would at least broaden the labor pool – is a no go.
So what’s left for Walsh to do? He has some options, but none are easy.
He could try and restrain wage increases that might kill projects – after all, what good is a proposed tower if it doesn’t get built? No jobs there.
Walsh could also encourage local trade unions to embrace some of the factory-style, modular construction now being used in the multibillion-dollar Atlantic Yards project in Brooklyn to shave costs.
That’s going to be an even tougher sell given it involves a dramatic restructuring how work is done. That’s never particularly popular, whether you work for a construction contractor or an insurance agency.
So Boston’s new mayor has his work cut out for him, to say the least. If he truly wants to show that he’s his own man, he’s going to have to risk angering some of his old buddies.
If not, then the debacle in Quincy Center is just a warmup for things to come.
Scott Van Voorhis can be reached at sbvanvoorhis@hotmail.com.
