The Effect of Prevailing Wage Repeals on Construction Income and Benefits

Posted by National Alliance for Fair Contracting on

Feb. 2018

Journal of Public Works Management and Policy

Ari Fenn, Zhi Li, Gabriel Pleites, Chimedlkham Zorigtbaatar and Peter Philips – University of Utah

While considerable research has examined the effects of prevailing wage law repeals on construction wages, little has been done on the repeals effect on benefits. Based on state-level data from the quinquennial Economic Census for construction from 1972 to 2012, we find that depending on sample and model specification, statewide annual average construction blue-collar income fell by 1.9% to 4.2%. Statewide annual average legally required benefits (social security, workers injury-compensation insurance, and unemployment insurance contributions) for blue- and white-collar construction employees combined fell from 3.8% to 10.1%. Statewide annual average voluntary benefits (primarily health insurance, pension contributions, and apprenticeship training) for blue- and white-collar construction employees combined fell from 11.2% to 16.0%. Because prevailing wage laws govern only blue-collar construction remuneration, blue-collar benefits probably fell more than blue- and white-collar benefits taken together.

(Download Full PDF Here)

Ensuring Government Spending Creates Decent Jobs for Workers

Posted by National Alliance for Fair Contracting on

By Karla Walter
Posted on January 29, 2018, 9:53 am

The federal government spends more than $1 trillion every year though contracts, grants, and other funding vehicles to deliver essential goods and services. It funds everything from the design and manufacture of sophisticated weapons systems to the construction of roads, bridges, and dams; from in-home care for aging Americans and those with disabilities to financial assistance programs that allow veterans and working families to access higher education. This spending creates tens of millions of jobs throughout the economy.

American policymakers have long harnessed the power of this spending by requiring recipients to create decent jobs. Yet today, these protections cover less than half of all spending, and too often, even the jobs covered by existing protections pay poverty wages.
Moreover, some anti-worker lawmakers are threatening to dismantle even these standards.

Job quality standards should apply to all taxpayer-supported work regardless of whether it is financed through federal contracts, grants, loans, or even tax incentives. Policymakers who care about workers must defend existing job protections from attacks and fight to strengthen policies to ensure that all government spending creates good jobs.

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PLAs good for construction industry

Posted by National Alliance for Fair Contracting on

KIMBERLY GLASSMAN
MARCH 5, 2018

On Feb. 12, an op-ed in the HBJ (“State must end project labor agreements”) by the Connecticut chapter of the Associated Builders and Contractors presented an over-simplified and inaccurate description of project labor agreements.

A project labor agreement, or PLA, is a pre-hire agreement that sets construction project employment terms. They’re often used on complex projects that require the services of multiple contractors and subcontractors over a sustained period of time. PLAs are a common procurement method for the state of Connecticut, municipalities and private developers.

The Associated Builders and Contractors (ABC) likes to tout their membership numbers. However, they represent only 1 percent of construction companies in the United States. According to the National Labor College, a meager 22,260 apprentices were enrolled in ABC programs, compared to over 420,000 apprentices enrolled in union-funded programs.

Though we appreciate ABC’s attempt to paint the use of PLAs as a partisan issue by invoking Gov. Malloy’s decision to utilize the agreements, they fail to disclose other elected leaders’ use of them. Republican Mayor Mark Boughton recently signed a PLA for Danbury High School. Former Republican Mayor John Harkins signed PLAs for both the Victoria Soto Elementary School and Stratford High School. And former Gov. John Rowland signed a historic PLA on Adriaen’s Landing in Hartford.

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US Department of Labor Wage and Hour Division Prevailing Wage Seminars

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DESCRIPTION

The Wage and Hour Division (WHD) Prevailing Wage Seminars are three-day compliance trainings designed for regional stakeholders (private contractors, state agencies, unions, federal agencies and workers).

The first two days of the seminar will consist of either courses on the Davis-Bacon Act or the Service Contract Act. The third day will feature courses concerning the Executive Orders and subject matter related to both the Davis-Bacon Act and the Service Contract Act as well as presentations from other agencies such as OSHA, Office of Federal Contract Compliance Programs (OFCCP), Housing and Urban Development (HUD), National Labor Relations Board (NLRB)

We have selected the following locations for our 2018 seminars:

If you would like to receive email updates about our seminars, please sign up for our mailing list here. (In the category “Wage and Hour” select “WHD – Prevailing Wage Seminar Announcements”)

For any questions please contact WHD-PWS@dol.gov

(Visit DOL’s WHD Website)

Oregon House OKs construction worker wage protection

Posted by National Alliance for Fair Contracting on

Contractor would have to pay under some conditions

By: KTVZ.COM news sources
Posted: Feb 26, 2018 01:30 PM PST
Updated: Feb 26, 2018 01:33 PM PST

SALEM, Ore. – The Oregon House on Monday narrowly passed House Bill 4154B, which would provide construction workers with additional wage theft protections, under certain circumstances.

The legislation, championed by Rep. Julie Fahey (D-West Eugene, Junction City, Bethel), would require a general contractor to pay the wages or benefits owed to a worker by a delinquent subcontractor if a specific set of conditions is met, according to a news release from Oregon House Democrats.

“The goal of this bill is to protect wages for workers in the construction industry by adding accountability for general contractors in certain specific situations,” Rep. Faheysaid. “When workers aren’t paid what they have earned, it hurts workers and their families. It also hurts our local economies and reduces tax revenue.”

…

This legislation would create a new process through which the construction workers employed by subcontractors would be able to claim unpaid wages.

(Read More)

San Jose ballot measure would force real estate developers to hire local

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By MARISA KENDALL
PUBLISHED: February 6, 2018 at 6:00 am | UPDATED: February 6, 2018 at 6:07 am

SAN JOSE – As Silicon Valley’s housing market booms, benefiting homeowners, landlords and developers, some activists say one group isn’t reaping its fair share of the profits: the local construction workers building these expensive homes.

A new ballot measure for San Jose seeks to change that. If approved by voters in November, the “Build Better San Jose” initiative would require developers of large, private projects to hire more local workers, and pay them better.

“Workers are not paid enough to be able to afford to live in the area,” said Louise Auerhahn, director of economic and workforce policy for public policy group Working Partnerships USA, which helped draft the measure.

Responsible Development San Jose, a coalition that supports local construction workers, is set to send the initiative to city officials Tuesday, the first step to putting it before voters in November. Once it is approved by the city, it will need 21,200 signatures to make it to the ballot.

If passed by voters, the measure would require developers in San Jose to pay workers the “prevailing wage” – a payment standard set by the California Department of Industrial Relations that varies depending on a worker’s location and specific type of work.

As of last year, the prevailing wage for construction workers classified as “laborers” in Northern California ranged from about $20 to $33 per hour. Developers also would have to put forth a “best faith effort” to hire locally for at least 30 percent of a project’s hours, hiring workers who live in San Jose or within 50 miles of the city’s limits. And developers would be required to help train new local workers by using one hour of apprentice labor for every five hours worked by an experienced worker.

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A warning for Missouri: Repealing the prevailing wage on construction jobs hurts workers and the economy

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BY MARC POULOS
Special to The Star
February 20, 2018 08:30 PM

Out of all the dubious and downright absurd ideas that some state politicians have been trying to sell taxpayers in recent years, one stands out above the rest: the suggestion that the cost of building schools, highways and other critical infrastructure could be trimmed by 20 percent by eliminating the local minimum wage – or prevailing wage – on government-funded construction projects.

Setting aside the political lunacy of essentially advocating middle-class wage cuts during an era of stagnation and rising inequality, what makes this canard especially ridiculous is that construction labor represents only a little over 20 percent of the total cost of building these projects – and it’s declining.

But that didn’t stop politicians in Indiana, Wisconsin, West Virginia and Kentucky from throwing caution and basic math to the wind. Beginning with Indiana in 2015, all four states have now repealed their prevailing wage laws. Other states, including Michigan and Missouri, are now considering following suit.

New research out of Indiana is providing even more reasons why they shouldn’t.

The Midwest Economic Policy Institute and Colorado State University-Pueblo Economist Kevin Duncan have just completed the first impact study analyzing what has happened since repeal in the Hoosier State.

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Study finds Indiana common construction wage repeal reduced worker pay, didn’t save money on public works projects

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By Dan Carden
Jan 29, 2018

INDIANAPOLIS – When Gov. Mike Pence signed the 2015 repeal of Indiana’s common construction wage statute, the Republican proclaimed that eliminating county minimum pay rates for public works projects would save the state and local governments money without reducing the paychecks of Hoosier workers.

“Wages on public projects should be set by the marketplace and not by government bureaucracy,” Pence said at the time.

“By repealing the common construction wage, our state is putting hardworking taxpayers first, lessening the burden on cash-strapped local governments and schools, and opening doors of opportunity for small businesses across our state.”

Three years later, the first in-depth, non-partisan analysis of the impact of Indiana’s common construction wage repeal suggests that Pence was wrong.

The Midwest Economic Policy Institute, in a report provided exclusively to The Times, determined that following common wage repeal Hoosiers working in the construction industry are earning less than they were before, with no meaningful cost savings for Indiana taxpayers.

Worker pay, productivity decline

The institute used U.S. Department of Labor statistics for the four quarters preceding repeal of Indiana’s common wage, also known as the prevailing wage, and the four quarters after to determine how the policy enacted by the Republican-controlled General Assembly affected 10 market outcomes.

The study found that construction wages fell in Indiana by an average of 8.5 percent following repeal of the common construction wage, with the lowest-paid workers seeing their paychecks drop by 15 percent.

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(See Full PDF of Study)

EDITORIAL: Construction wage repeal needs review

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The Times Editorial Board
Jan 30, 2018

From acts of Congress to local government ordinances, lawmakers from all levels should be willing to put their codified policies to the test.

In that vein, the Indiana Legislature should push for an empirical review of the General Assembly’s 2015 repeal of the common construction wage statute.

Whether the law remains off Indiana’s books or put back on, the decision should be made on statistical evidence and hard data, not political ideologies.

In a recent report provided to The Times, the Midwest Economic Policy Institute concluded that following the common wage repeal, Hoosier construction workers earned less than they did before, with no meaningful cost savings for Indiana taxpayers.
The law had been seen by proponents as a sort of guaranteed minimum wage for construction workers.

Opponents of the ultimately repealed law, including former Gov. Mike Pence, argued eliminating the county minimum pay rates for public works projects would save the state and local government agencies money without reducing construction workers’ paychecks. Drawing on U.S. Department of Labor statistics for the four quarters before and after the law was repealed, the institute concluded Hoosier construction wages fell by an average of 8.5 percent after the repeal.

The lowest-paid workers saw their paychecks fall by an average of 15 percent, according to the institute.

Construction wages in neighboring Illinois, Michigan and Ohio, meanwhile, grew a combined 2.8 percent.

The institute also reported the repeal didn’t contribute to more competition for public works projects, among other findings, and thus didn’t lead to measurable savings.

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Guest Column: Protect prevailing wage to save jobs

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By Kevin Hertel, Special to Digital First Media
POSTED: 01/30/18, 3:35 PM EST

Michigan’s prevailing wage laws have helped mitigate the effects of this misguided perception. Passage of prevailing wage laws proved that we have had the good sense to make sure that the people who build our schools and office buildings, keep our air conditioners working in the summer and furnaces working in the winter, and come out to unplug our drains at all hours of the day and night will always earn a living wage. This law stands not just to serve as a “minimum wage for tradespeople,” it also protects small contracting businesses. Since everyone is competing at the same baseline pay scale, top tradespeople are not immediately drawn to a company that is able to pay them more than a mom-and-pop contractor. Prevailing wages, then, are simply wages that help all workers in the construction industry earn a fair day’s pay for a fair day’s work.

The bottom line is this: Michigan is a manufacturing state. Our economy cannot exist, let alone continue its upward trend, if we pull the financial rug out from underneath skilled trade workers and leave no benefits to working in the trades. Every legislator I know would say that Career and Technical Education is the key to a successful state-many have worked to ensure that their centers for it are state of the art, as is Macomb County’s. However, if prevailing wage is repealed, this push will have been for nothing-no one is willing to go through that much training and certification to end up making $9.25 an hour. Repealing prevailing wage puts the future of our state at risk.

Democrat Kevin Hertel is a state representative from St. Clair Shores.

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