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.

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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.

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Delaware legislature strikes down county-by-county Right to Work efforts (DE)

Posted by National Alliance for Fair Contracting on

Delaware House passes bill stalling the state’s anti-labor movement

(PR NewsChannel) / June 26, 2018 / DOVER, Del.

Last week, Delaware legislators passed a pivotal bill stopping the state GOP’s Right to Work movement in its tracks.

Approved by a vote of 25-13 along party lines, the Delaware House voted to guarantee the right of private employers to enter into labor deals that require their employees to join a union. The bill effectively blocks the GOP effort to pass the controversial legislation on a county-by-county or town-by-town basis.

“The Governor strongly believes that one of the best ways to stand up for Delaware’s workers is to protect their right to organize, earn a good living and support their families,” said Jon Starkey, spokesman for Gov. John Carney.

Labor supporters agree, citing the number of states suffering under Right to Work as reason why legislators in Delaware made the right decision.

“Implementing Right to Work is attempting to put out a fire with gasoline,” said Richard Dalton, business manager for the International Union of Operating Engineers (IUOE) Local 18 in Ohio. “Business owners will prosper while workers remain unchanged, possibly even worse off than before.”

Studies conducted over the last decade have repeatedly shown Right to Work to have little impact on a state’s economy.

In 2011, the Economic Policy Institute (EPI) conducted a multi-part study. Their first major finding was that, on average, full-time workers in Right to Work states earned 3.1% less than those in unionized states. That same year, New Hampshire and Indiana’s legislature considered implementing a new law. Indiana passed Right to Work while New Hampshire didn’t receive enough support. Although New Hampshire’s economy was stronger from the start, Right to Work did nothing to close the performance gap with Indiana.

A study in 2017 expanded upon EPI’s research to find that Right to Work harms job growth and union performance as well.

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