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Editorial: Wages are low enough (IN)

Posted by National Alliance for Fair Contracting on

Kokomo Tribune
Oct 13, 2019

Many of us are earning what we made last year, maybe even the year before that.

By many measures the economy is improving: the unemployment rate continues to edge down to historic levels while job growth is up. But one stubborn indicator of recovery remains stagnant: Wages in the U.S. have been low and relatively flat since 2009.

Workers’ share of corporate income has plummeted dismally in the past 25 years, according to the Economic Policy Institute, a nonprofit, nonpartisan think tank dedicated to economic policy discussions. The Great Recession, from 2007 through 2012, put significant downward pressure on pay.

Yet in 2015, the Indiana Legislature ended the common construction wage. The Republican-led initiative did away with a state law setting the minimum wage that contractors working on public projects must pay.

Supporters suggested the local boards that determine the wage were artificially inflating wages and said elimination of the provision would lower project costs and save taxpayer money.

A study released only last year indicates the opposite is true.

A Midwest Economic Policy Institute study released in January 2018 said repeal of the prevailing-wage law in Indiana “has failed to produce any taxpayer savings on school construction projects and has had a negative effect on wages, job growth, productivity and other economic and industry indicators.”

The study, which included the work of Colorado State University-Pueblo economics professor Kevin Duncan, found:

* An 8.5% drop in wages in blue-collar construction jobs.

* A 15.1% drop in wages for the lowest-paid construction workers.

* A 5.3% slower rate of productivity compared to neighboring Midwest states with prevailing wage laws.

* A 1.5% slower rate of job growth in public works than neighboring Midwest states.

(Read More)

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USDOL Wage and Hour Division to Host Prevailing Wage Seminars

Posted by National Alliance for Fair Contracting on
May 2019

 

Our 2019 seminars will be held in the following locations:
  • Austin, TX, June 18th – 20th: Register Here
  • Anchorage, AK, June 25th – 27th: Register Here
  • Sacramento, CA, July 23rd – 25th
  • Washington, DC, August 13th – 15th
  • Indianapolis, IN, August 27th – 29th
Please note these locations may change.
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”)
The Wage and Hour Division (WHD) Prevailing Wage Seminars (Prevailing Wage Seminars) are three-day compliance trainings designed for regional stakeholders (unions, private contractors, state agencies, federal agencies and workers). In these seminars, conference participants will learn about the following:
  • The Davis-Bacon Act and McNamara O’Hara Service Contract Act
  • Executive Order 13495 “Nondisplacement of Qualified Workers”
  • Executive Order 13658 “Establishing a Minimum Wage for Contractors”
  • The process of obtaining wage determinations and adding classifications
  • Compliance assistance and enforcement processes
  • The process for appealing wage rates, coverage, and compliance determinations
Prevailing Wage Seminars for 2018 were held in the following cities:
  • Jacksonville, FL – April 10-12th, 2018
  • San Diego, CA – May 22-24th, 2018
  • Kansas City, MO – June 12-14th, 2018
  • Hato Rey, Puerto Rico – August 27-28th, 2018
If you have any questions please email WHD-PWS@dol.gov

Indiana seeks study to collect unpaid employment taxes (IN)

Posted by National Alliance for Fair Contracting on

By Craig Lyons
May 23, 2019, 3:00 PM

Indiana lawmakers plan to probe lost revenue when employees are listed as contractors or part-time by employers to avoid additional taxes.

A legislative study committee will look at worker misclassification and how to deal with potential lost revenue to the state. A study done by the Building Trades and Construction Council estimates the loss to the state from misclassification at $400 million, but a state-authored report posited the figure is closer to $14 million to $20 million for the state and $5 million to $7 million in local income tax revenue.

…

The state says worker misclassification happens when employees are listed as independent contractors or part-time employees, which often leaves them without overtime pay, workers’ compensation and unemployment insurance.

“This is little more than payroll tax fraud committed by unscrupulous contractors who are trying to gain an unfair competitive advantage in the marketplace,” Beck said. “Payroll fraud affects every taxpayer, shrinking public budgets, and even health care costs. It is about regaining lost tax revenue and insurance fund premiums because of dishonest contractors.”

Two reports have studied worker classification, one by the Indiana Building Trades and Construction Council, and a second from the Indiana Department of Revenue and Workforce Development and the Workers’ Compensation Board.

“There are at least four state agencies in state government – the Indiana Department of Revenue, the Indiana Department of Labor, the Worker’s Compensation Board of Indiana, and the Department of Workforce Development – that have the ability to investigate and report on this subject matter,” Beck said. “What this study would do is direct these agencies to tell us how pervasive worker misclassification is in Indiana, and what we can do to combat it.”

(Read More)

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Gary homeless project contractors cited for pay violations (IL)

Posted by National Alliance for Fair Contracting on

By Carole Carlson
February 18, 2019

The U.S. Department of Labor ordered four contractors, who built the $9.5 million Village of Hope federal housing project in Gary, to pay workers $255,474 for failing to pay prevailing wages and fringe benefits. 
The labor department announced the ruling last week.

The wage law violations impacted 53 former and current employees, according to a release from the labor department.

“Government contractors receive detailed agreements that include prevailing wage and fringe benefits rates, required to be paid by all contractors working on a federally funded project.

Prime contractors must assure that their subcontractors adhere to these rules as well,” said Wage and Hour Division District Director Patricia Lewis, in Indianapolis.The project’s prime contractor TWG Construction LLC, based in Indianapolis – has paid $82,477 to 20 employees.

TWG Construction LLC sub-contracted with a temporary staffing company, which failed to pay cleaning service crews in accordance with federal law.
The labor department’s investigation found temporary employees were misclassified and not paid the required prevailing wage rates.

Also, 8 Aces Construction Inc., Lansing, Ill., has paid $69,022 to 19 employees. Investigators found the company failed to pay finishers, painters and carpenters prevailing wage rate. The employer also failed to pay required fringe benefits to employees.

Due to the repeat and “willful nature” of these violations, the labor department said 8 Aces Construction Inc. and owner Jose “Tony” Ochoa have been declared ineligible to bid on federal contracts for a period of three years. A 2017 investigation found 8 Aces owed back wages totaling $99,313 to 95 employees.

(Read More)

Payroll tax fraud believed to be spreading throughout Indiana’s construction industry (IN)

Posted by National Alliance for Fair Contracting on

By: Drew Gardner
Posted: Feb 25, 2019 10:34 PM EST


SOUTH BEND, Ind. — The construction industry across Indiana is facing something many contractors call a growing problem — payroll tax fraud.
Some contractors are believed to be misclassifying workers, which robs them of many of the regular benefits employees receive and robs the state and federal government of hundreds of millions in tax dollars.

As you drive through Michiana it’s easy to see things are pretty good in the construction industry right now. There are new developments around almost every corner, but in recent years contractors like Tim Larson of La Porte-based Larson-Danielson construction noticed something seemed ‘off’ in some of the bids they were seeing.

” When we bid for a job we know how much is labor, how much is material and we found other contractors bidding at prices we couldn’t quite perceive how they were getting there, because we knew how much they were spending on material and we figured they had to be spending a lot less on labor than we were,” said Larson.

That’s because some contractors are believed to be participating in worker misclassification.

Worker misclassification is the practice of labeling workers as independent contractors instead of employees.

The IRS has a 20 point checklist to determine whether a worker is an employee or an independent contractor.

(Read More)

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RESULTS OF THE REPEAL – DID IT WORK? (IN)

Posted by National Alliance for Fair Contracting on

Nick Dmitrovich
October 12, 2018

A few weeks ago, Indiana passed the third anniversary mark since state legislators repealed the common construction wage law. Back in July of 2015, when the repeal went into effect, the intent was to provide financial relief for taxpayer-funded projects by reducing costs associated with construction wages.

At the time, former Governor Mike Pence, a major supporter of the repeal, said that “wages on public projects should be set by the marketplace and not by government bureaucracy.” During the campaign to get the repeal passed, supporters said the bill would help “cash-strapped” schools and other institutions keep project costs down.

So, now that a few years have gone by and data has had the chance to be developed, the big question is: Did it work? Did the repeal save public institutions the money it was supposed to?

Earlier this year, a report from the Midwest Economic Policy Institute (MEPI) straightforwardly titled “Effects of Repealing Common Construction Wage in Indiana” detailed the types of changes the repeal brought about across ten different construction market attributes. MEPI specializes in infrastructure investment and construction industry research.

To put it plainly, their report was a brutal look at the decision’s shortcomings and the damage its done to the construction industry.

“Repeal of common construction wage has led to a host of negative impacts on workers and the construction industry – including lower wages and more income inequality – while failing to deliver any meaningful cost savings or increased bid competition promised by those in favor of repeal,” researchers wrote.

Let’s take a look at the ten construction outcomes that researchers studied and how they have been impacted.

Construction Wages

Right off the bat, it’s fairly plain to see the people most impacted by the repeal are Indiana construction workers themselves, and vicariously their families. Just how much? A straight-up loss of 8.5 percent, even accounting for all the various factors that affect a person’s hourly wage (such as age, race, union membership, and other factors).
This wasn’t just a fact reflected in this report alone, it was actually predicted in additional research reports published at various times before and after the repeal went into effect (MEPI, Manzo, Bruno, Littlehale, et. al)

(Read More)

GUEST COMMENTARY: Reviewing Indiana’s common construction wage law (IN)

Posted by National Alliance for Fair Contracting on

Dewey Pearman
Sept. 2, 2018

Interesting data is now becoming available to test the pro and con arguments made in 2015 in the debate on legislation in the Indiana General Assembly to repeal Indiana Common Construction Wage law. That law was repealed in reaction to arguments that repeal would accomplish two objectives. First, repeal would increase competition in bidding among building contractors seeking to do work for public agencies. And, the cost of construction projects paid for by taxpayers would decrease. Opponents of repealing the law asserted that not only would these results fail to be realized but that repeal would result in, among other outcomes lower wages for workers.

Indiana’s common construction wage law, like similar laws in other states and at the federal level are intended to insure that when government spends money in a given labor market it does not inadvertently impact wages normally, or commonly paid in that market for similar type of work. That is, if as an example a carpenter in a given area is typically paid $25.00 an hour in wages and received $10.00 an hour in fringe benefits workers on public projects should not be paid more or less than those amounts for the same work. Doing so would interfere in the private labor market by providing an upward or downward pressure on local wages. The law required all contractors bidding on a public project to pay the wages and benefits customarily paid in that area. The law provided for an objective process by which wage and benefit rates were determined and also provided for public input into the determination.

On the issue of lower costs to taxpayers a 2018 study released by the Midwest Economic Policy Institute, The Effects of Repealing Common Construction Wage In Indiana, Impacts on Ten Construction Market Outcomes, finds that the average cost of school construction projects did not decrease after repeal but actually increased. The study focused on school projects because they tend to be more homogeneous than other types of public construction projects. The study, written by Kevin Duncan, Ph.D. Colorado State University-Pueblo and Frank Manzo IV, MPP, Midwest Economic Policy Institute looked at 146 school projects awarded before and 189 projects awarded after repeal of the law. The average project cost before repeal was $1.42 million and $1.48 million after the repeal. Contrary to arguments for taxpayer savings the average cost of school projects went up $60,000 after repeal. These findings are consistent with similar studies in many other states.

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In the end, what Indiana got with the repeal of the common construction wage law is an increase in taxpayer costs and lower wages for blue collar construction workers. While, the Indiana Department of Labor is required to submit a report on the effects of repeal of the common construction wage before July 2021 the early evidence suggest it is already time for the Indiana General Assembly to put this law back on the book.

(Read More)

NEW STUDY: Responsible Bidder Ordinances Promote Quality, Control Costs, and Provide Best Value for Taxpayers

Posted by National Alliance for Fair Contracting on

Date: May 22, 2018
Author: Jill Manzo

Responsible bidder ordinances (RBOs), which establish local construction standards on municipally funded public works, raise wages and reduce employee turnover according to a new study by the Midwest Economic Policy Institute(MEPI). As of May 2018, 40 Indiana counties, townships, cities, towns, school districts, and hospital districts have passed RBOs.

Nearly all governments award construction contracts to the lowest bidder, which can put pressure on contractors to cut corners on quality, wages, and safety. RBOs guarantee that contractors and subcontractors building public projects have proven track records of performance and legal compliance, adhere to local quality standards, and participate in USDOL-approved apprenticeship training programs.

Utilizing publicly-available data from the U.S. Census Bureau, the study examined county-level economic data on “heavy and civil engineering construction,” which includes the construction of public infrastructure such as highways, bridges, and parks. Overall, the researchers found that construction workers in 9 counties with RBOs are 1.6% less likely to leave or quit their jobs and construction workers earn about $500 more per month (or 8.3%) than their counterparts in jurisdictions without RBOs.

“By helping to raise incomes, reduce turnover, and boost productivity through apprenticeship training, RBOs help attract and retain the skilled construction workers that Indiana needs to build a 21st Century infrastructure,” said study co-author Jill Manzo. “RBOs can be a local solution to ensure that these vital projects are completed safely, on time, and on budget.”

MEPI’s analysis notes that RBO’s emphasis on quality and employment of higher-skilled workers provides additional safeguards for taxpayers, reducing the risk of design problems, cost overruns, change orders, and added safety risks.

(Read More)

(Executive Summary)

(Read Full PDF of Report Here)

SOUTH BEND PASSES RESPONSIBLE BIDDER ORDINANCE

Posted by National Alliance for Fair Contracting on

By IUOE Local 150

On April 11, South Bend Mayor Pete Buttigieg signed a responsible bidder ordinance (RBO) which was passed by the Common Council on April 9th. It sets conditions for contractors to be classified as “responsible” and eligible for work on projects of less than $150,000 in value.

An RBO is meant to protect taxpayer dollars as well as small businesses by making sure public works projects are completed efficiently and held to a high standard. They typically contain requirements such as participation in a training program and a clean safety record.

Mayor Buttigieg told WVPE radio that this ordinance was something that the city has been working on for a while. “I really view this as a community effort, there was a lot of leadership on the council,” Buttigieg said, “It was something we’ve been kicking around for a long time, but it took us a while to get it right and make sure that what we came up with really fit South Bend.”

“Ensuring that responsible contractors are prioritized for work opportunities in South Bend protects workers and delivers the best outcome for taxpayers,” said IUOE Local 150 President-Business Manager James M. Sweeney. “The residents funding this work deserve the assurance that their money will go to contractors who are qualified, capable and have a track record of quality and safety.”

(See Article)

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

Posted by National Alliance for Fair Contracting on

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.

(Read More)