Prevailing Wage Repeal Could COST Wisconsin Taxpayers Over $300 Million Per Year

Analysis of studies cited by advocates of prevailing wage repeal highlights massive social costs

FOR IMMEDIATE RELEASE: June 19, 2017
Wednesday, May 31, 2017

Madison: While critics of Wisconsin’s prevailing wage law have long claimed that repeal would save money by cutting the wages of blue-collar construction workers, a Midwest Economic Policy Institute (MEPI) analysis of two reports frequently cited to support the claims of prevailing wage critics shows that repeal could actually cost Wisconsin taxpayers over $300 million each year.

For its study, MEPI examined how construction wage cuts would affect overall state tax revenues and reliance on five different government assistance programs utilizing the Wisconsin Taxpayers Alliance’s recent claim of a 44% cut, and a 2015 Wisconsin Legislative Fiscal Bureau analysis that suggested repeal of prevailing would reduce wages by 14.1%.

“If an entire segment of Wisconsin’s blue-collar workforce faced a wage cut of 14% to 44%, it would mean thousands more Wisconsin workers would be on government assistance, and Wisconsin’s state government would have significantly less tax revenue to pay for these benefits,” said MEPI Policy Director Frank Manzo IV. “Using the wage cut figures promised by the law’s critics, we can assess that prevailing wage repeal would impose a potential social cost to Wisconsin taxpayers of hundreds of millions of dollars each year-without producing any real savings in total project costs.”

The current average wage for skilled construction workers, on which MEPI’s analysis is based, is $51,600 per year. The 44% wage cut claimed by the Wisconsin Taxpayer Alliance would reduce this average to less than $29,000 per year for those employed on public works projects. This would leave affected construction working families of four eligible for well-over $16,000 per year in government subsidized health, food and heating assistance, plus another $5,000 per year in Earned Income Tax Credits (EITC). The reduction in wages would also reduce their state and federal income tax payments by an average of $4,800 per year, for a potential annual social cost of more than $26,000. Similarly, a 14% wage cut would result in a potential social cost of over $17,000 per year for a family of four.

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(Full PDF of Report)

Contractor fined $189K for OR bridge safety violations

Kim Slowey
June 21, 2017

Dive Brief:

  • The Oregon Occupational Safety and Health Administration (OSHA) has fined a Minnesota contractor $189,000 and issued the company nine safety violations related to worker injuries on a Portland, OR, bridge project, according to KGW.com.
  • Oregon OSHA said contractor Abhe & Svoboda did not provide adequate fall protection for workers prior to an incident in which a worker fell 37 feet from the bridge and landed on another individual, injuring them both.
  • Company officials allegedly tried to justify their lack of compliance with Oregon’s safety rules by arguing that the rules change too often. The agency cited the company with two willful and seven serious violations.

Dive Insight:

While construction work in general is inherently dangerous, bridge work can be especially risky, as many employees are consistently working at elevated heights. In November, the Pennsylvania Department of Transportation charged contractor Joseph B. Fay Co. $3.3 million for damages related to a fire that erupted on the Liberty Bridge in Pittsburgh while Fay was working there.

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NABTU Apprenticeship Programs Seen as Model for Expansion

North America’s Building Trades Unions
14 Jun, 2017, 09:16 ET

WASHINGTON, June 14, 2017 /PRNewswire-USNewswire/ — The following statement was released today in response to the Trump Administration’s announcement of planned initiatives designed to increase apprenticeship education and training across the US economy:

“We commend the Administration for elevating and promoting the power of apprenticeship programs for workers and whole industries. As the preeminent organization involved in apprenticeship readiness and apprenticeship education and training today, North America’s Building Trades Unions (NABTU), its affiliated unions, and its contractor partners appreciate efforts by the Federal Government to increase utilization of apprenticeship education.

“Among construction apprentices in the US today, 75 percent are trained in the joint apprentice training committee (JATC) system, which the Building Trades operate in cooperation with their contractor partners. We know from over 100 years of experience that robust, labor-management commitment to and investment in craft training ensures the necessary and portable skills for workers to meet specific demands of employers and entire industries, while also providing the means for individuals and communities to gain a foothold on the ladder to the middle class. Coupled with increased investments in infrastructure, apprenticeship can unleash broad, sustainable growth throughout the country while also allowing for career pathways for long underserved communities and those looking to embark on safe, highly skilled, productive and rewarding careers in the construction industry.

“In the Building Trades, these apprenticeship career pathways have been fully developed through articulation agreements and other relationships with US colleges and universities. All Building Trades apprenticeship programs, for example, have been assessed for higher education credit. In fact, NABTU considers apprenticeship training ‘the other four-year degree.’ If the Building Trades training system, which includes both apprentice-level and journeyman-level training, was a degree granting college or university, it would be the largest degree granting college or university in the United States – over 5 times larger than Arizona State University. In fact, NABTU’s training infrastructure is rivaled only by the US military in terms of the quality and depth of skills training.

“US Labor Secretary Alexander Acosta framed it correctly when he observed, ‘if you look into the Building Trades, there’s almost a billion [dollars] that’s spent every year, and that’s all private sector money. The Building Trades have put together labor management organizations that jointly invest in these apprenticeship programs because they know both on the labor side and the management side that a skilled workforce is critical to the Building Trades. And that’s how it’s worked for a number of years.’

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Last minute legislation would close stolen wages loophole (NY)

Thursday, June 15, 2017

ALBANY – A wage theft law is on the books in New York State, but there is an effort to close a loophole that allows guilty businesses to hide assets and avoid paying what is owed.

Susan Zimet of Greene County, executive director of the Hunger Action Network of New York State, is lobbying to have to close that loophole in the next several days.

“We are trying to do what is called the ‘SWEAT’ legislation, which is ‘Securing Wages Earned Against Theft’ to basically put a lien on the business at the very beginning of the lawsuit so the assets can’t be moved around and if somebody wins, they can end up actually getting the back wages,” she said.

The measure passed in the Assembly last year and Zimet expects it to be approved again this year.

She is pushing to have the bill, which is curently in the Senate Judiciary Committee, chaired by John Bonacic (R, Mt. Hope), approved before lawmakers adjourn in about one week.

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The Truth About the Prevailing Wage Law

JUNE 10, 2017
Capitol Report
By State Representative, Leon D. Young

Succinctly stated: Repealing the prevailing wage doesn’t save the state money. , it costs the state JOBS! With that being said, let’s examine the truth about the prevailing wage law that Republicans refuse to admit and don’t want you to know. Repealing prevailing wage has in effect:

* Shipped millions of dollars across the border to companies in states like Florida and Kentucky.

* Caused great economic harm to countless, hard-working Wisconsin workers and their families. Moreover, a closer look inside the numbers reveals the following:

* More than one in four workers in Wisconsin made less than $11.56 per hour, which is considered a poverty-wage job, according to COWS (The Center on Wisconsin Strategy) with UW – Madison.

* Low-wage jobs don’t offer good benefits. Workers in low-wage jobs are less likely to receive health insurance through their employer, according to COWS.

* Repealing prevailing wage hurts veterans who work in the construction industry. According to a 2016 study from the Midwest Economic Policy Institute, approximately 2,000 veterans are likely to separate from their jobs by 2018 because of the repeal of prevailing wage laws.
o This will result in a total decline of veteran construction workers’ wages of $113 million, according to the same study.
o Additionally, more than 200 veterans will earn less than the official poverty line.
o This would, according to the Midwest Economic Policy Institute, result in more veterans relying on government assistance programs that would cost taxpayers more money.

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Chowdhury: Repeal of prevailing wage would hurt Wisconsin economy

Abdur Chowdhury
10:17 a.m. CT June 6, 2017

Out-of-state companies received $32 million in contracts for municipal projects in Wisconsin between January and April of this year, up from about $21 million during the same period in 2016. That represents a 53% increase.

Contracts that should be going to Wisconsin companies are now being given away to out-of-state companies from Florida, Kentucky and Missouri. The difference? No prevailing wage protection on municipal projects.

In 2015, the Wisconsin Legislature voted to end prevailing wage in local projects – a provision that took effect this January. Republicans in the Legislature are now considering a full repeal of the state’s prevailing wage law.

This law requires that construction workers on state construction projects be paid the wages and benefits prevailing for similar work in or near the locality in which the construction project is to be performed. The concept arises from the concern that unbridled competition among employers to pay low wages in low-bid public construction environment would lead to a less-skilled and less-productive workforce and to shoddy construction practices and unsafe public buildings and infrastructure.

While the Legislature was debating this issue in 2015, many of us had expressed concern that eliminating the law would cut wages and invite so-called “gypsy contractors” from out of state to bid on Wisconsin projects. Research conducted by Frank Manzo and his co-authors indicated that the amount of construction work that would be leaked to neighboring states would cost Wisconsin 6,700 jobs and $40 million in tax revenue, and reduce economic activity in the state by $1.1 billion. For every dollar of construction value that is completed by an out-of-state contractor, economic activity would decrease by $2.26 in Wisconsin.

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Columnist Dennis Bidwell: Addressing downtown Northampton’s challenges (MA)

By DENNIS BIDWELL

Monday, June 05, 2017
The Northampton City Council Committee on Community Resources, through public forums and a variety of presentations and submitted reports, has learned a great deal about both the strengths of the local economy, particularly as it affects downtown Northampton and the center of Florence, and about a variety of local challenges.
The efforts of the Pioneer Valley Workers Center and several labor unions produced considerable testimony, particularly from restaurant and construction workers, about their experiences with some local employers failing to comply with wage and labor laws. We also heard from restaurant owners describing their compliance with these laws, as well as their concern that the media’s attention on just one perspective about the issue left many restaurant owners feeling they were maligned as a group.

This attention to wage-theft issues yielded three actions taken by the city. First, issuance by the mayor of an executive order requiring that all contractors seeking procurement contracts with the city, or seeking tax increment financing agreements, certify their compliance with wage and hour laws. Second, passage by the City Council of a resolution declaring Northampton a fair employment city, and calling on the city’s License Commission and Community Preservation Committee to adopt similar requirements regarding contractor certifications. And third, urging additional wage-theft enforcement powers and resources for the state attorney general’s office, and approval of a council order requiring all applicants coming before the council for licenses to affirm their compliance with wage and labor laws.

California Labor Commissioner Citation of General Contractor for Subcontractor’s Wage Theft Affirmed

SOURCE California Department of Industrial Relations, California Labor Commissioner’s Office
Jun 29, 2017, 17:32 ET

LOS ANGELES, June 29, 2017 /PRNewswire-USNewswire/ — California Labor Commissioner Julie A. Su issued citations of $249,879 against Irvine-based general contractor Deacon Corporation, along with its subcontractor, Lafayette-based Champion Constructions, Inc.

This is the first time that the Labor Commissioner has held a general contractor responsible for wage theft by its subcontractor by issuing citations under AB 1897 (section 2810.3 of the Labor Code), signed by Governor Brown in 2014, which took effect on January 1, 2015.

Champion, a drywall and framing contractor hired by Deacon for the Cambria Hotel construction project in El Segundo, shorted 47 workers. The Champion employees worked an average of 10 hours a day, five days a week and were unpaid for four weeks.

“This case addresses the pervasive problem of wage theft in subcontracted industries,” said Labor Commissioner Julie A. Su. “Businesses at the top of the contracting chain that profit from workplace violations can no longer escape legal liability by hiding behind their subcontractors, even if they did not control the work performed or know about the violations.”

The wage theft came to light after several of Champion’s workers walked off the job on June 16, 2016, and filed wage claims at the Labor Commissioner’s Office in Long Beach for nonpayment of wages.

The Labor Commissioner’s investigation revealed that Champion paid the workers from an account with insufficient funds and then skipped several pay periods for the majority of the workers. Investigators also learned that Champion failed to pay overtime wages to many of the workers, who worked up to 2 hours overtime a day.

The Labor Commissioner’s Office last August issued citations against both Deacon and Champion totaling $279,151 in unpaid overtime and minimum wages, waiting time penalties, rest period premiums and civil penalties for work performed from May 8, 2016 to June 16, 2016. A demand letter was also issued in August for $50,466 to request payment of the contract wages, which is the difference between minimum wage and the wages promised to the workers when contracted for the job.

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The St. Petersburg Wage Theft Ordinance: New Notice and Poster Requirements

Monday, June 26, 2017

The City of St. Petersburg, Florida, recently amended its wage theft ordinance to require employers to provide pay notice to employees at the time of hire and to display “in a location accessible to all employees” a poster about wage theft. See St. Pete. Code, Chap. 15, Art. III, Sec. 15-40, et seq. These requirements are not yet in effect. As detailed below, the effective date is on hold pending the completion of a memorandum of understanding by the City, which is engaging a “community-based” organization to “implement the purposes of this article.”

The ordinance defines the term “employee” broadly to mean a “natural person who performs work within the geographic boundaries of the City while being employed by an employer . . .” including “a person who performs work that benefits an employer located within the City even though the employee may have performed work outside of the City.” The ordinance excludes “any bona fide independent contractor,” stating that the term “independent contractor” “shall have the same meaning as in the Internal Revenue Code, Fair Labor Standards Act, and implementing federal regulations, administrative interpretations and guidance” (though “independent contractor” is defined differently by the Internal Revenue Service and U.S. Department of Labor).

Background

On December 15, 2016, the St. Petersburg City Council passed several amendments to the City’s wage theft ordinance. Under Sec. 15-44, there are three new requirements for employers. Employers must provide a “written notice” to employees at time of hire, including a “template summary” summarizing the employee’s rights (available from the City), written notice of changes in pay, and a poster (available from the City). Sec. 15-44(a)-(d). There is also a $500.00 “per violation” penalty for an employer’s failure to adhere to any part of the ordinance. Sec. 15-44(e). The term “violation” is not defined.

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Construction workers, union seek more protection from wage theft, abuses in Charlotte

JUNE 26, 2017 7:45 PM
BY ELY PORTILLO

A group of construction workers and labor organizers told Charlotte City Council on Monday that the city needs to take more steps to ensure the people fueling the building boom aren’t taken advantage of and subjected to unsafe conditions.

At a press conference organized by the AFL-CIO union in front of the Government Center uptown, they asked City Council to establish a task force to study construction workers’ conditions and pass a policy to rate contractors and make them disclose more about their employment practices.

The call for more rules to protect construction workers is tied to a report called “Build a Better South” that highlights wage theft, workers misclassified as independent contractors, lack of benefits and other hardships facing workers in the South’s booming construction industry. The report is a partnership of the Workers Defense Project, Partnership for Working Families, and the University of Illinois.

The report’s authors surveyed almost 1,500 workers in six fast-growing cities – Charlotte, Atlanta, Houston, Dallas, Miami and Nashville. In Charlotte, they found:

▪ Nearly half – 44 percent – received no benefits at all from their employers, such as sick leave or health insurance.

▪ The industry is largely made up of Latino workers, who comprised 68 percent of those construction workers surveyed in Charlotte.

▪ Only 11 percent had formal training in construction at a vocational school or community college.

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