The Laborers’ International Union of North America, a union of mostly commercial construction workers that claims about 500,000 members in the United States and Canada, has been anything but quiet about the U.S. housing market downturn that has devastated the residential building industry.

LIUNA is kicking some major home builders when they are down — the group has openly attacked management practices, including executive compensation, and has released a report that details the contributions of the corporate home building industry to the nation’s mortgage crisis.

The Laborers’ International Union of North America, a union of mostly commercial construction workers that claims about 500,000 members in the United States and Canada, has been anything but quiet about the U.S. housing market downturn that has devastated the residential building industry.

LIUNA is kicking some major home builders when they are down — the group has openly attacked management practices, including executive compensation, and has released a report that details the contributions of the corporate home building industry to the nation’s mortgage crisis.

The union has submitted dozens of filings with the U.S. Securities and Exchange Commission, too, in an effort to force big builders and financial companies to disclose more information about mortgage investments.

A financial stake

Its interests are obvious: the union has numerous pension funds that have been impacted by the housing market downturn, problems in the mortgage and credit markets have the potential to wreak havoc across the entire construction industry, and the group is seeking to grow its membership in the residential sector.

Meanwhile, some large publicly traded builders have been reporting quarterly losses in the hundreds of millions of dollars, and builders have dumped land, abandoned hard-hit markets, laid off workers, dropped home prices and increased incentives in an effort to survive the troubled times.

The outlook for builders is still decidedly grim. The latest economic forecast by the National Association of Realtors, released this week, projects that new-home sales will drop 25.7 percent this year compared to 2007, following a 26.3 percent year-over-year decline last year and an 18.1 percent drop in 2006. And new single-family home starts are expected to fall 34.2 percent this year compared to last year.

‘Pigs at the Trough’

The union has launched a "Pigs at the Trough" tour to publicize its campaign against corporate builders’ practices and to draw attention to federal legislation that would extend tax benefits to builders that have suffered net operating losses in recent years.

LIUNA representatives have donned pig costumes and carried banners as a part of this campaign — the latest scheduled stop was Tuesday at builder Lennar Corp.’s annual meeting in Miami.

The union’s Central Laborers Pension Fund presented a proposal to require that senior executive pay at the company be linked to job performance.

Last month, the union sent representatives to attend builder Toll Brothers’ shareholders meeting in Horsham, Pa., and called for fellow shareholders to withhold votes for the reelection of company chairman and CEO Robert Toll and to reject its proposed CEO bonus plan.

"The efforts at Toll Brothers are part of LIUNA’s ongoing work to restore confidence and accountability to the mortgage industry and housing market," the group announced.

Jacob Hay, a spokesman for the laborers group, said that most workers in the home-building industry are not union workers, and that LIUNA tries "to look out for every construction workers’ interests," whether or not they are represented by the group.

The union has several reasons to be concerned about the state of the residential construction market, Hay said. LIUNA has pension funds that could be impacted by the residential downturn, he said, and there are worries that troubles in the residential industry will destabilize the entire construction industry.

Pension plans that have invested in home building companies are "really taking a hit," Hay said.

"Job losses in residential are now spilling over into commercial construction," he said, and the group estimates that over 350,000 jobs have been lost in the construction industry during this downturn.

A drive to organize

Also, LIUNA is looking to expand its membership, and it views non-union residential laborers as allies and potential new members.

Residential laborers, he said, "don’t have someone that can help them express their voice, and we are always looking for new areas of organizing. Union workers have been in decline. In the last couple of years this union has rededicated its focus toward organizing."

LIUNA membership had been as high as 700,000 about a decade ago, Hay said.

During the group’s conference in September 2006, the group’s general president, Terence M. O’Sullivan, announced that LIUNA would spend about $104 million per year toward organizing.

"The increased funding would be married to organizing strategies regionally and nationally to help organize hundreds of thousands of non-union workers in the union’s core sectors of building and heavy and highway construction," the group announced at that time.

"The union has also committed to a comprehensive organizing effort in the residential construction industry, in which virtually all workers currently have no union."

Lobbying efforts

In its report released last month, "A Multi-Billion Dollar Bailout for Those at Fault: Corporate Homebuilders, the Housing Crash and the Mortgage Crisis," LIUNA calls attention to provisions of the Foreclosure Prevention Act, proposed federal legislation that would offer tax relief to builders for losses during the housing downturn.

The legislation would extend the period for which home builders can apply excess net operating losses to tax returns from prior profitable years to four years — current law provides for two years. For example, builders that suffer losses in 2008 and 2009 would be able to apply this "carryback" provision back to 2004 and 2005 if this legislation is ultimately approved.

"What is clear is that the handout to home builders will cost billions of dollars and makes up a third to a half of the (total) cost of the Foreclosure Prevention Act," according to LIUNA’s report.

In a separate announcement, LIUNA estimates that the tax benefits could total $573 million for Lennar, $607 million for D.R. Horton and $598 million for Pulte Homes. "Other corporate home builders, such as Centex, NVR, KB Home, Toll Brothers, Ryland, MDC, Beazer and Standard Pacific, stand to gain over $100 million as well," LIUNA charges.

The National Association of Home Builders, which has a membership of about 235,000, has been supportive of provisions of the legislation.

In an April 7 article in NAHB’s official online publication, Nation’s Building News, the builders’ trade group states that its "intensive long-term lobbying efforts paid dividends" with the proposed Foreclosure Prevention Act, and noted the "carryback" tax benefits for builders.

NAHB officials refused to offer any comment for this article about LIUNA and the group’s actions targeting builders. NAHB officials also did not offer any estimates on job losses in the construction industry.

But the April 7 article in the NAHB publication notes that NAHB did send a letter to Senate leaders about the Foreclosure Prevention Act to refute "accusations by the Laborers International Union of North America that the net operating loss carryback provision was a bailout for the housing industry."

NAHB’s letter sought "to rebut point-by-point every allegation made in the LIUNA document," the article states.

Home builders have been quiet about LIUNA’s efforts. Builders contacted by Inman News — including KB Home, Toll Brothers and Lennar — offered no comment about the group or its actions.

Mixed messages for unions

Mike Rabourn, a member of the New England Regional Council of Carpenters who wrote a research paper titled "Organized Labor in Residential Construction," said the challenged housing market is a mixed bag for labor unions that represent construction-industry workers.

There were some serious organizing drives planned for residential construction workers toward the peak of the housing boom, though those large-scale efforts haven’t materialized.

Unions may get more traction with construction workers during an economic downturn, "when everyone is struggling" and "it could be to (workers’) advantage to have national builders somewhat weakened" if they are organizing, he said.

On the flip side, builders have a "larger pool of unemployed workers to pick from" and workers may be more fearful of rocking the boat in times of economic uncertainty, Rabourn said.

Locally and regionally, there have been some successful drives to organize residential construction workers. Rabourn’s report details local union organizing efforts in Phoenix and Las Vegas, including LIUNA’s creation of a local union in the Las Vegas market "that will focus primarily on residential organizing."

For unions, ‘the future is residential’

Also, LIUNA has engaged in some outreach to the immigrant laborer community.

In August 2006, LIUNA announced that it was working with the National Day Laborer Organizing Network "to help California residential construction workers organize to improve their lives," and stated that thousands of workers "routinely face hazardous working conditions, substandard pay and job insecurity despite a booming construction market. Few of those workers, most of them recent immigrants, have an organized voice to deal with issues."

Rabourn’s report states that the introduction of "large numbers of foreign-born workers into construction has been accompanied by the rise of informal employment practices and an underground, cash economy to the labor market."

Some have suggested that hiring practices in the residential construction industry may mask the labor statistics. Jerry Nickelsburg, an economist for the Anderson Forecast at University of California, Los Angeles, stated in a report last year that construction industry statistics may overlook job losses because of the presence of undocumented workers.

And his report cites an estimate by the Pew Hispanic Institute that perhaps 12 percent to 20 percent of the undocumented workers living in the United States are employed in the construction industry, while another source estimates that immigrant labor represents 30 percent to 50 percent of the total construction workforce.

Home builders are well aware of the presence and prevalence of immigrant laborers in the work force, and NAHB has protested restrictions on immigration that would impact builders.

LIUNA and other union groups may find benefits in forging stronger bonds with immigrant laborers, according to Rabourn’s report. "One of the first issues unions faced when looking at organizing workers in residential construction, or in many cases nonunion construction in general, were the new demographics of the labor force. Unions needed to make their organizations more open and appealing to Hispanic and immigrant workers."

The report notes that unionization in the construction industry has generally been on the decline, though construction labor unions are definitely ramping up their organizing efforts.

"If unions are to expand substantially in construction, they will have to begin to tame the residential market. As one union official phrased it, ‘the future is residential,’" Rabourn states in the report.

Decline and restructuring

In 1970, an estimated 50 percent or more of all construction workers were union members and 80 percent of every dollar spent in construction was spent on union projects. Today, union labor in the construction industry represents about 15 percent of the total workforce, he said.

Besides membership challenges, LIUNA has faced other historical challenges, too — the union survived the threat of a U.S. Department of Justice complaint in 1994 that alleged domination and influence of the union by members and associates of organized crime.

"LIUNA has been infiltrated at all levels by corrupt individuals and organized crime figures who have exploited their control and influence over the union for personal gain and to the detriment of the union," according to the draft complaint, and the union engaged in a reform program the following year in an effort to root out these problems and avoid direct government control of the union.

Construction labor unions have redoubled their organizing efforts in modern times, Rabourn said.

LIUNA left the AFL-CIO union in 2006 to join a labor federation called Change to Win that includes the Teamsters, Service Employees International Union, United Farm Workers of America and others — together they represent about 6 million workers.


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