Labor Cost Trends in 2025: What CLRC’s Settlements Data Means for Contractors

Labor Cost Trends in 2025: What CLRC’s Settlements Data Means for Contractors[00:00:00] Welcome to Talk the Tauc from the Association of Union Constructors. In this podcast, we explore the latest labor trends, industry insights, and important issues in the world of construction. Join us for conversations with industry leaders, subject matter experts, and innovative visionaries as we discuss how we are building the world of tomorrow. Talk the Tauc presented by the Association of Union Constructors. [00:00:25] Kirk: Today, we're joined by Carey Peters from the Construction Labor Research Council to break down the newly released 2025 year-end settlements report. CLRC tracks total package increases for union craft workers across the country, including wages, health and welfare, retirement, apprenticeship, and other contributions. [00:00:43] And this data gives contractors one of the clearest signals of where labor costs are heading. The headline this year, first year settlements averaged 4.7% in 2025, holding steady at the highest level we've seen in recent years. Carey, thanks for joining us. [00:00:58] Carey: Good to be with you. [00:00:59] Kirk: Well, so I know it's not your first rodeo and you've been through this before, but it's now just a matter of tradition.Since we last talked, what's the song that's been stuck in your head? I can't remember what I said last time, but it was probably something to do with Pink Floyd. I'm not going there, dates me a little bit, even though it is the number one band of all time. I'm sure you and all your listeners agree with that. I'm not a Disney guy either, but I was there last week. I don't know, some Disney song, I guess. [00:01:26] Kirk: It's amazing the number of people like one of my favorite podcasts was a while back and it was, a bunch of rough and tumble construction guys and two of the three of them were what we said Sophia the first because they had young daughters. And I was like, yeah, so they're out there walking the beams humming, humming Sophia the first. There's something so wholesome about that. [00:01:47] Carey: That's wholesome. They're being good dads. [00:01:51] Kirk: We're here to talk about the settlements reports. And I assume that most people that are listening know what the settlement reports are. But for those who don't talk to me about what the settlement reports are and why they exist and why they're useful. [00:02:03] Carey: Well, I mean, as you know, this is the biggest, best and baddest database of union craft wage rates in the US. If you want to know what's going on with union construction workers, we got it. We collect settlements from all over the United States, we get them from locals sometimes, more so we get them from various management associations. We have 13 management associations that help sponsor CLRC, including tauc, thank you. [00:02:35] And their members all throughout the US, their regional associations are usually quite familiar with us and they provide us with their settlements. We pop those into our database. We stir it around a little bit, create averages and data cuts. And then we produce this report quarterly. [00:02:52] Kirk: And just being thorough because different words can mean different things to different people. By settlements in this context, you mean? [00:02:59] Carey: We mean multi-employer negotiated agreements. The employers, as an example, let's take Peoria, maybe the union electrical contractors could be a member of the NECA chapter there. That NECA chapter then would have a labor agreement for those union electrical employers in Peoria and the agreement between those multiple employers and the local. And they have that contract, they provide that to us along with their wage data. That's an example. We do that a thousand times over throughout the US for all the different trades and all the different cities. [00:03:38] Kirk: And just before we kick into it, just from a logistical standpoint, thousands of times you release this report once a quarter. I mean, the second you're done with it, do you just kind of start over?That seems like a heavy lift. [00:03:50] Carey: It is. It's hungry. I tell them our database is hungry. We are feeding it constantly throughout the year. It's most hungry in June, July, and August because that's when most settlements, about 75% of them come due in those months, June, July, and August. That's when it gets fed the most. But yeah, throughout the year, not every day, but often during the year, we are popping new data into that database.We create new analysis and then four times a year we produce a report. [00:04:24] Kirk: Okay. I don't want to say the comb, but this is the one before the one.This settlement report is the quarter one. Isn't the big, big one is going to be the next one? [00:04:35] Carey: Actually the one, I think the one we'll talk about is the 2025 year end. Yes, so that we're only, a little, I guess we're two month and a half, two months after that. But this is the one that reflects everything that happened in 2025. We can give you a good feel for what happened. [00:04:53] Kirk: Let's talk top line summary. What happened with settlements in 2025? [00:04:57] Carey: Well, it was the same as the two prior years. And that's a pretty high number. In other words, the average US settlement was 4.7% in 25, 24 and 23. We've kind of flattened out there and that's all crafts throughout the US. That's a lot higher though, Kirk, than it was just a few years earlier. It really, if people look at right there, exhibit one on our settlements report just a few years ago, we were at an average increase of 2.8%.The contractors are paying about 1.9% more now than they did just a few years ago on an annual basis. [00:05:38] Kirk: Again, just in the purpose of just translating to kind of a more of a corporate awareness, that basically means the standard wage increase across all crafts across globally, by nation, we're looking at a roughly a 5.5% increase, 4.7% increase three years in a row. [00:05:55] Carey: Yes. Also to carry your point forward a little more. In 25 that averaged out, we do these on an hourly basis because that's how almost all of them are paid $3.12 an hour was the 2025 average increase. [00:06:13] Kirk: That doesn't sound like a lot. But when you remember that a lot of these guys working in the 60, 70, 80, 90 hour week, I'd be like that, that can be a significant impact to the average paycheck. [00:06:22] Carey: It can certainly boost the paycheck of the employees. And certainly if a contractor has 100 or 1000 employees that hits their bottom line as well. It affects both parties, certainly. That's a lot. If you go back just a few years, you know, contractors were looking at $1.63 per hour and now it's $3.12. [00:06:44] Kirk: Yeah, I mean, that's, it's a big jump. [00:06:47] Carey: Yeah, it's a big jump, you know, for contractors. I mean, wages always go up, but they're just going up a little faster than they used to. They had a long time, a decade where they just, from nine until 22, over a decade, they just went up a little bit a tenth or so a year. And then after COVID, I think it's due to this high inflation that we had recently, the acceleration of increases popped up quite a bit. [00:07:15] Kirk: I was just going to ask about that, you know, do we have any kind of prevailing theories? I mean, we had, we had the pandemic, we have higher inflation, we have different presidencies, we have any ideas of what would be the driving factors, is that it? [00:07:28] Carey: You can't prove causation for sure, but I can make an educated guess, or maybe for me, it's just an uneducated guess, Kirk, okay, but I'll still guess, how about that? Inflation. Two other big things have happened in our world in the last decade, a worker shortage, we hear about that a lot, but even with that news out there all the time, we didn't see that drive union craft wages up at an accelerated rate. [00:07:57] When COVID hit, we saw the wages didn't go down, it's just that they didn't accelerate as quickly, the increases were a little smaller, but COVID actually drove that down a little bit and then wow, we had kind of a rebound here and we're gonna blame that on that inflation back in 2022. [00:08:14] Kirk: Yeah, so I'm looking at it, mother Google, I just Googled just kind of the year over year and obviously we have 8% inflation in 2022 and the settlements are three year long agreements, two year long agreements. [00:08:27] Carey: That's a good point to talk about. Most of them are three years, very few are one or two years, and a few are more. I've seen them as long as, either nine or 10 years, which seems a little, a little outrageous to me, but somebody wanted that, but almost most of them are three years. Let's say you settled, you negotiated in 2021 and back then three, maybe three and a half percent was the going rate. [00:08:53] And so you negotiated that. For the next three years, you're paying, let's say three and a half in the middle of that contract, you have 8% inflation. Now in that contract comes due three years later in 2022, 25 and inflation may have subsided since then, but the parties, particularly the unions in that instance may say we kind of missed this cost of living increase. [00:09:20] Even though inflation may have subsided three years later, you may still see elevated to some extent settlements to sort of catch up as unions may have felt they fell behind the curve. That's a possible theory out there. [00:09:35] Kirk: Sure. Hear that theory and again, neither of us is an economist per se, but you're a much more astute numbers guy, just looking at the year over year since 22, we have a 3.4, a 2.9, a 2.4 for someone that negotiated in 2022 before the, the should hit the fan, if you will, three years later would be 2025 and we're talking the end of the end of year 2025. Would you anticipate is there, is there a reason to believe that as we go into 2026, 2027, those might settle and drop a little bit back down to the 3%? [00:10:08] Carey: That's a perceptive question. How should I say that? I wouldn't be surprised. Okay. [00:10:14] Kirk: Sure. [00:10:15] Carey: The question, and I think they will, I don't know if it'll be in 26 or maybe 27, there might be kind of a delayed reaction, but I think they might fall back. The other question a little bit would be, have we created a bit of a new normal, right? Not that 4.7 is normal, but maybe it's something between where we're at now and then 1.7 we were at in 2010, right? Time will tell. [00:10:43] Kirk: But we've established a new, we've established a new baseline and now there's an expectation. [00:10:48] Carey: I mean, potentially, potentially, potentially. But I think I anticipate them falling down to some extent, whether or not they go all the way back to 1.7 is to be seen, but probably somewhat. But I think anyone that tries to predict the future, and I know economists love to do it, so do weatherman, by the way. If your job title ends in ist and you predict the future, I just don't have a lot of, including myself, but my job title doesn't end in an ist, but I'm just not that confident in predicting the future because I've seen people not be that good at it. I don't go too far out in the land trying to predict the future. [00:11:26] Kirk: It makes absolute sense. We talked, big picture, 4.7 nationally, edge-to-edge, all crafts, all regions. Were there any numbers that surprised you? Is Seattle super high in Ohio, super low? I picked two names from a hat, was there any surprising numbers? [00:11:43] Carey: Well, interesting. You picked Seattle. I believe that's in the northwest part of the country. Is our geography right on that? [00:11:49] Kirk: I'm pretty sure last I checked. [00:11:51] Carey: I think you peeked behind the curtain and you're not letting on. But anyway, yeah, that was the highest, that region, the northwest, so it's going to include Alaska, Oregon, and Washington, and of course, Seattle would be the big city there. That had the highest average, and we've seen that for a couple of years now. Their average is 5.4. It's a bit above our national average. Out there, you're averaging 5, 5.5%. [00:12:18] The other thing that's surprised me the last few years is the northeast. The northeast is a union, it's a union of stronghold, right? You got your Boston’s and your New York’s and places like that. But their increases as percentages, and we're talking percentages now. We can shift to the actual dollar amounts in a second, was the lowest at 4.3. And sometimes we think the denser the union presence is in an area, the more favorable the union increases will be, because they're just more popular there. [00:12:53] And that could be true in the northwest, unions are fairly prevalent there. But in the northeast, they're also prevalent, but we see the smallest increases as a percentage in the northeast. [00:13:02] Kirk: Interesting. [00:13:03] Carey: Yeah, that is interesting. [00:13:04] Kirk: That is relatively fascinating. What about, I mean, that's region for region, are any particular trades showing higher settlements than others? [00:13:12] Carey: Well, in 25, the highest one was plumbers and fitters, they averaged 5.6. And last year, they were one of the highest also at 5.8. We are seeing that need for welding and also the other skills that they have. We've got them at the higher end. And we've got, yeah, that's probably all I'll say about the different trades there. Electricians is always interesting. We had them at 4.9 last year. Just a little above the national average, getting close to the national average. But yeah, we had, for the last two years, plumbers and fitters were toward the higher end. [00:13:52] Kiek: What about a little lower? [00:13:54] Carey: Well, and if we, I was going to say, if we also look, I was talking about percentages. I like to look at the percentages, but I know contractors and union workers, they probably want to look at the dollar amount, right? The plumbers and fitters also in a monetary sense had the highest increase last year at $4.22. They've got some of the higher packages. [00:14:14] When they get the higher percentage, they get the higher dollar amount. When you look at just the dollar amount, the laborers were toward the bottom. We would kind of expect that because it's not as much of a skilled trade and they're just, their actual pay rates are going to be a little bit less than some of the skilled trades. To see laborers and rifters also on the dollar amount were a little bit lower, but still both of those were well over two bucks an hour in 25. [00:14:39] Kirk: And I can make, then again, you know, maybe not to an individual person's paycheck, but when you talk about a contractor that has a hundred or a thousand contractors across dozens or hundreds of jobs across a region, that's a big number. [00:14:54] Carey: It can add up. It sure can. [00:14:56] Ad: Want to get your company message in front of the top leaders in union construction? Place an ad on Talk the Tauc. Our listeners are owners, contractors, and labor leaders who shape the future of our industry. It's a direct way to reach a powerful, engaged audience and show your support for union construction. Learn more about advertising opportunities at tauc.org. [00:15:15] Kirk: I know we just talked about how you don't really like, you know, to tell the future per se, but we're going in, we have a very uneconomically speaking word, a very interesting time in our country with everything from terrorists to there's lots of, there's lots of change in movement, anything that you dare think we will expect in this big June report? [00:15:37] Carey: I don't think it'll be higher than 4.7 or if it is, it'll be a small amount, but it could be lower as we talked a little bit ago. Maybe the range would be from, let's say we're at 4.7 now, maybe from a 4.3 to a 4.8. That gives us a five point range, but I, I think we'll still see the average probably over four, but maybe dropping a little bit on that. [00:16:00] Kirk: In your report, for those there's something, you know, we, you published this quarterly report and that includes kind of a craft by region matrix that gets very granular that gets down into the absolute nitty gritty to the penny, to the craft, to the region. If I'm a contractor, how can I use that strategically? Obviously, you know, we can't tell the future, but what is, what is a strategic use case for that level of granularity? [00:16:25] Carey: One of the biggest factors in what an increase will be is where you're located. And I think a close second, but probably second is what craft you're in. In other words, those two together are going to be big factors in how much that increase is, but sometimes people go into their bargaining and they don't have any numbers. How would you know where to start? [00:16:47] And if you have some kind of a benchmark, like CLRC's records, at least both parties are looking at the same picture and it gives them maybe a background for their own particular negotiations with their craft or crafts in their part of the country. It's just a nice reference tool and we make this available. We are fortunate and part of our mission at CLRC is to make this available to, to anyone who wants it at no cost. [00:17:17] It's funded through people like tauc indirectly because of our partnership with you and with many other associations. And through those partnerships, then we forge ahead with, as I said, the biggest, best and baddest database in the US on union graph rates. It's just a good resource for people to look at and use. I want to make just a real clarifying comment. [00:17:38] We publish, I said this quarterly, the settlements report is what we're talking about and it only focuses on percent and monetary increases. One of those quarters, which will be next quarter, publishes the actual wage rates, because we haven't talked about that here today, but once a year, we're going to tell you what is the national average in the East North Central region for union crafts or what is the national average for plumbers and pipe fitters. [00:18:08] We'll have that in that report and we do that once a year. Heads up, that's coming out next. The national average, this is about a year old now. We'll be updating it. Last year, it was $68.16 for the total package. That will be wages, retirement contributions, health and welfare contributions, apprentice, all of the employer payments, but not FICA and not insurance. That's 68.16. The highest region was the Southwest Pacific, characterized in large part by California, 78.17. The lowest was the South, even $50. [00:18:49] Kirk: That's a really big $28 disparity between Alabama and Southern California. [00:18:55] Carey: Yeah, that's a good way to say it. I mean, the union density, and I live here in the South, it's just less. It's less in Alabama and Georgia and Mississippi, Florida even, than it's going to be in California, Washington, Indiana. When you have a more dense union area, you tend to get the higher union rates. [00:19:20] Kirk: Is any of that. I used to live in Southern California. Is any of that cost of living variable? Because Southern California is a lot more expensive than Central Mississippi. [00:19:28] Carey: I think so. I'm not going to make this argument, but you can certainly argue to some extent that $78 in California is about the same as $50 an hour in Mississippi. [00:19:42] Kirk: No, you really could make that argument, actually. I remember just the quickest of anecdotes. In 2009, I moved from Los Angeles to Orlando. And I paid, at the time, $1,500 a month in Los Angeles. Got me a two-bedroom, two-bathroom, 1,000-square-foot apartment in the valley. About 35, 40 minutes away from anything. I then moved to Orlando where I got a two-bedroom, two-bathroom, 1,800-square-foot townhouse on a lake for $700 a month. [00:20:10] My rent got cut in half for twice of the place. It was just mind-blowing to me. I had two small children at the time, and I moved across the country. My rent got cut in half for twice the place. It was amazing to me. [00:20:23] Carey: Kirk, I can see we're making a numbers guy out of you right now in real time. See that? See how that works for you? [00:20:30] Kirk: That’s what I'm talking about, how we can use these reports to think strategically and make meaningful decisions as contractors. If I'm moving in my giant board of projects and people and prevailing wages, trying to see what information we need to know. [00:20:48] Carey: We give presentations from time to time, and I recently did one in Orlando, of all places. That's where I went to Disney. I mean, it's a work pleasure trip, right? [00:20:56] Kirk: Sure, it is. [00:20:57] Carey: I took a look at inflation, like we talked, up to 8% in 2022, and then I took a look at the materials that contractors buy. Believe it or not, you may have heard of the Prooser Price Index, PPI, and they can aggregate all kinds of different commodities into a mutual fund. Your mutual fund has lots of stocks. They take all these commodities, maybe cement and lumber and diesel fuel and pipe fittings and all that, and they can make these aggregate indexes. [00:21:28] I said, "Well, how much did those go up?" Well, they went up like 25% in 2022 and 23. That creates this conundrum for contractors and employees. When they come to the bargaining table, you have employees, rightly so, who say, "Wow, inflation was 8% in 2022, and it was pretty bad in '21 and '23 also." And a contractor says, "Yep, I see it. And by the way, my commodities that I need to buy to build this building or this bridge or to maintain this power plant went up 22%." [00:22:08] You have this competing interest between the expenses that management and owners are having and the employees, and it's kind of a conundrum. I call it the contractor's cost conundrum. When they go to the bargaining table, this is something that they have to realize we are more or less on the same team, and we have to find a fair wage for the employees and for the contractors when we have some competing economic interests. This is quite a conundrum out there that I know for the last couple of years bargaining sessions have encountered. [00:22:44] Kirk: We have two more questions, and then I'll let you go. The first is there's a lot of data, and like you said, there are a lot of confounding variables. There's some conundrums, there's things that are hard to think, but what are some common misinterpretations that you see contractors take and go, "Oh, I see this number. It must mean X, Y." Is there a common mistake that you see? [00:23:04] Carey: I think maybe both on this conundrum, both parties, both labor and management, to spend a little more time understanding each other's economic challenges because both have it. Employees have it, contractors have it. I think a greater desire and actual effort to wear each other's shoes, so to speak, would really help because in the end, all of the labor and management negotiations will come to a number, an economic increase for the employees. [00:23:37] And along the way, can the parties find a way to maintain a good relationship by understanding each other and putting an emphasis on the process as well as that final outcome. [00:23:49] Kirk: Awesome. Then my last question, we've kind of danced around and I've asked a little bit, but so if you're talking to a contractor today, if someone sees the settlements report, which by the way, will be available both on this podcast and on the talk website, if you're advising a contractor today, what would you tell them to plan for over the next 24 months? No future telling, but just, "Hey, this is what you should be kind of ready for as you're going into these settlements." [00:24:12] Carey: Yeah, be ready to listen to your labor partners to understand their perspective. Be ready to share some objective data from your standpoint as well, and probably be ready for an increase, a fair increase that might have been a little larger than it was last time. [00:24:30] Kirk: That's awesome. Carey, I really enjoy our talks. Again, I'm not a numbers guy, but it paints a really cool picture to get to see all the things and what's going on with all of these settlements. They really do give a lot of insight into what's going on in the world. [00:24:43] Carey: Well, we are here to help. We appreciate tauc. You guys have been great supporters of CLRC. We're hoping we can return the favor just a little bit with our settlements report and a podcast. Thank you. [00:24:55] Kirk: Awesome. Well, again, to anyone listening, it is going to be available both in this podcast, in the notes here, as well as on our website, and thank you so much for your time. [00:25:04] Carey: Okay. Thank you. [00:25:06] Kirk: I'm Carey Peters from the Construction Labor Research Council, discussing the 2025 year-end settlements report.For leaders responsible for bidding, budgeting, and long-term workforce strategy, these trends directly affect competitiveness and project margins. If you want to stay ahead of labor cost trends and union construction, this is the data you need to understand. It's available in the show notes of this podcast, as well as on our website. Thank you so much for listening to Talk the Tauc.