February 6, 2024
From Socialist Revolution

Workers are being crushed right now by the high cost of living. Yet every time we demand livable wages, the bosses insist they can’t afford it. But as Trotsky noted in The Transitional Program, we should never take the bosses at their word. Instead, the workers should demand the employers open the books and show exactly where the money is going.

What would we find if we could inspect the accounts for ourselves? As it happens, I work for a general contractor in New York City and have access to my employer’s books. I can tell you that if my coworkers saw how much value they generate for the bosses—and how little of it goes to their wages—it would spark an immediate riot in the company yard.

Leon Trotsky
Trotsky noted in The Transitional Program that workers should demand the employers open the books and show exactly where the money is going. / Image: public domain

For context, my job involves coordinating among the different subcontracted trades on the construction site, managing the project budget and schedule, developing site logistics plans, and maintaining site safety, all on behalf of the client who is either a private developer, a hospital, school, or the government.

The company compiles data from previous projects to determine how many workers will be needed for a particular jobsite. The bosses use this to create cost projections based on the project schedule, along with the anticipated bill to the client per month. What they didn’t realize is that they were inadvertently spotlighting just how much each worker is exploited.

On average, the data reveals that, as a portion of what the client gets billed, the labor of each worker generates $35,000 in value every month. The bosses use this metric to determine that, for example, if a job is anticipated to bill the client $7 million in a given month, it should have 200 workers on site each day, on average. But each of those workers receives only a fraction of that value in take-home pay—nowhere near $35k a month!

So where does all this money go? I decided to dig a little deeper by doing a case study of a union concrete subcontractor’s monthly expenses.

A concrete subcontractor employs lathers, laborers, and carpenters on site to frame the deck, install metal reinforcement, and pour the concrete. These workers’ salaries trend towards the average across all unionized building trades. In this case study, we are building a high-rise concrete building with each floor requiring approximately 400 cubic yards of concrete. To pour a floor this size every three days requires approximately 50 concrete laborers, 40 lathers, and 40 carpenters on site each day.

In addition to labor expenses, the concrete subcontractor will have material expenses for the cost of concrete and rebar, truck rentals, crane and lift rentals, etc. Currently, the cost of 5,000 PSI concrete is approximately $260 per cubic yard, a lump sum cost which includes the cost of concrete, rebar, and trucking. A tower crane rental is around $100,000 per month, and we’ll assume another $40,000 for miscellaneous monthly rental costs of shanties, lifts, scaffolding, etc.

The company compiles data from previous projects, inadvertently spotlighting just how much each worker is exploited. / Image: MTA Construction and Development, Flickr

Referring to Table 1, the concrete subcontractor’s cost per month will amount to nearly $3.55 million. But with an average workforce of 130 workers per day, at $35,000 per worker per month, we would expect them to bill $4.55 million. That’s an additional $1 million in the concrete subcontractor’s pocket!

Let’s break down that $1 million margin. A typical building trades subcontractor’s overhead is around two times their profit—i.e., two parts overhead per one part profit. This means that approximately $330,000 out of the $1 million would be profit for the subcontractor, while the remaining $660,000 covers their overhead costs, including office expenses and salaries for management and executives. On top of this, the general contractor also collects a monthly fee equal to 2.75% of the overall cost of the work—in this case, another $113,000. This means that in total, the bosses pocket $443,000 in pure profit each month.

If these profits were distributed among the workers on the concrete deck—whose labor generates all this wealth to begin with—it would add up to an additional $41,000 per worker per year. That’s without even touching the bloated executive salaries or any of the current overhead costs. Consider this the next time you hear an employer complain that they can’t afford to give workers a raise! These figures could be replicated across all industries. Just imagine if the labor unions took this data into account when making demands of the bosses, instead of rolling over subserviently each time the employers claim they can’t afford to give concessions!

You’ll also notice that the “fully loaded rate” spent on each worker includes general liability, worker’s compensation, and umbrella insurance. That’s half a million dollars spent on insurance alone each month. On top of that, the general contractor is required to pay 3.5% of the cost to their insurer. That means $700,000 straight to the abyss of private insurance. This is the illogical nature of capitalism! Under socialism, the workers’ state would be the insurer, democratically managed by the working class, and this cost would be freed for better use under a planned economy.

We live under a system in which a concrete laborer wakes up at the crack of dawn to commute two hours to Manhattan, works eight hours exposed to the elements shoveling concrete, and gets home to spend a token amount of time with the family before collapsing in bed for the day. He may admire his hard work when the building he worked on for over a year becomes an icon on the New York City skyline, but he will never be properly compensated for his labor under capitalism. Meanwhile, the capitalist parasites, the C-suite executives, and private developers pocket the wealth produced by others for their vacation homes and yachts.

The building trades are full of workers who are recognizing their exploitative conditions. / Image: Daniel Mekis, Wikimedia Commons

We recently received the following message through socialistrevolution.org from someone looking to get involved in the fight for revolution:

I am a construction worker who can’t afford to attend the schools and hospitals I build. I want the full value of what I build to belong to the 99% instead of the profit-driven capitalists. I wish to disrupt the current hierarchy of power. That is why I study communism and wish to take more action.

Comrade, you’re not alone! The building trades are full of young workers who are recognizing their exploitative conditions for what they are, and looking to organize and take action. Armed with a Marxist perspective, we are building communist cells at workplaces and job sites across the country!

There is a tradition in construction of hosting a “topping-out” ceremony when the superstructure of a building is complete. During this ceremony, the American flag is hoisted to the top of the building—a fitting symbol for celebrating a system that sucks the life out of millions of workers each day. But another world is possible, and it’s waiting to be born. I look forward to the day when we proudly fly the red flag at a topping-out ceremony, when the workers are at last justly compensated for the incredible feat they’ve collectively accomplished!

Source: Socialistrevolution.org