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Research Confirms Merit Shop Economic Impact

BY IEC STAFF

As IEC Executive Director Thayer Long reported in his column in the last issue of IEC Insights magazine: “Working with leading market research and strategy firm Geo Strategy Partners, we confirmed what we felt all along — that the merit shop is powering the United States in a big way.” 

Just how big? Key study findings included: 

  • Merit shop electrical contractors account for over $165 billion in electrical construction put in place annually, out of a total market value of $260 billion. This means more than 60% of all electrical construction is completed by companies like IEC members.  
  • Non-union electrical contracting firms have grown steadily by 2.2% percent since 2017, with over 80% of all electrical contractors proudly calling themselves merit shop.  
  • Merit shop electrical contractors employ over 350,000 electricians, and employment among merit shop companies has grown an astounding 31% in the period between 2017 and 2023 — contrasted to a market share drop in union electricians by 15%.  

“The findings were impressive to say the least,” Thayer says. “While we knew that the merit shop electrical contractors were outperforming union contractors in the commercial and industrial space, the data told an even more powerful story than we anticipated.”  

Our Study 

In the Spring of 2024, IEC National engaged Geo Strategy Partners, a well-known and nationally regarded economic consulting firm, to conduct an in-depth study into the merit shop electrical contracting market. A team of economic analysts was tasked to measure the economic impact of the merit shop electrical contracting industry. Specifically, IEC wanted to obtain empirical data on the number of businesses, electrical workers employed, and revenue generated by the overall electrical contractor sector, and then breakdown both union and merit shop segments.  

Over a period of several months, extensive secondary research of economic and industry data reported by government agencies, associations, and other publications was collected, including data obtained from NECA and IBEW. In addition, quantitative primary research was captured through surveys gaining insights on IEC members and their businesses. Through this research and data modeling, IEC’s economic study measured the size and economic significance of the U.S. merit shop electrical contractor industry, which in turn created key insights on the number of businesses, employment and salaries, and total revenue generated. 

“The data uncovered was fascinating,” Thayer says. “And, with data, we are well positioned to speak loudly and make the merit shop impact known in Washington, D.C. and local governments to impact policy decisions that, unfortunately, have often favored the union shop.” 

  • As of 2023, there are an estimated 64,660 merit shops in the U.S. with a high concentration in the Mountain West region 
  • Even though Greater Texas is the smallest IEC region, it has the highest market share of merit shops at 93% 
  • Merit shops contributed 501,998 jobs to the economy in 2023 with half located in the Mountain West and the Southeast regions 
  • In 2023, there were 95,216 people participating in an electrician apprenticeship in the U.S., with the market almost equally split between union (48%) and non-union (52%) apprentices 
  • IEC had 17,335 active apprentices in 2023, representing a 35% market share within merit shop and 18% of the overall market 
  • Overall, 89% of electrical contractors have less than 20 employees; IEC holds a 3.3% share of the national number of these small contractors 
  • An increase of $1 in the payroll expense means an increase of $3.2 dollars of revenue 
  • IEC contractor members employ an estimated 87,740 electrical workers, representing around 17% of merit shop electrician employment (501,998 in 2023)​ 
  • IEC contractor member companies generate approximately $15 billion in electrical services revenue annually​ 

What’s Next? 

“IEC remains committed to representing the entire merit shop electrical contracting industry,” Thayer continues. “This research study empowers IEC to continue to tell its story and invite not-yet-member firms into the fold to reap the benefits we offer.” 

Thayer acknowledges that this data helps direct IEC’s work around its four identified priorities, or pillars: 

  • Advance workforce development through positioning IEC as a leader within the electrical industry 
  • Grow and instill excellence within the apprenticeship program and professional development 
  • Elevate the impact of government affairs efforts and expand aligned initiatives 
  • Grow membership within existing chapters and launch new chapters 

“This study provides fuel for each of our four pillars, and study results have been shared with the IEC committees and professional staff members driving these efforts,” Thayer says. “It’s empowering for the IEC Membership Committee to know, for example, the large number of merit shops in various regions not yet taking advantage of IEC benefits.” 

As stated earlier, the IEC Government Affairs Committee now has data to confirm the economic impact of the merit shop and insist upon being heard. 

“Similarly, workshop development and education initiatives take on new meaning and become all the more powerful when backed up by data showing the widespread impact of the merit shop,” Thayer concludes. “Knowing that 52% of apprentices out there already are in merit shops and seeing that merit shop employment has been growing while union shop employment has been declining provides incentive to keep growing the IEC Apprenticeship Program and investing efforts in spreading the electrical career message far and wide.” 

IEC members can view the full study here

“I know our members are committed to the merit shop philosophy and have built great businesses because of that commitment,” Thayer concludes. “IEC hopes this study gives members one more reason to believe in and share the merit shop message.” 

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