Without prevailing wage laws, guess who loses? Taxpayers. (IL)

Posted by National Alliance for Fair Contracting on

By: JAMES M. SWEENEY
November 28, 2017

James M. Sweeney is president and business manager of the International Union of Operating Engineers Local 150.

Mark Glennon recently argued in a column for Crain’s that municipalities’ budget challenges can only be solved by lowering wages of workers who build our schools, transportation systems and other public infrastructure projects.

Setting aside the irony of a self-described lawyer and venture capitalist calling for middle-class construction workers to take a pay cut, let’s unpack these assertions a little.
Read more: Illinois prevailing wage mandate hurts the economy

Prevailing wage functions as a local market minimum wage on skilled construction work that is paid for by government. It ensures that things like schools, bridges and roads are built by local people who are trained to do the job right the first time, and that local tax dollars do not undercut local wage rates by attracting low-wage, unskilled workers from other parts of the country. Most prevailing wage workers complete three to five years of industry-financed, post-secondary apprenticeship training for occupations that are consistently recognized as among the nation’s most dangerous.

While construction wages and benefits represent just 22 percent of total public works costs, legions of economists have reached the consensus that prevailing wages have no impact on total project costs because they result in higher productivity, fewer safety issues and less spending on materials, fuels and equipment.

If you don’t believe in peer-reviewed facts, consider that Republican Indiana Rep. Ed Soliday said last year that Indiana’s repeal of its prevailing wage law “hasn’t saved a penny.”

What is also known is that states without prevailing wage laws have more income inequality, see more of their tax dollars shipped to firms out of state and spend hundreds of millions of dollars more on programs like Medicaid, food stamps and low-income tax credits for construction workers.

In other words, without prevailing wage laws, taxpayers lose far more than just good local jobs and quality workmanship.

For the record, unions do not set prevailing wage rates. These rates are based on surveys of what union and non-union employees are actually paid in the marketplace. For each craft in each community, the most common wage rate prevails.

(Read More)

Employees of TIF projects in Portland to receive prevailing wage (OR)

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NOVEMBER 22, 2017

The Portland City Council voted to require contractors working on Tax Increment Financing-funded projects in the city to pay their employees a prevailing wage.

“We will be the first community in the state to put this in their TIF rules,” Mayor Ethan Strimling told the Portland Press Herald.

Prevailing wages are set on an annual basis by the Maine Department of Labor on a county-by-county basis for state construction projects exceeding $50,000.

However, the city council shot down another provision requiring contractors on TIF projects to participate in an apprenticeship program registered by the state or federal government, a move supported by union workers. Instead, the council will explore offering grants for a broader job-training program that would help other industries as well, the newspaper reported.

Also removed was a requirement that at least 25% of work hours be performed by Portland residents, minorities, women or veterans.

(See Article)

LABOR COUNCIL HOPES TO MAKE CONTRACTORS PAY IN LYNN (MA)

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BY THOMAS GRILLO|
November 28, 2017

LYNN – If a group of union organizers gets their way, contractors who violate the state’s labor laws would be barred from doing business with the city.

Three dozen members of the North Shore Labor Council, a coalition of 50 unions representing 18,000 workers, crowded a City Hall hearing room Tuesday to urge the City Council to adopt an ordinance that would prohibit the city from hiring companies who have failed to pay their workers.

“Our goal is to protect workers from being cheated and keep them from getting these contracts while helping honest businesses,” said Kathryn Cohen, an organizer with the North Shore Labor Council.

Of the 14 firms prevented from doing work for the state or municipalities for public construction or public works projects by the Attorney General Maura Healey’s office over the last two years, one is from Lynn. Since 2015, there have been 26,767 wage complaints and citations issued statewide, 69 to Lynn companies.

At issue is the failure of some employers to pay their employees for work performed. While the state prohibits employers who have violated labor laws from seeking government contracts, some are able to sign deals because no one is checking, Cohen said.

“We know some debarred contractors are still getting work and we need to strengthen enforcement,” she said.

Under the proposed ordinance, a volunteer Wage Theft Advisory Council would be appointed by the mayor and City Council. The six-member panel would review lists of companies who violate labor laws from the Attorney General’s office and sign off on the company seeking work from the city.

The Massachusetts Budget and Policy Center reports $700 million worth of wages go unpaid annually to about 350,000 Massachusetts workers. Of that number, $5.2 million in wages is recovered by the Attorney General’s Fair Labor Division.

Ward 6 City Councilor Peter Capano said the ordinance is crucial because without it, honest employers are at a disadvantage.

(Read More)

Higher Minimum Wage For Employees Of Some City Contractors One Step Closer To Implementation (PA)

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By KATHLEEN J. DAVIS
11-29-17

Pittsburgh City Council gave preliminary approval Wednesday to a measure that would require a $15 an hour minimum wage for employees of some contractors.

The bill would apply to companies in professional service contracts with the city over $100,000.

According to data from the City Controller’s Office, 31 contracts over $100,000 were approved in 2015. Most were related to construction projects, health care and software upgrades.

When the measure was introduced on Monday, Nov. 20, Mayor Bill Peduto said implementing it would have a minimal effect on the cost of contracts and the city’s finances.

“We want to work with companies that also believe a worker’s value should be a minimum of $15 an hour,” he said. “We are hoping this will be the standard for which Pittsburgh companies will recognize the worth of their workers.”

Peduto said this was the second part of a city wage plan that began in November 2015, when he signed an executive order to gradually increase minimum wage for city employees to $15 an hour by 2021. It’s currently $12.50.

(Read More)

SAVE THE DATE – 20th Annual NAFC Conference, August 19-22, 2018 – San Diego, CA

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It’s our 2oth Anniversary! Ensure to save the date and join NAFC as it will be holding its next Annual Conference in sunny San Diego, CA. The Conference will be held at the Hilton San Diego Bayfront Hotel, in downtown San Diego. This year’s Conference will be jointly sponsored by the Center for Contract Compliance and will have a national and California state specific focus. The NAFC National Conference is attended by several hundred participants from across the nation, including representatives from labor organizations, fair contractors, fair contracting compliance organizations as well as researchers, academics, attorneys and officials from federal, state and local governments.

Stay tuned for further information.

(Visit NAFC Conference Page)

New York’s prevailing wage law

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A cost-benefit analysis

(A working paper from the Economic Policy Institute)

By Russell Ormiston, Dale Belman, and Matt Hinkel
November 1, 2017

…

The cost of state prevailing wage laws has been a considerable focus of independent, academic economists over the last 15 years. In study after study, the results demonstrate a clear consensus: state prevailing wage laws have not been shown to increase taxpayer costs on the biggest components of state construction budgets (roads and schools). If this seems counterintuitive, consider that high-wage contractors employ the most skilled and most productive workers and use the industry’s most advanced technology and equipment; this allows them to place bids on public construction projects that are competitive with-if not better than-those of low-wage, low-skill contractors. Essentially, state lawmakers “get what they pay for” when it comes to hiring contractors and workers to build public construction projects.

…

There is another fundamental problem with the current narrative on state prevailing wage laws: it entirely ignores the many benefits that the law provides a state’s residents and communities. In a time when economic opportunities for blue-collar workers are slipping away-devastating families and communities-prevailing wage laws are one of the few effective policies available to state lawmakers that increase the standard of living for these workers, incentivize employers to provide opportunities for training and skill development, and offer a clear pathway to the middle class for non-college educated state residents. Prevailing wage laws also advantage in-state and law-abiding contractors, reduce illegal employment practices, and improve workplace safety for a state’s residents. Any public discussion about state prevailing wage laws that ignores the benefits of the policy does an incredible disservice to a state’s workers, families, and communities.

(Read More)

(PDF Copy of Report)

Here’s why California developers must pay construction workers a fair wage

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BY SAMANTHA DRAPER
Special to The Bee
OCTOBER 27, 2017 5:00 AM

Eighty five percent of the costs associated with housing construction in California are unrelated to the wages or benefits paid to the workers who actually build it.

And since 1990, those wages, adjusted for inflation, have actually decreased by 25 percent and been redistributed into profit margins for developers, which are growing 50 percent faster than the cost of materials or labor.

Developers got most of what they wanted in housing reform legislation that Gov. Jerry Brown signed into law this month. And yet the building industry continues to complain about wages that are going to be paid to construction workers on certain projects.

The builders claim that they will need to raise prices to grow their already bulging bottom lines if they have to pay their workers enough to live. But there’s no real evidence to support this assertion.

In reality, the elimination of red tape on new housing construction likely will save most developers far more than any modest increase in their workers’ wages.

Peer-reviewed research on prevailing wages shows no impact on total project costs, because these standards promote skills training and quality workmanship that increase productivity and reduce spending on fuel and materials. And because they are market rates that reflect local cost of living, they save taxpayers the cost of subsidizing below market wages with welfare expenditures.

These aren’t abstract academic theories.

In 2015, the state of Indiana repealed its prevailing wage law. Earlier this year, the Indiana Assembly assistant Republican floor leader was asked about the effect on project costs. His response: “It hasn’t saved us a penny.”

(Read More)

Columbus, OH, tests plan to increase apprenticeships, local hires

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By Kim Slowey
Nov. 2, 2017

Dive Brief:

  • The city of Columbus, OH, is testing a new construction apprenticeship and local hiring plan for public projects that it hopes will boost the local construction workforce, according to The Columbus Dispatch.
  • The agreement between the city and the Columbus Building & Construction Trades Council, AFL-CIO, requires the organization to host apprenticeship fairs, use 20% Columbus and 25% regional residents on the project, and collect five cents for every hour each member works to help fund an apprentice scholarship fund. City officials said non-union contractors will also be able to bid the project.
  • The first project to operate under the program is the construction of an $8 million firehouse. The local chapter of the Associated General Contractors of America expressed concern that the new workforce requirements would make it more difficult for contractors to bid on projects competitively.

Dive Insight:

It’s not uncommon for state and local governments to specify hiring requirements for publicly funded projects. Local activists often see it as a way to get a return on invested taxpayer money. However, while the goal of using as many locals as possible is not one with which many would disagree, the details of these initiatives are up for debate.

First, in some markets, contractors have difficulty finding enough workers to meet local mandates. For example, contractors working on the new Little Caesars Arena in Detroit were fined almost $3 million through March of this year for failing to meet the local hiring requirements laid out by the city. By all accounts, the contractors did their best to recruit local workers, but the skilled talent pool was just too thin.

(Read More)

The Broken Promise

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Report from wvbrokenpromise.com

Legislative leaders pushed through a law to cut local construction workers’ wages dramatically claiming the action would save money and create more jobs.

Despite overwhelming evidence to the contrary, Republican legislative leaders quickly passed a bill to eliminate the state’s prevailing wage law.

The legislative leadership promised taxpayers would see a savings of 25 to 30 percent on public works projects.

There hasn’t been the promised savings based on examination of the award of bids since July 1 when the law went into effect and during a three-month period in 2015 when the Legislature suspended the prevailing wage law.

(Read More)

Direct Federal Spending High on Industry’s Infrastructure List

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Industry officials, lawmakers also agree on need for Highway Trust Fund fix.

October 14, 2017
Tom Ichniowski

As the construction and transportation industries continue to wait for more specifics from the White House about President Trump’s still-unreleased infrastructure investment plan, some top officials are making clear that they want direct federal funds to be a keystone of the proposal, though acknowledging that public-private partnerships can be helpful in some cases.

Lawmakers and witnesses at a House highways and transit subcommittee hearing on Oct. 11 also said they want the plan to include a remedy for the Highway Trust Fund, which will face another shortfall in 2020 unless it gets a revenue infusion.

Rep. Bill Shuster (R-Pa.), chairman of the full Transportation and Infrastructure Committee, said the panel has been working closely with administration officials on “principles” for the infrastructure plan “And we hope to see that soon coming out of the White House,” Shuster added..

The wait for the plan has been long. There has been little action in the House, too, said Rep. Peter DeFazio (Ore.), the transportation committee’s top Democrat.

He noted that it has been more than nine months since the committee held its first 2017 infrastructure hearing, on Feb. 1 and House lawmakers have only rolled out a few legislative proposals.

DeFazio said that “all we’re doing around here is just talking, while the country crumbles.” He added, “I mean, seriously, let’s get to work.”

DeFazio also called for a strong federal role. He observed that more than 20 states in recent years “have stepped up” by raising revenue, mainly through increases in their own gasoline taxes. But DeFazio said those additional dollars are not enough. “They need a federal partner,” he said.

(Read More)