Letter to the Editor: Prevailing wage is good policy (IL)

Posted by National Alliance for Fair Contracting on

DECEMBER 15, 2017
By Frank Manzo IV – Guest columnist

One of the many factors that has made Bruce Rauner one of the nation’s least popular Governors has been his proposals to cut pay for middle-class wage earners. So it came as little surprise to see the Illinois Policy Institute (IPI) – a group with close ties to Rauner – recently attacking the Illinois Prevailing Wage Act.

Prevailing wage functions as a local minimum wage on publicly-funded construction jobs like roads, bridges, schools and police stations. It promotes a level playing field for local contractors, ensures these projects are done right and produces good middle-class jobs for skilled local workers.

Like Rauner, the IPI has recently argued for repealing prevailing wage in Illinois. In so doing, the IPI is passing off flawed analysis with little basis in reality as sound policy.

But don’t take my word for it.

Indiana repealed its prevailing wage law in 2015, and “it hasn’t saved a penny,” according to the state’s Assistant Republican Floor Leader in the House, Ed Soliday. And before repealing its law outright, Indiana took other steps to hollow out its construction labor standards. The effect was not only a decline in wages, but hundreds of middle-class jobs fleeing the state. While IPI claims that repeal would save money and boost employment, the fact is that neither happened in the real-life example of Indiana.

But the experience of Indiana and the observations of Rep. Soliday are hardly outliers. Most peer-reviewed economists have arrived at the same conclusions. I have authored or co-authored 25 studies on these laws myself.

Here’s what we’ve found:

First, labor represents a small and historically declining share of construction budgets and prevailing wage has no effect on total project costs.

Reams of data have shown that eliminating local market-based prevailing wage standards only results in high-skilled local workers getting replaced by lower-skilled workers, often from out-of-town. This ultimately yields not just lower wages- but lower levels of productivity, higher spending on fuel and materials, higher risk of safety problems and shoddy workmanship, and more construction workers reliant on taxpayer-funded government assistance programs.

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The Illinois Policy Institute Receives a Failing Grade on Prevailing Wage (IL)

Posted by National Alliance for Fair Contracting on

Published by Frank Manzo, IV
December 7, 2017

A new report released by the Illinois Policy Institute on prevailing wage is factually inaccurate. Here’s why.

The Illinois Policy Institute is a libertarian policy organization with close financial and lobbying ties to Illinois Governor Bruce Rauner. None of their research has ever been subject to peer review. On December 6, 2017, the Illinois Policy Institute released a report calling for the repeal of the Illinois Prevailing Wage Act- a longstanding goal of Governor Rauner. This brief highlights the biggest problems and factual inaccuracies in their report.

Inaccurate Claim #1: “The empirical literature is still divided on the impact of prevailing wage on construction costs.”

Fact: Most peer-reviewed studies (over 75 percent) have concluded that prevailing wage laws have no impact on total public construction costs.

“We got rid of prevailing wage and so far it hasn’t saved a penny.” -Rep. Ed Soliday, Assistant Republican Floor Leader, Indiana House of Representatives, 2017

Inaccurate Claim #2: Prevailing wage laws “favor disproportionately white, unionized workers.”

Fact: By stabilizing the wage floor, prevailing wage reduces income inequality among construction workers of all backgrounds. Prevailing wage standards cover construction workers of all races- union and non-union alike. Peer-reviewed research has found no relationship between prevailing wage laws and the racial composition of the construction labor force. Over the past 10 years, the union membership rate was higher for African-American workers in Illinois’ construction and extraction occupations than for comparable white workers.

“Davis-Bacon has been instrumental in bridging the wage gap for historically disadvantaged sectors of our society. In the face of decaying social and economic opportunities, this measure provides women and minorities with an important tool to achieving greater parity with their mainstream counterparts.”
-Congressional Black Caucus, 1995.

(Read More)

(One Page PDF of Blog)

(IL) governor candidate Bob Daiber talks prevailing wage, right to work

Posted by National Alliance for Fair Contracting on

Prevailing wage, PLAs supported

By Kelsey Schulz
POSTED ON JANUARY 29, 2018

WOOD RIVER – Bob Daiber expressed his support of prevailing wage and project labor agreements, as well as his opposition to “right to work” laws, during a press conference in Wood River Monday.

Speaking at the Carpenters Union Hall, 277 E. Madison Ave., the Democratic candidate for the governor touched on those topics and more in front of a crowd that included 19 local labor leaders.

“As many of you know I’ve been a strong advocate for organized labor my entire political career,” said Daiber, who is also the Madison County Regional Superintendent of Schools. “I’m here today as a candidate for governor to continue my ongoing pledge to labor that we can move forward in this state collectively with good paying jobs.”

…

On prevailing wage: “I support prevailing wages, I always have. There’s no place in the workplace to drive down wages. If we do away with prevailing wages in the state then we are going to be competing with as to who as a worker is going to work for less and that is not a place that we want to go. When we have good jobs in the state that are based on prevailing wage we have workers that are being able to make a living wage and are less dependant upon the state for benefits and that’s the direction I want to move Illinois.”

On project labor agreements: “The project labor agreements are simply agreements between labor and management that help get jobs done on time, on budget with no shutdowns and workers being able to go to work each and every day without any work stoppages.”

On right to work: “Last year, I signed a pledge saying ‘no’ to right to work (for less) in the state of Illinois, because I am an advocate for collective bargaining both in the public and private sectors. As governor, I will sit down with AFSCME at the table and we will work out a contract for all state workers in Illinois because they too deserve to have good paying jobs and benefits.”

(Read More)

Study shows prevailing wage led to more work done at a lower price (MI)

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By Erika Geiss
Jan 24, 2018

The word “Michigan” is practically synonymous with building and manufacturing.

From the auto industry that made our state famous to the “mighty” Mackinac Bridge that travelers still marvel at decades after its construction, our skilled tradesmen and women have driven us forward practically since statehood.

Yet we have trouble filling jobs in the skilled trades. It’s expected that Michigan will add 15,000 jobs in the professional trades every year through 2024, but we lack people with the training and experience to fill them.

One of the incentives these jobs offer is a good salary. That’s why it’s even more astonishing that special interests are trying to repeal Michigan’s prevailing wage law. These special interests, mostly contractors who hope to be able to pay their employees less, have worked to gather signatures to put the issue before the state Legislature or on the 2018 ballot.

Contrary to what you might have heard, the law doesn’t force companies to pay workers union wages or require that only union workers be hired for a construction job. It stipulates that for state-funded work projects, employees receive a pay rate based on a survey of actual wages and benefits in the area.

Studies suggest that if Michigan’s prevailing wage law is repealed, salaries for construction workers would drop by 20 percent to 50 percent. Just think about what it would be like to have your salary cut in half. Would you want to stay in that job? Most likely, you’d be looking for a new line of work. At a time when Michigan is trying to attract more skilled trades workers, repeal would be a terrible mistake.

…

Not only does prevailing wage ensure a good quality of life for people who choose these careers, it ensures that our roads and schools are built on time and on budget. It allows the workers to provide for their families and support local businesses while laying the groundwork – quite literally – for a well-built Michigan that will attract further investment.

We must protect Michigan’s prevailing wage law.

State Rep. Erika Geiss (D-Taylor) represents the 12th District.

(Read More)

Stiffed electricians get watt they deserve as sleazeball boss forks over $750G (NY)

Posted by National Alliance for Fair Contracting on

BY ANDREW KESHNER
NEW YORK DAILY NEWS
Wednesday, December 20, 2017, 2:37 AM

Five electricians got an early Christmas gift Tuesday in a check for more than $750,000.

The windfall was way overdue for the hard-working men who were stiffed out wages by a crooked boss.

Now that their greedy superior, Michael Riglietti, has a grand larceny conviction on his head, he’s finally opening his wallet to fully pay the men.

Acting Brooklyn District Attorney Eric Gonzalez and city Department of Investigation Commissioner Mark Peters presented the five checks.

The funds were the money the men deserved for their time on various public works jobs, including many schools. Though they were supposed to be compensated prevailing hourly wages around $50, they were getting a fraction of that – between $13.50 and $25 an hour.

“I am so happy to be able to hand you these checks, which were hard-earned and well-deserved and really will help make your holidays brighter,” Gonzalez said.

Riglietti, 50, pleaded guilty last month to grand larceny and his company, MSR Electrical Construction Company, once in Red Hook, copped to violating labor laws on prevailing wage requirements.

(See Article)

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)

Posted by National Alliance for Fair Contracting on

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)

New York’s prevailing wage law

Posted by National Alliance for Fair Contracting on

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.

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(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.”

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Prevailing wage called “imperative” to housing bills

Posted by National Alliance for Fair Contracting on

Oct. 10, 2017

State Building and Construction Trades Council President Robbie Hunter established a context in support of the prevailing wage in a Sacramento Bee story this week when he discussed how decent pay buys a highly skilled and trained work force that in the end cuts down on construction costs.

“Build it once, build it right,” the newspaper quoted Hunter as saying.

The Bee’s Oct. 8 story focused on the prevailing wage component included in five of the bills that were part of a housing package that was signed into law on Sept. 29 by Gov. Jerry Brown.

Three of the bills included an expedited approval process for contractors to get their projects built, including one piece of legislation, Senate Bill 35, which bypasses delays imposed by city councils and by a redundant environmental review process.

“Therefore,” Hunter said in a later statement, “it was imperative to have prevailing wage rates and a skilled workforce to assure that workers are paid a fair wage.”

As Hunter said in the video that accompanies the story, “If there is not a fair wage paid to the workers who are building a project, the very workers will be the ones who need the affordable housing.”

(Read More)