NEW STUDY: Prevailing Wage Laws Close Income Gaps for African Americans in Construction

Posted by National Alliance for Fair Contracting on

FEBRUARY 28, 2018
PUBLISHED BY – Frank Manzo IV

Prevailing wage laws reduce income inequality between African-American and white construction workers by as much as 53% and help more blue-collar workers reach the middle class, according to new research by the Illinois Economic Policy Institute (ILEPI) and University of Illinois at Urbana-Champaign’s Project for Middle Class Renewal.

“While prior research has concluded that there is no relationship between prevailing wage laws and the racial composition of the construction workforce, the data clearly shows that these laws help eliminate income disparities between black and white construction workers,” said study co-author and University of Illinois Professor Robert Bruno. “African Americans employed as laborers, plumbers, pipefitters, electricians, and heavy equipment operators see the largest gains.”

Utilizing publicly-available data from the American Community Survey, the study examined construction worker earnings by race and trade, comparing the results between states with prevailing wage laws and those without. Overall, the researchers found that prevailing wage laws lift the incomes of African American construction workers by an average of 24%, and close the income gap with white workers from 26% to just 12%.

A more advanced analysis controlling for other observable factors found that states which currently do not have a prevailing wage law could reduce income inequality for African-American construction workers by at least 7% if they implemented one.

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Illinois House Testimonies on the Consequences of Repealing Prevailing Wage

Posted by National Alliance for Fair Contracting on

MARCH 1, 2018
PUBLISHED BY – Frank Manzo IV

On Tuesday, February 27, the Labor and Commerce Committee in the Illinois House held a hearing titled “Impacts of Repealing the Prevailing Wage.” Frank Manzo IV, MPP, Policy Director of the Illinois Economic Policy Institute (ILEPI); Robert Bruno, Ph.D., Director of the Project for Middle Class Renewal at the University of Illinois; and Kevin Duncan, Ph.D., Professor of Economics at Colorado State University-Pueblo submitted testimonies.

Good afternoon, Mr. Chairman and Members of the Committee. My name is Frank Manzo IV. I am the Policy Director of the Illinois Economic Policy Institute, a nonprofit research organization that provides candid and dynamic analyses on major subjects affecting the economies of Illinois and the Midwest- specializing in the construction industry.

Economic research finds that repeal of state prevailing wage laws decreases construction worker incomes and reduces apprenticeship training. For example, a peer-reviewed study published within the past week found that blue-collar construction income and benefits fell by between 4 and 11 percent in states that repealed their prevailing wage laws since the 1970s. Another analysis of nine states that repealed their prevailing wage laws since the 1970s found that repeal was associated with a 40 percent decrease in training.

Workers are better trained in states with prevailing wage, so they complete public projects more efficiently. The preponderance of economic research finds that prevailing wage does not affect construction costs. Since 2000, there have been 11 peer-reviewed studies that used regression analysis to examine the effect of prevailing wage on school construction costs. Ten of these studies, or 91 percent, find no statistical impact on the cost of school projects. Repealing prevailing wage does not reduce costs for taxpayers.

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My name is Robert Bruno and I am a Professor of Labor and Employment Relations in the School of Labor and Employment Relations at the University of Illinois. I also serve as Director of the Labor Education Program and Director of the Project for Middle Class Renewal.

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The Illinois Prevailing Wage Act levels the playing field for all contractors by ensuring that state and local expenditures maintain and reflect local area standards for wages and benefits.

Prevailing wage is a partial solution to a problem caused by the low-bid model: contractors aiming to lower their bids through cutthroat reductions in wages, benefits, and apprenticeship training. By taking labor costs out of the equation, prevailing wage incentivizes construction contractors to compete on the basis of efficiency and core competencies, rather than on undermining middle-class compensation standards.

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Veterans speak out about prevailing wages in Lansing

Posted by National Alliance for Fair Contracting on

By News 10
Posted: Tue 12:17 PM, Feb 27, 2018
Updated: Tue 7:26 PM, Feb 27, 2018

LANSING, Mich. (WILX) – A group of Veterans gathered in Lansing Tuesday to speak out about and support the prevailing wage vote.

Veterans from three skilled trade unions talked at a press conference at the Michigan Senate building on Tuesday morning.

Their message, “a vote against prevailing wage is a vote against high-quality jobs that allow veterans to support themselves and their families.”

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“Veterans bring with them the experience, grit and sense of unity necessary to succeed in the skilled trades,” said Brad Reed, a business representative for the Michigan Council of Carpenters and Millwrights (MRCC) and Army veteran. “By protecting the prevailing wage, these high-skill, high-demand jobs are more available and accessible to our nation’s heroes.”

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Employers Steal $15B From Low Wage Workers Each Year

Posted by National Alliance for Fair Contracting on

February 23, 2018

Biography

David Cooper is a Senior Economic Analyst & Deputy Director of EARN. David conducts both national and state-level research, with a focus on the minimum wage, wage theft, employment and unemployment, poverty, and wage and income trends. He also coordinates and provides technical support to the Economic Analysis and Research Network (EARN), a national network of over 60 state-level policy research and advocacy organizations.

… wage theft can occur in a variety of different forms. It can be everything from a worker not being paid for all the hours that they’ve worked, to workers not getting overtime for working more than 40 hours per week, someone getting paid less than the minimum wage, even things like illegal deduction from folks’ paychecks or not getting meal breaks.The really egregious cases are when folks don’t get paid at all and believe or not, that happens more frequently than we certainly would like, particularly in certain industries where there’s a lot of use of, for example, immigrant labor or sub-contractors who may not be paid, not just for all the hours that that they work, but some of them don’t actually even get any of the money that they’re owed.

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GUEST COMMENTARY: WE NEED TO TALK ABOUT WAGE THEFT

Posted by National Alliance for Fair Contracting on

Posted on February 19, 2018
By Melissa Wells

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Wage theft occurs when a worker performs a job for an agreed-upon wage, and after completing the job, does not receive the full wage they are entitled to. The Center for Popular Democracy estimates that 580,000 Maryland workers suffer from wage theft each year, for a total of $875 million in gross wages lost annually. These numbers may underestimate the scope of wage theft in Maryland, as our Department of Labor, Licensing and Regulation has found that “employees often do not file a claim for a wage payment and collection law violation because they fear retaliation,” leaving us with an incomplete picture of wage theft’s prevalence. Low-wage workers are the most vulnerable to wage theft, particularly in industries like construction, food service and landscaping.

Workers are right to fear retaliation from their employers because Maryland law does not protect them from “discharge, demotion, discipline, or any other action that would reasonably deter an employee from engaging in protected activity under the state’s wage payment and protection law.” This means that though Maryland workers have a right to bring wage theft claims, they do not have a right against repercussions from their employer for bringing the claims.

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Prevailing wage crucial for construction workers

Posted by National Alliance for Fair Contracting on

BY SAMANTHA DRAPER
POSTED 02.20.2018

It is sadly ironic that portions of the construction industry have been fighting for years to reduce wages on these important but dangerous jobs are now claiming they face a skilled labor shortage.

Just last year, California’s housing industry spent millions of dollars lobbying against minimum labor standards in any part of the residential construction sector. Even though research shows that construction labor represents a paltry 15% of total housing construction costs, they tried making the mathematically absurd claim that paying their workers enough to pay the rent -even in exchange for less red tape on certain projects – would somehow make California’s housing affordability crisis worse.

Some California contractors talking about labor shortages were trying to convince California municipalities to become “charter cities” so they could circumvent prevailing wage rules.

But they haven’t been the only ones.

Since 2015, five U.S. states have repealed their prevailing wage laws – laws that establish minimum wages for different skilled crafts on publicly funded projects and promote privately financed training programs that are designed to prevent skilled labor shortages. Other states are considering following suit, even though labor represents just over 20% of the total cost of public works projects – a historically small and declining share in what constitutes fully one-third of all output in America’s fourth-largest economic sector.

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Prevailing wage a better value

Posted by National Alliance for Fair Contracting on

Henry Yanez
Published 11:00 p.m. ET Feb. 12, 2018

This year, special interests collected signatures to put the question of repealing Michigan’s long-standing prevailing wage law before the Legislature or on the ballot – often misconstruing the true intent of what their petition would do. They tell you it’s about saving you money. Nothing could be further from the truth. Let me tell you what prevailing wage is.

Michigan’s prevailing wage law ensures that our publicly financed buildings, roads, bridges and utilities are constructed using highly skilled and trained workers who are paid the regional average for their trade. The law doesn’t artificially inflate wages or the cost of construction and doesn’t force workers to be union members.

It just ensures that the people building our infrastructure earn a fair wage and benefits, and that their pay reflects their level of training. The law keeps skilled tradespeople and their families here in Michigan, where they spend money, grow the local economy and pay taxes.

Lowering wages reduces job productivity and lengthens the project schedule. Mistakes also happen when inexperienced, lesser-trained workers do the work. Michigan has already experimented with repealing prevailing wage in the mid-1990s. Costs went up and our skilled workforce went down. A study of highway and bridge work in 10 states found that high-wage workers built 74.4 more miles of roadbed and 32.8 more miles of bridges for $557 million less, compared to low-wage workers. Better and more efficient work for less money isn’t a difficult idea to get behind. …

Rep. Henry Yanez, D-Sterling Heights, represents Michigan’s 25th House district.

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Murphy signs executive order creating Jobs and Economic Opportunity Council

Posted by National Alliance for Fair Contracting on

BY Michael Hill, Correspondent
February 27, 2018, 5PM EST

At the International Union of Operating Engineers Training Center Local 825, Gov. Phil Murphy painted New Jersey’s economy as stuck in the mud.

“For eight years, we have slogged behind every competitor state in multiple categories,” said Murphy.

His list went on – challenging his new role to lead the state to a stronger and fairer economy.
“It’s time for New Jersey to get back to leading by doing,” said the governor.

With the stroke of a pen, the governor signed another executive order, his 12th in six weeks. This time, creating the Jobs and Economic Opportunities Council within the Governor’s Office made up of the lieutenant governor and several cabinet members.
“Specifically, I’m directing the council to analyze state and national economic trends and data to design the policies needed to attract, expand and retain good jobs. I am asking them to identify potential funding sources,” said Murphy.

The governor said the council’s scope will be broad and do what he’s already ordered his cabinet to begin doing – streamline state government by considering how best to use technology.

“Turning New Jersey around must begin with fixing our economy, making us a place that creates jobs and new opportunities in innovation and infrastructure” continued Murphy.

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AG investigation convicts Queens construction companies of ripping off employees

Posted by National Alliance for Fair Contracting on

By Mark Hallum
FEBRUARY 20, 2018

State Attorney General Eric Schneiderman announced the conviction of three Queens construction companies after they pleaded guilty to misclassifying employees as independent contractors to avoid paying overtime.

Lotus-C Corporation of Jackson Heights, Johnco Contracting Inc. of Bayside, and RCM Painting Inc. of Maspeth were all convicted of felony counts of grand larceny and falsifying business records in Queens Supreme Court on Feb. 7 and will pay over $730,000 in restitution for missed wages and unpaid taxes.

“Led by pure greed, the defendants in this case attempted to sidestep the law – misclassifying their employees as a way to stiff them on the overtime pay they rightfully earned,” Schneiderman said. “My office will continue to crack down on those who seek to steal from their workers in order to line their own pockets.”

The investigation by the attorney general’s office revealed the defendant corporations failed to properly pay employees – usually carpenters and painters – for overtime by falsely filing them as independent contractors. Over 150 workers were affected and did not receive the time and half pay for working over 40 hours a week required by law.

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As part of the plea deal, the three corporations will be dissolved and Cesar Agudelo of Lotus-C and John Massino of RCM Painting and Johnco will be barred from bidding on public works contracts for up to five years.

About $371,000 will go to the workers as restitution while another $360,000 from the defendants will go to unpaid unemployment insurance contributions.

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California DA: Contractors failed to pay $200K in prevailing wages, state taxes

Posted by National Alliance for Fair Contracting on

Kim Slowey
Feb. 26, 2018

Dive Brief:

  • The Orange County (California) District Attorney’s Office has charged a group of contractors that performed work on the Pacific Amphitheater at the Orange County Fair and Event Center in Costa Mesa between 2013 and 2015 with underpaying workers and failure to pay state taxes, an amount totaling $200,000, according to the Los Angeles Times.
  • Prosecutors allege that the owners of AWI Builders, Zhirayr “Robert” Mekikyan and his wife, Anna Mekikyan of Pico Rivera, California, did not pay workers the prevailing wage rate established for the $10 million project, which was a new lobby and entrance area for the amphitheater, and created fraudulent records to conceal the supposed fraud. The DA’s office also claims that AWI did not report the correct amount of wages to the California Employment Development Department to avoid paying its fair share of state payroll taxes.
  • Also named in the suit is another one of the Mekikyans’ companies, Construction Contractors Corp., and a family member’s business, TOSC, Inc. Prosecutors allege that those companies also submitted forged apprenticeship certificates. An attorney for the Mekikyans said the charges against his clients are false.

Dive Insight:

Prevailing wage fraud is a problem nationwide, and local authorities have their hands full trying to root it out.

The Manhattan District Attorney’s office has categorized this underpayment of workers as wage theft and, in December, charged area construction companies, as well as their owners, with stealing nearly $3 million in wages from more than 400 construction workers. Manhattan DA Cyrus R. Vance Jr. said the companies stole employee pay through checks returned for insufficient funds, hourly rates lower than the prevailing wage, not paying overtime or not paying workers at all. The amounts not paid per construction company ranged from $13,000 to $700,000.

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