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How unions encourage the cash economy

Pressure from unions push costs up, and workers out, of the legitimate economy.


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December 28, 2011 by Adam

Here’s a letter from a reader in response to a recent CanadianContractor.ca post.

Robert:

We will soon be very much like Greece.

Quebec has a very large underground economy already because everyone legitimate is union or they don’t work. We had a family member move to Quebec for experience and found she could only work if she worked for cash.

Our company is based in Ontario and has been under attack by the carpenters union for over 10 years. They could not get over 50 per cent card signing (A union must be able to sign at least 50 per cent of the employees within a company in order to be certified. Ed.) so they accused us of unfair labour practices and Ontario Labour Relations Board (OLRB) supported them.

Our cost to hire a union carpenter is now $49 per hour, with equipment and O&P (overhead and profit) we need to charge them out at $80 to $90 to make any money. Because of the OLRB decision we no longer hire people from our local community because most have little or no construction experience. Since June 2010 we only manufacture. We do no site work or installation packages in Ontario or Quebec.

Most underground construction work is completed for $20 to $25 per hour. [40K to 50K no tax] and a lot of this underground work is completed for persons belonging to a union. Most small companies close after being forced to become signatory to a union. We had 14 site staff in June 2010. We now have zero site staff. We now assemble or panelize as much as possible to eliminate site labour.

We quoted work for a 800-bed construction camp being set up for hydro dam repairs. The camp ended up being designed and built in China and shipped in sections, about 500 12′ X 40′ units. Quoting the entire camp installation was not even an option for any Canadian companies.

 

The European union now makes nine out of 10 decisions instead of the governments of the countries who joined several years ago. The underground now thrives in these countries.

I don’t expect you to write anything on this because it would politically incorrect.
Jim VanderWal

VanderWall Homes and Commercial Group

Petrolia, Ontario


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12 Comments » for How unions encourage the cash economy
  1. What’s so politically incorrect about stating your opinion? I think you are very close to accurate. It is tough to sell carpentry for $50/hour, I can only imagine trying to sell it for $90.00/hour.

    “China is Eating our Lunch” -Donald Trump

    Someone is pillaging the Canadian and US economies for short term gain. Without an active manufacturing sector… we will be Greece. That’s just my opinion… I agree with you.

    L

  2. Tanya says:

    We need to come up with a Foreign Sales Tax (FST) which would apply to all companies that are Canadian (or American) owned and have products manufactured in other countries (namely China, India, etc) and sold in Canada (or the US). This would deter manufacturing leaving the country. This tax (FST) would not apply to any products manufactured in another country if the company is owned by a foreign company. This way everyone wins, but mainly Canada wins since I don’t see those other countries jumping in to help North America.

    • Robert Koci says:

      Do you know of any countries that have such a tax? Is this something you have heard of before?

      • Tanya says:

        No, this is just something I think should be implemented to save our jobs and our economy. We can not grow being an importing country which is what we have become. In Europe, very few companies make there products in China and send back to their country. They send those “Made in China” products to Canada and the US. Stuff for their countries they make in Europe (one reason why Germany is doing better then most).

  3. Ray says:

    The whole western world has been pillaged by high union wages, which have really undermined the usefullness of unions. Only government workers and union workers can afford these kind of labour costs. As noted by the Caterpillar company this week, they are asking their employees to take a fifty percent wage cut. I think we need more of this approach. I also know the above mentioned workers are some of the least likely to want to pay for services at those prices. They retire at 50 to 60 years old and collect approximately 70 per cent of their wage for life. How can the private world hope to match that? We have no choice but to by products made offshore. We don’t have a manufacturing sector anymore. If you do start a small manufacturing business you will be taxed to death, especially with regard to property taxes. They are completely out of control. We are in a sad state. Compared to the fifties and sixties we don’t look so good.

    As for a foreign sales tax this would be futile because Canadian companies would hide their company names and ownership to side step this tax. We can only win by getting back to work in a low cost environment.
    On the good side most products manufactured in China are getting better and better.

  4. Kevin says:

    The craft unions being under attack for too high a wage is unfair as opposed to public sector unions. In days of old the public union members accepted less pay for more security to work for the government. Now the highest paid, most protected and most lucrative pensions are in public sector. If the tax burden is prohibitive for new manufacturing in this region, doesn’t that say something?

    Who’s pension funds are being bolstered by tax dollars? Not craft unions in the private sector that try to ensure fair wages and standards of living that enable people to raise families comfortably in relation to modern cost of living indicators.

    What caterpillar has proposed is an insult to the families that have poured sweat into the company’s healthy bottom lines. Sure, bring over laid off Walmart employees and have them build locomotive engines for 10 bucks an hour, but is that how high tech manufacturing is going? Can we sustain an economy when we are cutting each others hair for pennies? Do you want to live in a society where we all make minimum wage and are forced to shop at dollar stores? We need a fix to the manufacturing base we have lost. Germany is a prime example that it can be done.

    Can the municipal, provincial and federal governments appropriate all tax breaks afforded companies previously when they pull a move like caterpillar? If not, we are being sold down the river by our own governments. Do they care? Nope, they have their future secured with our taxes. Why would they?

  5. matthew says:

    I worked on the camp you are talking about and what you failed to mention is the general contractor was signatory to the carpenters union therefore had to use a signatory sub contractor to build and manufacture the camp that is why your bid was not chosen. Ontario has a subcontractor clause for unions if 3 union companies bid on a contract for a signatory general contractor they have to use a non subcontractor.

  6. Joe says:

    I have been doing commercial construction for the last 25 years. I have worked throughout Ontario.
    Union malls like Cadillac Fairview only allow union trades to do any construction. I would love to challenge the teachers union lawyers on this script in there leases. This is unconstitutional in the free world.
    Who has the money and resources to fight this monster.

  7. Stupid for working legit says:

    “WE”.. the Contractors know who really is doing most of the underground cash work!! Here it is ………it is all the laid off union workers who work a couple months a year at outrages wages, then collecting unemployment insurance and then going out and doing all $$$ CASH $$$ jobs???!!!!!! And on top of that they butcher those jobs and it reflects back onto the entire trade of true craftsmen. That laid off UNION person would never be accountable, they got there CASH there gone.
    And the Government doesn’t see this???? BLIND EYES

  8. W.....L says:

    I am a carpenter for 18 years , my first few years was non union apprentice , what I learned is if I didn’t join union I cannot raised my family by myself and I have to work until I died without pension . And union company never own me money . That simple !

  9. GC says:

    Somewhere along the way in commercial industrial carpentry somebody is making millions off the backs of hardworking people.
    If not for unions we don’t get a fair slice and the rich get richer. This was a very interesting thread, on the micro scale (ie residential) the wage usually comes down to match the scale of the work. The truth is though the value of the workers time is constantly being decreased by external forces, bureaucrats chiselling away at the bottom line, the guy (or girl) filling out the tender for the job, taxing small business to death, inflation. At the root of all this our time is become worth less and less, with that said $49 an hour security for a family, so what if Mr CEO can’t afford that cottage in the Muskokas.

  10. John says:

    I am a small contractor in a mechanical field. Recently my company was unionized without a vote, just stolen away from me in the middle of the night. My employees were skilled tradesmen, made good money and were given a ton of perks they couldn’t get anywhere else. When the Application to Certify was allowed by the OLRB, all my guys quit and went off to other companies, and that didn’t matter. Now two office staff, and three people who didn’t want to join a union but were never asked or given the option will be out of a job, plus two other people who share a building with us because we won’t be able to split the rent.

    My company works in a sector that is traditionally non union, so I am now completely noncompetitive from a price point. I guess I could go after work at inflated prices for the various levels of government in this province, but I would just feel dirty. I don’t actually have an issue with unions, but in Ontario the way things are currently working, the unions run the show. It is dirty, sneaky, underhanded, unconstitutional in my opinion, and just a mess. I have to restrain myself from going on a potty-mouthed tirade. Just a joke.