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Savings from prevailing wage law changes uncertain (MO)

Posted by National Alliance for Fair Contracting on

Date: July 22, 2018
Author: Philip Joens

Jefferson City and Cole County officials said any savings they incur from a partial repeal to the state’s prevailing wage law likely will be negligible.

Gov. Mike Parson signed House Bill 1729 on July 13, rolling back several provisions of the state’s long-standing prevailing wage law. The changes will take effect Aug. 28.

Most notably, the bill eliminates prevailing wage requirements for projects costing more than $75,000.

Jefferson City Public Works Director Matt Morasch and Cole County Public Works Director Larry Benz said most city and county construction projects cost more than that threshold.

Many city projects, like Jefferson City’s plans to resurface about 60 roads between 2018-20, cost at least $1 million, Morasch said.

“At the city, we do very few that are under $75,000,” Morasch said.

Benz said even simple projects like curb replacements can cost about $100,000. He estimated fewer than 10 percent of Cole County projects cost less than $75,000.

“It may affect some of the smaller (projects),” Benz said, “(like) drop inlets, but most of the time we do that work ourselves.”

Missouri’s prevailing wage law dates back to 1959, and is similar to the federal Davis-Bacon Act of 1931, which requires workers be paid minimum wages on federal construction projects.

Under existing law, the state compares the number of hours worked in each county at the collectively bargained rate and the rate non-union contractors pay. The rate with the most hours worked each year prevails and becomes the prevailing wage for each skill set and occupation in each county.

Under the new law, at least 1,000 hours of work in a given county and job category must be reported to the state for the previous year for the prevailing wage rate to apply. If that does not happen, a contracting minimum wage defined as 120 percent of a county’s average wage will be paid to construction workers.

HB 1729 also exempts all public works projects costing less than $10,000 from competitive bid requirements. This provision and the $75,000 threshold appear to attempt to distinguish between construction projects and maintenance projects.

(Read More)

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Wage theft “epidemic” in construction. Taxpayers paying the tab. (NV)

Posted by National Alliance for Fair Contracting on

AUTHOR – Dana Gentry
PUBLISHED – July 27, 2018

A new ad from Attorney General Adam Laxalt’s gubernatorial campaign alleges his opponent, Steve Sisolak, awarded a public works job to Las Vegas Paving, a union company, for $100 million, over a non-union contractor who bid $4.6 million less.

But construction industry experts contend lower bids generate projects that are too often built on the backs of Nevada workers who are enduring a wave of wage theft on public works jobs. And your tax dollars are fueling it.

“From what I’ve seen, if you point out a project, someone is cheating on it,” says Evangelina Diaz of the Painters’ Union. “It’s crazy out there. It’s a dirty business.”

“It’s the only way the contractor can submit a lower bid. A gallon of paint is going to be the same. Brushes, rollers – materials are going to cost the same. It’s the wages where they can cheat,” Diaz says.

“There is a company, Vision Drywall, that paid over a million dollars years ago in back wages and they are still in business. Then we caught them again and they paid several hundred thousand dollars. That’s just the cost of doing business for them,” Diaz says.

Federal court records indicate Vision Dry Wall entered into a confidential settlement in 2014 with workers who claimed they were intentionally and systematically denied overtime. The Nevada Labor Commission reports eight complaints filed against the company, the last in 2015.

Nevada law requires prevailing wages be paid on public works jobs of $250,000 or more, while all federal jobs of $2,000 or more require prevailing wage.

Las Vegan Guy Bennallack owns a number of construction companies in a variety of trades including painting and roofing, and has contracted on numerous public works jobs.

Bennallack was convicted of 13 counts of tax evasion in 1994. Court records from his failed appeal reveal how far Bennallack was wiling to go to save money by defrauding the government.

“Here, appellant created false documentation to hide his illegal conduct; provided false W-2 forms to his employees for them to prepare false returns; used Southern Distributors as a secret supplier of cash by directing them to issue rebate checks to appellant; evaded detection by instructing Southern Distributors to issue the checks in amounts less than $10,000; maintained two sets of books in order to conceal sales; withheld information from his tax-advisors in order to falsify his returns; withheld invoices from the IRS.”

Today, Bennallack says he has 500 jobs going on at one time. He says cheating employees, who he says are well-versed in the law, would be impossible.

“I’m telling you there’s no way to do that. The penalties are far worse than anything you would ever gain,” he says. Asked what the penalty would be, Bennallack admits workers would be paid the amount they would have legally been due, but likely no more.

A spokeswoman for the state says the Bennallack-owned Painting Company has had two wage and hour complaints and two prevailing wage cases prior to 2012.

The Original Roofing Company, owned by Bennallack, had one wage and hour complaint in 2016.

Nevada’s Labor Commissioner is tasked with ensuring workers are paid fairly, and has an online list of contractors who are prohibited from bidding on prevailing wage projects because of prior violations.

The law allows the Labor Commissioner to assess a $5,000 administrative penalty against wage violators and the discretion to increase it in certain cases.

Contractors who are assessed an administrative penalty by the state may be prohibited from being awarded a public works contract for three years for a first offense and five years for subsequent offenses.

The Attorney General, who is notified of all violations, has the ability to prosecute. Adam Laxalt’s office did not respond to the Current’s request for information on wage theft prosecutions.

(Read More)

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Letter to the editor: Prevailing wage benefits economy (PA)

Posted by National Alliance for Fair Contracting on

LETTER TO THE EDITOR
Sunday, Aug. 26, 2018, 9:04 p.m.

Regarding Ray Borkoski’s letter ( “End prevailing wage in Pa.,” July 25, TribLIVE): The benefit prevailing wage provides to the local economy is immeasurable. Prevailing wage ensures tax money is used solely to benefit the public and the taxpayer by requiring the hiring of local, skilled workers, which stimulates all aspects of the local economy. When local people are working they spend money on homes, cars, food, clothes, etc.

Without prevailing wage, we would see an increase in contractors misclassifying workers, paying cash and avoiding paying payroll taxes. This leads to a loss in state revenue in the hundreds of millions.

States with weak or no prevailing wage laws spend $367 million more a year on food stamps and earned income tax credits for blue-collar construction workers than states with prevailing wage laws.

Without prevailing wage, you also lose safety standards and responsible contractors. What is the advantage of building a bridge “cheaper”?

Prevailing wage is not a union or nonunion issue; without prevailing wage, all wages fall. The standard of prevailing wage is set by a survey of the entire construction market in a local area.

The Midwest Economic Policy Institute found that after the repeal of prevailing wage in Indiana, the lowest paid construction workers’ wages fell 15.1 percent.

Mike Bobnar
Hempfield

(See Op-Ed)

Study: Prevailing Wage Strengthens Minnesota’s Economy & Promotes a Skilled Workforce (MN)

Posted by National Alliance for Fair Contracting on

School Project Data Shows the Law Boosts Local Hiring and Has No Effect on Construction Costs

Date: July 16, 2018
Author: Frank Manzo IV

St. Paul: In the wake of Michigan’s controversial decision to repeal its prevailing wage law, new research shows that Minnesota’s prevailing wage law boosts the economy by almost a billion dollars every year, creates 7,200 jobs, strengthens apprenticeship programs, increases local hiring by 10%, and has no significant effect on the overall cost of publicly-funded construction projects. The research was completed by the Midwest Economic Policy Institute and University of Colorado State University-Pueblo economist Dr. Kevin Duncan.

“This study brings important, new evidence that Minnesota’s prevailing wage law maintains wages and benefits for Minnesota’s construction workers, reducing their need for public safety programs and helping to keep these working families in the middle class, and it does this without a detectable impact on public construction costs,” said University of Minnesota labor economist Dr. Aaron Soujourner. Soujourner is a former economic adviser to President Trump and President Obama who performed a peer review of the research.

Prevailing wage functions as a local minimum wage for different types of skilled construction work. It is typically applied to publicly-funded projects like roads, bridges, and schools, and is based on what skilled craft workers in the community are most often paid for comparable work. The state’s average full-time, blue-collar construction worker currently earns about $48,000 per year.

“Prevailing wage is a win-win-win for Minnesota taxpayers, the state’s economy, and the construction industry,” said study co-author and Colorado State University-Pueblo economist Kevin Duncan. “While the data consistently shows that overall project costs and bid competition are not affected by the law, its impacts on wages, local hiring, welfare reliance, workforce productivity, and the overall stability of the labor market are especially significant.”

The study analyzed more than 600 winning bids for school construction projects in the Twin Cities region between 2015 and 2017. While the majority of bids did not include prevailing wages, there was no statistically significant difference in the average total cost of prevailing wage bids and non-prevailing wage bids. However, prevailing wage bids utilized 10% more local subcontractors.

“In terms of project costs and local hiring, the new data out of Minnesota mirrors what’s been seen in other states,” said study co-author and Midwest Economic Policy Institute Policy Director Frank Manzo IV. “A repeal of Minnesota’s prevailing wage law would not save money, but it would export more tax dollars to businesses from out of town.”

(Read More)

(PDF Copy of Full Report)

(Executive Summary)

(Key Findings)

VIDEO: Protecting Prevailing Wages (MN)

Posted by National Alliance for Fair Contracting on

By Filiberto Nolasco Gomez
Workday Minnesota
October 1, 2018

MINNESOTA – The Fair Contracting Foundation works to elevate the legal enforcement of applicable laws to ensure quality contractors have the opportunity to compete fairly. One of their focuses is protecting prevailing wages.

“Working people in Minnesota are preserving part of the middle class through prevailing wage laws. Unfortunately, these laws have recently been repealed in several states, including Wisconsin, because some political leaders claim that construction wages are too high. Support the skilled people who build Minnesota; support your local economies; and support prevailing wages!”

(See Video)

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On issue of prevailing wage, Minnesota succeeds where neighboring states have failed (MN)

Posted by National Alliance for Fair Contracting on

By Frank Manzo IV and Kevin Duncan. July 30th, 2018

A legislative virus that is shrinking middle-class incomes, eliminating jobs and causing skilled workforce shortages is spreading across the Midwest. It’s called repeal of state prevailing wage laws.

Prevailing wage laws establish local minimum wage rates for the skilled workers that build our schools, highways, bridges and other critical infrastructure Since 2015, three Midwest states (Michigan, Wisconsin and Indiana) have repealed their prevailing wage laws, and even more have tried to weaken them.

Minnesota has not. And a growing body of evidence tells us why the Gopher State has it right.

First, eliminating prevailing wage doesn’t save taxpayers money. Recent research out of Indiana showed no difference in construction costs before and after repeal of prevailing wage. Additionally, that state’s Assistant Republican House leader has publicly acknowledged that repeal “hasn’t saved a penny.” This is because labor represents only 23 percent of the total cost of a construction project. It is simply not possible to find significant cost savings by cutting worker wages and benefits.

Instead, research shows that when you eliminate the wage floor, any savings disappear due to a host of new problems. For example, arbitrary wage cuts discourage local skilled workers from pursuing careers in the construction trades; and these workers are often replaced by lower-skilled workers from out of town. Costly impacts in the form of lower productivity, more jobsite injuries and increased reliance on social safety net programs more than offset any savings from paying lower wages.

And repeal invites even larger consequences for the local economy.

In a study released this month, we examined hundreds of school construction bids over a three-year period in the Twin Cities area. We found that prevailing wage increases the share of construction value completed by local contractors by 10 percent. If prevailing wage were to be repealed, the tax dollars that employ local workers – and the ripple effects from their spending as consumers – would be exported out of the local community. In fact, we found that Minnesota’s prevailing wage law ultimately strengthens the economy and creates 7,200 jobs statewide.

(Read More)

The cost of construction and the state’s prevailing wage (NY)

Posted by National Alliance for Fair Contracting on

By JEFF COLTIN
JUNE 4, 2018

Anybody who has seen Gov. Andrew Cuomo give a speech in the past few years knows that New York is in the midst of a building boom.

There are marquee projects like the Gov. Mario M. Cuomo Bridge over the Hudson River or the renovation of LaGuardia Airport in Queens, and there are smaller projects like street enhancements in downtown Watkins Glen or a proposed Metro-North station at Woodbury Common Premium Outlets.

These projects are mostly publicly financed and built by private contractors – and in the midst of this building boom, some state legislators are hoping to clarify what those contractors should be paid.

The state constitution says that construction workers on state-financed projects should be paid the prevailing wage – a set rate of pay and benefits. Prevailing wage rates are maintained by the state Labor Department and vary by location and job. For example, a structural ironworker in Albany County would make $30.50 an hour plus some $27 an hour in supplemental benefits on a public project, while one in New York City would make nearly $52 an hour, plus more than $70 an hour in supplemental benefits. It’s meant to prevent contractors from undercutting wages, and to ensure workers on public projects are getting paid fairly.

A bill is being considered that would expand the number of construction projects subject to the state’s prevailing wage rates. In practice, the bill is meant to clarify the definition of “public work,” legislating that even largely private projects that receive tax breaks or other government subsidies are still required to pay a prevailing wage to workers. The bill’s sponsors say that judicial rulings have caused loopholes that allow contractors to not pay full wages.

Advocates for workers say the state is paying for poor working conditions. “Too often in construction, we see a race to the bottom where unscrupulous contractors are receiving taxpayer dollars to subsidize development with little to no standards in place for the workers on these projects,” said Patrick Purcell, executive director of the Greater New York Laborers-Employers Cooperation and Education Trust, in a press release supporting the legislation.

(Read More)

See Related Article: New York State Prevailing Wage Law: Defining Public Work,

Fred B. Kotler, J.D., Cornell University ILR School (March 2018)

Gary Frueh: Need for prevailing wage

Posted by National Alliance for Fair Contracting on

POSTED ON JULY 1, 2018
Gary Frueh – Guest Columnist

There is a lot of discussion lately on prevailing wage. It is important to understand more about prevailing wage. Wages are set for areas according to living standards. You wouldn’t want to pay construction wages based on New York City or Los Angeles in Lima, Ohio. Many different entities do this, including health care providers. It just sets wages prevalent to an area.

Does prevailing wage, tend to raise wages some? It sets standards for an area. Training programs that assure work being done is both accurate and efficient under prevailing wage. Otherwise, it becomes an item to undercut the bidding process.

Let’s get to the heart of the issue. To say work done is better or worse under prevailing wage needs background.

A past study out of the University of Utah prepared for the Kansas State Senate Labor and Industries Committee stated these facts when prevailing wage was removed in Kansas:

* Wage incomes in Kansas construction fell 10%. Employer pension and health insurance contributions fell 17%

* Construction workers covered by collective bargaining in Kansas received health insurance and employer contributions, only 10% of workers in open shop received pension and only 4% received health insurance from their employer.

* Apprenticeship training in Kansas construction fell 38% after repel. Minority apprenticeships fell by 54%.

* Serious injury rates in Kansas construction rose by 21%

* The projected gain from repel a 6% to 17 % savings on state construction costs failed to materialize.

…

Why does prevailing wage make sense. It establishes a wage scale that is harder to manipulate and consistent with living costs of an area. Think of it this way. All our State Legislators are paid a specific wage. While the cost of living in Cleveland is much higher than Lima the legislator is paid the same. The taxpayer is bearing the burden of paying one too much or one not enough. In any case a prevailing wage scenario might fit their circumstance very well.

There are good reasons to keep prevailing wage laws in protecting the consumer, taxpayers and the communities from bearing the burden of increasing taxes on its residents to make up for losses incurred as past factual studies on prevailing wage have shown.

(Read More)

Opinion: Michigan’s prevailing wage repeal will hurt workers

Posted by National Alliance for Fair Contracting on

Sean McGarvey and Doug Maibach
June 30, 2018

Michigan’s Mackinac Center for Public Policy keeps promoting the Michigan Legislature’s repeal of prevailing wage protections without considering the latest facts. One of Mackinac’s recent articles calls on the federal government to take a cue from Michigan and advance an effort to repeal federal prevailing wage protections.

Prioritizing ideology over evidence, it doesn’t cite the most advanced economic research on prevailing wage laws, fails to include industry experts, and, even worse, ignores the accounts of construction workers, the building trades unions and high-road contractors who readily pay prevailing wages – the people most impacted by the Legislature’s decision.
If Mackinac had done its research, it would find that there is no statistical relationship between prevailing wage laws and contract costs. In any industry, an employer can reduce labor costs by reducing turnover and using competitive, fair wages to attract and retain the industry’s most productive workers.

Mackinac claims that cutting “inflated wages” for blue-collar construction workers saves taxpayer dollars or lowers costs on a given project, but this obscures the fact that the money will simply be absorbed by other white-collar participants in that same construction project – whether it be the architect, engineer, Wall Street financiers, insurance carriers or project suppliers. Interestingly, these other participants’ wages are never accused of being unfair or inflated.

Construction labor accounts for about 20 percent of a typical project’s overall cost, and Mackinac says the repeal will cut project costs by 15-20 percent. So, following Mackinac’s logic, the construction workforce would work for nothing.

Without prevailing wage protections, responsible contractors must increasingly compete against “low road” contractors who frequently fail to invest in meaningful training and do not offer health and retirement benefits for their workers. The reckless market this creates diminishes incentive, in the form of investments in wages, benefits and training, for both the building of human capital in the construction industry and the retention of human capital over the long run.

Ultimately, this leads to the erosion of community wage and benefit standards, shoddy work and unsafe work sites, and less young people, women, communities of color and veterans joining the skilled trades.

(Read More)

Smart Cities Prevail Launches Multi-State Campaign On Prevailing Wage Laws

Posted by National Alliance for Fair Contracting on
TV and online effort will reach California and New Mexico

Source: Smart Cities Prevail
Wed, 23 May 2018, 16:21:14 EDT

SACRAMENTO, Calif., May 23, 2018 (SEND2PRESS NEWSWIRE) – Smart Cities Prevail today released a series of new TV advertisements on prevailing wage laws, part of a multi-state public information campaign launching in California and New Mexico.

“HT Tran” tells the story of an Iraq War veteran who came home after being wounded in combat to found the award winning general engineering firm Anvil Builders.

“I wouldn’t be alive today if all the guys I served with took shortcuts,” Tran says. “Taking care of workers doing dangerous and difficult jobs here at home is no different than taking care of soldiers in the army. Prevailing wage is an investment in well-trained local professionals who know how to get the job done right the first time.”

Research has shown that prevailing wage laws disproportionately impact veterans, because they work in construction at higher rates than non-veterans.

“Rebuilding America” highlights the important role that prevailing wage laws play in promoting local hiring and higher quality workmanship on schools, roads and other public projects. Research consistently shows that prevailing wage laws improve the economy and help generate more local middle-class jobs without increasing overall project costs.

“While the well documented economic and community benefits of prevailing wage have been long-validated by respected economists and earned these laws broad bi-partisan support, they are often not well understood by the public at large,” said Smart Cities Prevail spokesman Todd Stenhouse. “This campaign isn’t just about facts and figures – it’s about telling the story of what is at stake and who is really impacted by these laws. More often than not, it’s you or someone you know.”

Established in the 1930’s, prevailing wage laws establish the local market minimum wage on different types of skilled construction work. Typically, the wage includes a base wage, benefits and training contributions – based on surveys of workers performing similar jobs in the community.

(Read More)