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Running Your Business

Updated: July 8th, 2008 05:26 PM EDT

Union or Non-Union?

Ron Roberts

I often get asked whether a contractor should unionize or not. I always respond with three questions:

"Which market are you planning to serve?"

"Which trade are you talking about?"

"How thoroughly do unions dominate your area?"

The point of my questions is this: Can you be competitive if you are unionized?

Your chosen market plays a huge role in your decision.

Governments typically require contractors to pay union-level wages on government-funded projects. Being unionized actually gives you a cost advantage as the average union worker is more productive that the average non-union worker (that's my personal experience anyway).

Commercial developers rarely show preference to union contractors. Since non-union shops' primary competitive advantage is low cost, they have a leg up when chasing small and light commercial work.

If you are doing mostly residential work, unionizing will probably price you out of the market. Case in point, how many home owners are willing to pay an extra $30 an hour for the benefit of using union workers? Few. Very few.

If you operate in a city that is heavily union, the talent pool of non-union craftsman will be small. You may need to unionize just to find enough skilled people to do your work.

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