These U.S. Workers Are Being Paid Like It’s the 1980s

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In some parts of America, the Department of Labor hasn’t updated its “prevailing wage” for taxpayer-funded work in decades.

By Josh Eidelson
May 25, 2018, 4:00 AM EDT

Thanks to a web of loopholes and limits, the federal government has been green-lighting hourly pay of just $7.25 for some construction workers laboring on taxpayer-funded projects, despite decades-old laws that promise them the “prevailing wage.”

Over the past year, the U.S. Department of Labor has formally given approval for contractors to pay $7.25 for specific government-funded projects in six Texas counties, according to letters reviewed by Bloomberg. Those counties are among dozens around the nation where the government-calculated prevailing wage listed for certain work-like some carpenters in North Carolina, bulldozer operators in Kansas and cement masons in Nebraska-is just the minimum wage.

That’s in part because, according to publicly available data from the Labor Department’s Wage and Hour Division, the agency is relying on wage survey data in more than 50 jurisdictions that’s from the 1980s or earlier. Experts said that’s a far cry from what Congress intended when, starting with the Depression-era Davis Bacon Act, it passed a series of laws meant to ensure that private companies contracted for government-backed projects pay their workers at least in the vicinity of what others get for the same work in the same geographic area.

In an emailed statement, the Labor Department didn’t address whether the decades-old data is a problem.

“The Wage and Hour Division carefully plans where to survey on an annual basis to ensure that prevailing wage rates reflect the reality of construction pay practices in a locality. The division identifies potential survey areas based on a number of criteria, including where available data on active construction projects in an area reveal changes in local pay practices such that a survey is necessary,” the department said.

Because government contracts are often required to go to the “lowest responsible bidder,” supporters say prevailing wage rules prevent a “race to the bottom” in which exploitative companies who pay workers less outbid safer, higher-quality firms, and in turn drive down industry standards to pocket more taxpayer dollars. Opponents of prevailing wage rules counter that they’re intrusive mandates that waste money, inflating construction costs in order to help unionized firms beat non-union competitors.

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ILR Impact Brief – New York State Prevailing Wage Law: Defining Public Work

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Publication Date 3-8-2018
Fred B. Kotler, Cornell University ILR School

Abstract

New York’s prevailing wage standards require that contractors on state funded construction projects pay their workers no less than wage and benefit levels “prevailing” within the local construction market.

Much has changed since the prevailing wage was enacted by statute in 1897 and written into New York’s Constitution in 1938. “Public works” projects then typically meant construction of public facilities, funded by public money, for public use. Today public resources are leveraged creatively to attract private capital for economic development.

The commingling of the various forms of public support with private funding has blurred the definition or boundaries of “public work.”

Sixteen other states have statutes that more broadly apply the standards to include loans, tax incentives, and other forms of public support to private projects. New York is among ten other states that enable private developers to accept public money without paying prevailing wages and benefits.

This report examines the taxpayer interest in redefining “public work” to include both traditionally funded public works projects and private, economic development projects funded at least in part by public assets.

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(Full PDF of Study)

Sherry Buchanan: Leave prevailing wage alone

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OpEd Sherry Buchanon
4/9/18

Once again, Republicans are trying to repeal Missouri’s prevailing wage. This law protects standards for decent wages, guarantees a fair bidding process, and demands safety and quality for public projects. The Kansas City Star recently called repeal efforts “the political lunacy of advocating for middle-class wage cuts during an era of stagnation and rising inequality.”

Prevailing wage protections started in 1931 when the Davis-Bacon Act was signed by Republican President Herbert Hoover. The act came about after two congressmen teamed up to protect their states from contractors who were bringing in low-paid labor from Alabama to do work on taxpayer-funded projects. Not only did the congressmen object to displacing local labor, they also recognized that these migrant workers would not be long-term taxpayers, consumers and constituents. They recognized that paying the lowest wages was not good overall economics.

Missouri’s prevailing wage law requires workers, union or nonunion, to be paid set wages on taxpayer-funded projects such as schools, jails and bridges. Wage rates are determined county-by-county from voluntary annual wage reports submitted by contractors who work in those counties. Those who pay union rates and those who do not are included in the average. So essentially, the “prevailing wage” in each county is the local going rate for various types of labor.

Because trade unions have successfully bargained for higher compensation, and because union-skilled labor is preferred by many local private and public builders, local wages are higher than they might otherwise be.

…

I want public policy that protects workers’ ability to make living wages so they can pay taxes and be vigorous consumers, helping our businesses and economy to prosper in ways that are good for everyone, not just the rich. I want public policy that supports a fair bidding process for contractors and rewards contractors willing to do quality work. I want public policy that guarantees safe construction of schools, roads, county jails and bridges. I want policy that supports spending local taxes to pay local workers who, in turn, spend locally.

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San Jose, Calif., Weighs Boost for Construction Project Workers

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By Joyce E. Cutler
March 27, 2018

Private construction projects in San Jose, Calif., that receive $3 million or more in tax breaks or other public financial support would have to pay prevailing wages and hire local workers under a proposal the city council is expected to consider next week.

“There are three basic challenges we’re trying to grapple with. One is a severe shortage of affordable housing and of housing supply generally; substantial shortage of construction labor, which are driving up construction costs; and third, a growing gap between those who are benefiting from the great prosperity here in the Bay Area and those who are gasping for air with the rising tide,” Liccardo said.

Local Standards

The proposal would require that employers on the projects pay a wage-and-benefits package that’s at least equivalent to the state-determined levels for the work and geographic area. At least 30 percent of the workers on a qualifying project within the city would have to live within 50 miles of the job site. A quarter of apprentice hours would have to go to disadvantaged workers. Projects would have monitoring and compliance provisions.

The requirements would cover projects that receive at least $3 million in public subsidies, including money, land, or other direct financial assistance or a substantial reduction in fees or taxes.

“The end goal is to provide good quality jobs to local workers. And whether we do that by way of initiative or reaching a compromise by the more conventional channels is not so important to us,” Ben Field, South Bay Labor Council executive officer, told Bloomberg Law.

Union-Backed Initiative

The agreement was reached after negotiations with the South Bay Labor Council, Working Partnerships USA, the Santa Clara-San Benito Counties Building Trades, and the Mechanical, Electrical, Plumbing, and Sprinkler Fitters (MEPS) unions, Liccardo said in a memo to the council.

“One of the best ways to ensure that good quality jobs go to local workers is to provide a prevailing wage,” Field said March 23. “One of the basic problems that we’re seeing here is middle class jobs are disappearing. A large part of the reason is the construction workforce is not being paid adequately.” Would-be construction workers aren’t going into trades or crafts where the wages are depressed.

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Feds reach settlement with Santee contractor to pay stiffed workers

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By Carl Prine
March 28, 2018

The U.S. Department of Labor announced Wednesday that investigators had reached a settlement with a Santee builder to repay back wages owed to the workers by a defunct subcontractor.

A & D General Contracting, Inc.. the prime contractor on a pair of federally funded projects for the Marine Corps, will compensate 16 workers $52,969 after El Cajon-based Amigos Design Build Landscapes failed to pay prevailing wages before declaring bankruptcy.

“The prime contractor in this case is stepping up to the plate and doing the right thing,” said Department of Labor spokesman Leo Kay during a telephone interview.

The case spun out of a probe by the agency’s Wage and Hour Division into Amigos Design’s work on two projects – a control gate at Marine Corps Recruit Depot in San Diego and Camp Pendleton’s Combat Training Tank and Instruction Facility, according to a Department of Labor press release.

Amigos Design filed for federal bankruptcy protection in late 2016, four years after the company was founded. In his Chapter 7 paperwork, company president Douglas Leal estimated $579,562 in debt to 113 creditors and only $482,182 in property to pay them.

…

Wage and Hour Division investigators determined that Amigos Design violated the Davis-Bacon and Related Acts by failing to pay required health and welfare rates to its employees.

The firm also incorrectly categorized some workers in jobs so that they would receive lower compensation rates than they deserved. Others were slotted as apprentices to pay them below the prevailing wage rates but they weren’t enrolled in any apprenticeship programs.

And on top of that, the company falsified its certified payroll reports, according to the Department of Labor.

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bill-would-allow-cities-counties-to-opt-out-of-prevailing-wage

Raimondo Speaks To Construction Unions, Supports Prevailing Wage

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The taxpayers will not get any breaks on school construction but will pay the prevailing wage, the governor signaled in a D.C. speech.

By Margo Sullivan, Patch Staff |
Apr 18, 2018 1:30 pm ET

WASHINGTON, DC – Rhode Island Gov. Gina Raimondo told the Building Trades unions she is running for another term, and she supports the prevailing wage. Raimondo delivered a speech in Washington, D.C. on Wednesday. In her remarks, she mentioned the projects her administration has undertaken to put construction workers back on the job. Among the projects, she included her $1 billion plan to replace and rebuild the public schools.

State Rep. Patricia Morgan, a declared Republican candidate for governor, had suggested saving the taxpayers money by not paying the prevailing wage for the school construction jobs. But Raimondo, without mentioning Morgan, stood squarely with the unions and demands for the prevailing wage. The unions had a seat on the panel that developed the billion dollar plan for the schools. No taxpayer groups were represented.

Here is the governor’s speech.

Introduction
Thank you! I love having the opportunity to spend time with people who build things.

Thank you Sean McGarvey. I am so grateful for your friendship and support, and for inviting me back to speak here once again. Brent Booker, thank you for your leadership and for everything you do to support America’s tradesmen and tradeswomen. Terry O’Sullivan, you’re incredible – I’m so thankful for our partnership.

Armand Sabitoni – the pride of Rhode Island! I could not ask for a better friend or supporter. You are a champion for the building trades and you deserve so much credit for all of the exciting development that’s happening back home in our small state.

And to my own local leaders: Michael Sabitoni, Tim Byrnes, and Scott Duhamel, thank you for everything you’ve done to strengthen Rhode Island’s middle class. We’re not done yet. Let’s keep going, and let’s keep building.

Rebuilding the Middle Class Deal
For decades, there was a deal in America: if you worked hard and did what was expected of you, then you could raise a family with dignity and security. You could own a home, save for retirement, help your children pay for school, and even take time to visit beautiful beaches like the ones we have in Rhode Island!

In recent years, though, that “deal” has come under attack. There are powerful forces in America that have been working to ensure that a privileged few do well, without any concern for what happens to American workers.

In my state, the building trades got crushed by the recession. As recently as 2012, nearly one out four Rhode Islanders in the building trades were unemployed. When I was running for Governor, I would talk to tradesmen and tradeswomen. They’d been out of work three months, four months, nine months, a year. They were losing their homes. Losing their marriages. Losing their pride.

We had to do something. Back in 2014, across Rhode Island, there weren’t any jobs for laborers, but there was so much work to do.

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Lake County commissioners OK updated responsible contractor checklist

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By Andrew Cass, The News-Herald
POSTED: 04/30/18, 3:22 PM EDT

A sizable group of labor union representatives packed into the Lake County commissioners’ chambers to show support for a resolution updating the county’s responsible contractor checklist for infrastructure projects

Commissioner John Hamercheck said the resolution was part of a yearlong process, gaining steam in the past three months. It passed unanimously at the board’s most recent meeting.

“It sets the rules for how we’re going to do capital improvements at the county level,” Commissioner Daniel P. Troy said.

Troy also said he thinks that it ensures that the taxpayers – who are paying for the projects, be it through federal, state or local funds – are getting the best return on their investment.

“The way I look at it, it’s putting this in place so we’re not sitting here trying to determine who is the lowest bidder and who is the best bidder,” he said. “It’s still the law, but sometimes that becomes very difficult.”

Basically, he added, they’re setting criteria that is going to help ensure they pay “the right people the right amount of money to do the job the right way the first time.”

“What we’re looking for in this responsible contract language is furnishing of records as to that contractor’s performance on other projects, how they have complied with statutes that we have to comply with in terms of prevailing wage, payments of benefits etc.,” he said.

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San Jose ballot measure would force real estate developers to hire local

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By MARISA KENDALL
PUBLISHED: February 6, 2018 at 6:00 am | UPDATED: February 6, 2018 at 6:07 am

SAN JOSE – As Silicon Valley’s housing market booms, benefiting homeowners, landlords and developers, some activists say one group isn’t reaping its fair share of the profits: the local construction workers building these expensive homes.

A new ballot measure for San Jose seeks to change that. If approved by voters in November, the “Build Better San Jose” initiative would require developers of large, private projects to hire more local workers, and pay them better.

“Workers are not paid enough to be able to afford to live in the area,” said Louise Auerhahn, director of economic and workforce policy for public policy group Working Partnerships USA, which helped draft the measure.

Responsible Development San Jose, a coalition that supports local construction workers, is set to send the initiative to city officials Tuesday, the first step to putting it before voters in November. Once it is approved by the city, it will need 21,200 signatures to make it to the ballot.

If passed by voters, the measure would require developers in San Jose to pay workers the “prevailing wage” – a payment standard set by the California Department of Industrial Relations that varies depending on a worker’s location and specific type of work.

As of last year, the prevailing wage for construction workers classified as “laborers” in Northern California ranged from about $20 to $33 per hour. Developers also would have to put forth a “best faith effort” to hire locally for at least 30 percent of a project’s hours, hiring workers who live in San Jose or within 50 miles of the city’s limits. And developers would be required to help train new local workers by using one hour of apprentice labor for every five hours worked by an experienced worker.

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Guest Column: Protect prevailing wage to save jobs

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By Kevin Hertel, Special to Digital First Media
POSTED: 01/30/18, 3:35 PM EST

Michigan’s prevailing wage laws have helped mitigate the effects of this misguided perception. Passage of prevailing wage laws proved that we have had the good sense to make sure that the people who build our schools and office buildings, keep our air conditioners working in the summer and furnaces working in the winter, and come out to unplug our drains at all hours of the day and night will always earn a living wage. This law stands not just to serve as a “minimum wage for tradespeople,” it also protects small contracting businesses. Since everyone is competing at the same baseline pay scale, top tradespeople are not immediately drawn to a company that is able to pay them more than a mom-and-pop contractor. Prevailing wages, then, are simply wages that help all workers in the construction industry earn a fair day’s pay for a fair day’s work.

The bottom line is this: Michigan is a manufacturing state. Our economy cannot exist, let alone continue its upward trend, if we pull the financial rug out from underneath skilled trade workers and leave no benefits to working in the trades. Every legislator I know would say that Career and Technical Education is the key to a successful state-many have worked to ensure that their centers for it are state of the art, as is Macomb County’s. However, if prevailing wage is repealed, this push will have been for nothing-no one is willing to go through that much training and certification to end up making $9.25 an hour. Repealing prevailing wage puts the future of our state at risk.

Democrat Kevin Hertel is a state representative from St. Clair Shores.

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Veterans speak out about prevailing wages in Lansing

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By News 10
Posted: Tue 12:17 PM, Feb 27, 2018
Updated: Tue 7:26 PM, Feb 27, 2018

LANSING, Mich. (WILX) – A group of Veterans gathered in Lansing Tuesday to speak out about and support the prevailing wage vote.

Veterans from three skilled trade unions talked at a press conference at the Michigan Senate building on Tuesday morning.

Their message, “a vote against prevailing wage is a vote against high-quality jobs that allow veterans to support themselves and their families.”

…

“Veterans bring with them the experience, grit and sense of unity necessary to succeed in the skilled trades,” said Brad Reed, a business representative for the Michigan Council of Carpenters and Millwrights (MRCC) and Army veteran. “By protecting the prevailing wage, these high-skill, high-demand jobs are more available and accessible to our nation’s heroes.”

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