Detroit Construction Workers hit by Shrinking Benefits

Health tab hits trade workers

Ironworkers and others pay more for medical coverage, face shrinking benefits in retirement.

Sharon Terlep / The Detroit News

Tuesday, December 27, 2005

Ed Hall's body is stiff and battered from two decades spent lifting and hauling the heavy equipment that fills Michigan factories.

In retirement, the 59-year-old former ironworker has counted on first-rate health care benefits to cover his medications, routine checkups and hospital stays at almost no cost to him.

But all that will vanish next month when health coverage provided by his union, Iron Workers Local 25, becomes the latest casualty of health care cutbacks hitting more than 90,000 workers and retirees in Michigan's construction trades.  For ironworkers represented by Local 25, which covers eastern Michigan, retiree benefits will be cut altogether beginning Jan. 1.

"I gave up my body for the business, and here they are years later saying we're not going to pay," said Hall of Detroit, who estimates his health care tab will jump from almost nothing to hundreds of dollars a month.  "They're trying to bail out of their responsibility."

Problems caused by soaring health costs and a sour economy are especially acute in the building trades, where the work force is shrinking fast and most workers retire more than a decade before becoming eligible for Medicare, the federal system that provides health coverage for those older than 65.

Even as unionized workers in Michigan's 14 organized construction trades are putting more of their hourly wages toward health coverage -- in some cases giving up pay increases altogether -- coverage for workers and retirees is slipping.  Co-pays and limits exist where they didn't before, and retirees are being forced to pay more.

Health care benefits are especially valuable to workers in the building trades, union leaders said.  Many develop health problems later in life as a result of the strenuous nature of their work.

Metro Detroit's 900 unionized roofers, for example, pay $7.30 for health care for every hour they work, nearly twice what they were paying a few years ago.  Roofers and other skilled trades workers make between $8 and $33 per hour.

For three years, Metro Detroit's 500 plasterers and cement masons have upped their health fund contributions each year by 50 cents an hour.

And the region's 5,000 electricians will get a $1.90 per hour pay increase next year under their most recent labor contract, but most of the extra cash is expected to go toward a health care plan in which co-pays for prescription drugs and medical care have increased fivefold in recent years.

"We're kind of used to peaks and valleys," said Joe Abdoo of the International Brotherhood of Electrical Workers Local 58.  "But this is the worst valley I've seen in 30 years of working with this local."

>From electricians to bricklayers, workers in the construction trades typically receive their health benefits and pensions through trust funds set up by their trade associations.

The system is funded jointly by workers, through payroll deductions from their hourly wages and by the companies who contract out building work, through contributions to the trust funds.

Today, however, the funds are drying up fast, threatened by a number of factors:

# Construction has slowed along with the state's economy, resulting in workers putting in fewer hours -- as much as 25 percent fewer in some fields.  Since workers contribute to health funds on a per-hour basis, fewer hours means less cash is funneled to the trust funds.

# Like most investments, the workers' health care funds have been hit by declines in the stock market that are eating away at returns.

# At the same time, rising health costs are making benefits more expensive.  The cost of health care in the construction industry has been growing between 10 percent and 20 percent annually depending on the field, according to Davis Langdon and Seah International, a construction consulting firm.

# Adding to the problem, the construction work force is aging and shrinking.  Fifteen years ago, there were 10 workers for each retiree.  Now, the worker-retiree ratio is about 2-to-1.  About 188,000 workers were employed in the construction trades in Michigan in November, compared to about 205,000 in 2000, a decline of more than 8 percent.

"You name it, it's going wrong," said Pat Devlin, secretary-treasurer of the greater Detroit Building Construction Trades Council.  "If nothing is done, all these benefits are going to be in trouble."

Some relief may be on the way in 2006.  Michigan's construction industry should be buoyed by the construction of permanent casinos in Detroit and a flurry of building in the health care industry, Devlin said.

"It's a shot in the arm," said Abdoo of IBEW Local 58.  "At least there's a light at the end of the tunnel."


You can reach Sharon Terlep at (313) 223-4686 or sterlep@detnews.com




"I gave up my body for the business, " says Ed Hall, a retired ironworker who will lose all benefits next month.

Morris Richardson II / The Detroit News