In the construction industry, one person's ceiling is often another person's floor. Construction contractors and some government officials are beginning to worry that this principle may apply to anti-inflation guidelines as well as high-rise apartment houses.
The ceiling in this case is President Carter's 7 percent anti-inflation guideline for wage and benefit increases this year.
Adherence to the guideline would mean a substantial cutback in increases for many industrial unions that have been winning 8-to-10 percent increases in recent years. But it would mean a gain for construction unions in most of the country, whose average increases have been hovering around 6 percent since the mid-1970s.
Construction industry observers say the guidelines alone are unlikely to have much effect on construction contract settlements. More important, they say, are economic imperatives within the highly localized, fragmented industry, principally restraints imposed by the pell-mell growth of nonunion competition.
But the psychological effect of the guidelines on union expectations, coupled with labor shortages that undercut the cost-restraining effect of competition, could start pushing up the overall level of construction wage settlements. And this is what some experts see coming as the industry prepares for this year's biggest round of bargaining in April and May.
"Right now, I think they [he set-lements] will come in at at least 7 percent... and in some areas 7 percent may look low," said one government official who was recently predicting a settlement average of little more than 6 percent.
An additional concern is that, with construction wages and benefits totaling an average of more than $13 an hour and going as high as $18 or $19 in some cases, a 7 percent increase would amount to $1 or more for many workers -- with ripple effects through other sectors of the economy where $1 may account for considerably more than 7 percent.
Moreover, although 1979 is a relatively light bargaining year for construction, high settlements this year "could cause chaos in 1980 because there would be a catch-up argument" by the larger number of union locals bargaining in that year, warns Dennis Bradshaw, president of Contractors Mutual Association, a Washington-based research group for unionized contractors.
The first contracts negotiated thus far, only a dozen or so out of 1,600 due in 1979, have averaged nearly 9 percent, but government and industry officials agree these contracts are no-where near enough to establish a trend. What they do see is increasing signs that unions, whose members have been conditioned to think of 7 percent as the government's prescription for wage increases, may capitalize on tight labor markets in the Ohio Valley and elsewhere to win higher settlements.
"While bargaining in 1979 is lightest in a decade, those agreements up for negotiations are concentrated in a few areas," said the Contractors Mutual Association in a recent publication. "Moreover, the heaviest concentration of contract negotiations will take place in areas with high employment levels or manpower shortages, and extraordinarily high manpower demand is anticipated in 1979 and several years beyond."
The association also noted that the 7 percent guideline "when applied to an industry with a three-year history of average settlements of 7 percent or less simply adds to the anticipation of workers."
The Associated General Contractors, an industry association representing 8,000 union and nonunion firms, has also expressed fears that the 7 percent guideline will become a floor for construction settlements and called on the Carter administration to clarify what it expects from the construction industry.
Robert Georgine, president of the AFL-CIO's Building and Construction Trades Department, figures the unions already have gotten the message: 7 percent. "It's a safe bet that, with the kind of publicity the 7 percent has gotten and the kind of inflation we have, people are going to think they should get 7 percent," said Georgine.
"Our experience has been that, once you set a ceiling, it eventually becomes a floor."