Business: THE SCANDAL OF BUILDING COSTS

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ORGANIZED labor long ago acquired a stranglehold over the $85 billion construction industry. That power has not only led to an astronomic rise in building wages but has also enabled unions to load the nation's largest industry with archaic and inefficient methods of operation. As a result, construction costs are climbing so swiftly that they are complicating Washington's struggles to increase the supply of housing and restrain inflation. Last week George Romney, Secretary of Housing and Urban Development, challenged construction-union leaders to adopt reforms. His candor was greeted with boos, jeers and catcalls.

"I want to help you see yourselves as others see you," Romney told 3,000 delegates at a Washington conference of the A.F.L.-C.I.O. Building Trades Department. Then he reeled off the statistics of construction wage settlements which jumped from an average raise of 12.40 per hour in 1962 to 49.60 per hour last year. The unionists cheered wildly. Next the Secretary admonished them to relax apprenticeship restrictions that deny jobs to Negroes. They booed. When he urged building workers to increase their productivity, they booed again. He advised the unionists to end other practices that raise building costs. More boos.

Reddening but unruffled, Romney continued: "There is nothing more vulnerable than entrenched success. The demand for reform is growing. People are already talking about compulsory arbitration in the building trades."

Lagging Output. Some of the reasons for such talk are obvious. The cost of housing construction jumped by 10% last year, more than the increase in any other item of family living expenses. Home-building costs went up at an annual rate of 12% during March, the latest month for which statistics have been compiled. At the same time, U.S. housing output has fallen seriously behind the nation's needs. Last year the U.S. built just under eight houses and apartments for every 1,000 people compared with 16 per 1,000 during 1950, the peak year. On a per capita basis, U.S. housing output has fallen from world leadership to a level below Western Europe, Japan and Russia.

Widening Gap. Including fringe benefits, the average union construction worker now gets paid $5.91 an hour; in big cities he makes more. Philadelphia carpenters recently won a 23% pay increase, to $6.85 per hour, to be followed by a further 21% raise next year. Omaha roofers will get a 57% increase over the next two years, and Miami laborers will get a 70% boost over three years. The widening gap between wage rates in construction and manufacturing increases the chances of industrial strikes. Last year construction wage settlements were more than 31 times higher than those in oil, trucking and rubber, and five times the increases won by auto and cannery workers.