Suppose I operate a nonunion construction company with 20 employees. I pay my roofers $25 per hour plus I match their 401k contributions 50 cents for each dollar my employees contribute up to 6% of their gross pay. I provide no health insurance and under Obamacare I won't have to because I have fewer than 50 employees. Assume that all 20 of my employees work 40 hours and contribute the full 6% to their 401k's. My weekly labor costs are 20 employees X 40 hours X $25 = $20,000 plus $20,000 X .03 = $600 for total labor costs of $20,600.
Suppose further that you operate a union construction company with 20 employees whom you also pay $25 per hour but instead of a 401k you must contribute $3 for each employee hour worked to a union pension fund. That would be 40 hours X $3 X 20 employees for a total of $2400 plus the $20,000 wages for a total labor cost of $22,400. I have a small competitive advantage over you but nevertheless an advantage.
Now comes the kicker. You must contribute another $4 per hour for each employee to a health care plan run by the employees' union while I insist that my employees buy their own health care on a state run exchange but through the wonders of Obamacare depending on family size my employees are eligible for a annual subsidy to offset the cost of the policy and again by virtue of Obamacare my employees will have an insurance plan that is at least equal to your employees' plan. If my employees press me I'll give them another dollar on the hour to help with their health insurance. If they press me really hard I'll make it $2. I can afford it!
Admittedly, the $4 figure I used in the example is just a guess. It would mean that the union insurance plan would be providing insurance to the worker and his family for $8320 per year which strikes me as a little on the cheap side. The point is your labor cost is not just a bit higher than mine. It's a bunch. My weekly labor cost are $20,600 and yours are $25,600 or a little better than 24%.
This back of the envelope calculation illustrates the reasoning behind the United Union of Roofers, Waterproofers and Allied Workers call for the repeal of Obamacare. I wrote a post about that earlier this week. The union leadership now must go to its membership and tell them that to remain competitive with nonunion workers they must either give up their union health insurance or be prepared to take a massive wage cut or there is very apt to be little work for union roofers. Should the membership refuse the number union contractors will dwindle until there are none. Note Bene United Union Roofers et al every time you trust the government you get screwed.