Prevailing wage crucial for construction workers

Posted by National Alliance for Fair Contracting on

BY SAMANTHA DRAPER
POSTED 02.20.2018

It is sadly ironic that portions of the construction industry have been fighting for years to reduce wages on these important but dangerous jobs are now claiming they face a skilled labor shortage.

Just last year, California’s housing industry spent millions of dollars lobbying against minimum labor standards in any part of the residential construction sector. Even though research shows that construction labor represents a paltry 15% of total housing construction costs, they tried making the mathematically absurd claim that paying their workers enough to pay the rent -even in exchange for less red tape on certain projects – would somehow make California’s housing affordability crisis worse.

Some California contractors talking about labor shortages were trying to convince California municipalities to become “charter cities” so they could circumvent prevailing wage rules.

But they haven’t been the only ones.

Since 2015, five U.S. states have repealed their prevailing wage laws – laws that establish minimum wages for different skilled crafts on publicly funded projects and promote privately financed training programs that are designed to prevent skilled labor shortages. Other states are considering following suit, even though labor represents just over 20% of the total cost of public works projects – a historically small and declining share in what constitutes fully one-third of all output in America’s fourth-largest economic sector.

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

Prevailing wage a better value

Posted by National Alliance for Fair Contracting on

Henry Yanez
Published 11:00 p.m. ET Feb. 12, 2018

This year, special interests collected signatures to put the question of repealing Michigan’s long-standing prevailing wage law before the Legislature or on the ballot – often misconstruing the true intent of what their petition would do. They tell you it’s about saving you money. Nothing could be further from the truth. Let me tell you what prevailing wage is.

Michigan’s prevailing wage law ensures that our publicly financed buildings, roads, bridges and utilities are constructed using highly skilled and trained workers who are paid the regional average for their trade. The law doesn’t artificially inflate wages or the cost of construction and doesn’t force workers to be union members.

It just ensures that the people building our infrastructure earn a fair wage and benefits, and that their pay reflects their level of training. The law keeps skilled tradespeople and their families here in Michigan, where they spend money, grow the local economy and pay taxes.

Lowering wages reduces job productivity and lengthens the project schedule. Mistakes also happen when inexperienced, lesser-trained workers do the work. Michigan has already experimented with repealing prevailing wage in the mid-1990s. Costs went up and our skilled workforce went down. A study of highway and bridge work in 10 states found that high-wage workers built 74.4 more miles of roadbed and 32.8 more miles of bridges for $557 million less, compared to low-wage workers. Better and more efficient work for less money isn’t a difficult idea to get behind. …

Rep. Henry Yanez, D-Sterling Heights, represents Michigan’s 25th House district.

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California DA: Contractors failed to pay $200K in prevailing wages, state taxes

Posted by National Alliance for Fair Contracting on

Kim Slowey
Feb. 26, 2018

Dive Brief:

  • The Orange County (California) District Attorney’s Office has charged a group of contractors that performed work on the Pacific Amphitheater at the Orange County Fair and Event Center in Costa Mesa between 2013 and 2015 with underpaying workers and failure to pay state taxes, an amount totaling $200,000, according to the Los Angeles Times.
  • Prosecutors allege that the owners of AWI Builders, Zhirayr “Robert” Mekikyan and his wife, Anna Mekikyan of Pico Rivera, California, did not pay workers the prevailing wage rate established for the $10 million project, which was a new lobby and entrance area for the amphitheater, and created fraudulent records to conceal the supposed fraud. The DA’s office also claims that AWI did not report the correct amount of wages to the California Employment Development Department to avoid paying its fair share of state payroll taxes.
  • Also named in the suit is another one of the Mekikyans’ companies, Construction Contractors Corp., and a family member’s business, TOSC, Inc. Prosecutors allege that those companies also submitted forged apprenticeship certificates. An attorney for the Mekikyans said the charges against his clients are false.

Dive Insight:

Prevailing wage fraud is a problem nationwide, and local authorities have their hands full trying to root it out.

The Manhattan District Attorney’s office has categorized this underpayment of workers as wage theft and, in December, charged area construction companies, as well as their owners, with stealing nearly $3 million in wages from more than 400 construction workers. Manhattan DA Cyrus R. Vance Jr. said the companies stole employee pay through checks returned for insufficient funds, hourly rates lower than the prevailing wage, not paying overtime or not paying workers at all. The amounts not paid per construction company ranged from $13,000 to $700,000.

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Ninth Circuit Considers Challenge to Prevailing Wage Law

Posted by National Alliance for Fair Contracting on

BIANCA BRUNO
February 5, 2018

(CN) – The Ninth Circuit Monday considered arguments by nonunionized construction groups challenging a California wage law they claim prevents the open-shop industry from exercising its free speech rights.

The Associated Builders and Contractors of California Cooperation Committee and Interpipe Contracting appealed the dismissal of their case brought against Attorney General Xavier Becerra, Labor Commissioner Julie Su and Department of Industrial Relations director Christine Baker, which challenged the constitutionality of an amendment to the state wage law that went into effect in 2017.

Senate Bill 954 only allows employers who make payments to an “industry advancement fund” as required by a collective bargaining agreement to receive a prevailing wage credit through a state subsidy.

(Read More)

(Order in ABC vs. Becerra)

Prevailing Wage, Local Workers Sought for Affordable Housing Projects

Posted by National Alliance for Fair Contracting on

Posted by Debbie L. Sklar
March 14, 2018

Builders who receive city money for affordable housing and public works projects would be required to hire skilled, local workers and pay them a prevailing wage under a proposal advanced by a City Council committee Wednesday.

Councilwoman Georgette Gomez’s “HireSD” program would aim to lift people out of poverty by requiring developers in certain projects to hire workers who have completed apprenticeships or other training because those workers are paid a higher wage. The resulting demand for skilled workers would create an incentive for economically disadvantaged people to complete that training as a “pipeline to middle-class jobs,” the councilwoman’s Chief of Staff Dominika Bukalova said.

The plan would also require developers of certain projects to hire local people and pay a prevailing wage, a minimum wage currently paid in certain public works projects.

The rules would apply to projects that receive money from the city’s affordable housing fund and a business subsidy program. Part of the proposal is an expansion of a 2013 prevailing wage ordinance that applies to public works projects.

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Guest Column: Prevailing wage supports Oakland County communities (MI)

Posted by National Alliance for Fair Contracting on

Andy Meisner is Oakland County treasurer
POSTED: 01/12/18, 3:12 PM EST

Big things are happening here in Oakland County. In November, Oakland County voters approved millions of dollars in public projects to improve our schools, sidewalks and communities – all smart investments in our future.

These projects show that our economy continues to grow. We’ve come a long way since the stagnant, cash-strapped Recession years, and we can make even more progress working together.

Unfortunately, some special interests in Lansing want to gamble with Michigan’s prevailing wage law in hopes of increasing their profits. That would create roadblocks to growth in Oakland County, and it’s the wrong move.

Repealing the prevailing wage is being hawked by special interests as a way to save taxpayers’ money. If that sounds too good to be true, it’s because it is. Repealing prevailing wage will send qualified workers out of state, leaving projects to lower-skilled workers. It will lead to expensive mistakes and cost-overruns that will be passed onto taxpayers when projects are built with cheap labor by out-of-state contractors, compromising safety and quality.

…

Prevailing wage is a smart investment that levels the playing field so local Michigan contractors have the opportunity to compete for public projects, without being undercut by the fly-by-night operations that employ cheap, low-skilled labor. By requiring all contractors who bid on a project to pay their workers a fair wage, quality contractors are challenged to work smarter and employ innovative ideas, not just cut costs by slashing wages.

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Prevailing wage supporters launching counter-petition (MI)

Posted by National Alliance for Fair Contracting on

Jonathan Oosting
Updated 11:25 p.m. ET Dec. 7, 2017

Lansing – A coalition of construction unions and contractors are launching a petition drive for an initiative to preserve Michigan’s prevailing wage law, an attempt to thwart a separate petition drive seeking repeal.

The state’s Republican-led Legislature could decide early next year whether to scrap the 1965 law, which requires union-rate wages and benefits on state-financed or sponsored construction projects.

But the Michigan Prevails coalition and the Protect Michigan Jobs ballot committee are urging legislators against taking up the repeal initiative.

“They can do what they want to do, but make no bones about it, we are not going to take this lying down,” said Patrick Devlin, secretary-treasurer of the Michigan Building and Construction Trades Council, who is helping organize the counter-petition.

The Protect Michigan Taxpayers ballot committee, funded largely by an association representing contractors who do not use union labor, last month submitted more than 380,000 signatures for a repeal plan. If approved by the Board of State Canvassers, the measure would advance to legislators.

…

“This isn’t just about the unions,” said Mike Crawford, executive director for the Michigan Chapter of the National Electrical Contractors Association. “This is very much a business issue. The prevailing wage law … makes sure that public construction projects are bid on an equal footing, at least as far as labor is concerned.”

(Read More)

(Visit Michigan Prevails Website)

Letter: Prevailing wage stabilizes labor market (MI)

Posted by National Alliance for Fair Contracting on

DetroitNews
Published 10:57 p.m. ET Jan. 3, 2018

Michigan is experiencing a skilled-worker crisis. Our state’s construction industry is booming and contractors are struggling to find the workers needed to participate on public projects. From a business perspective, the prevailing wage is a proven tool to retain qualified workers on Michigan’s public projects and entice new recruits into the trades (Re: The Detroit News’ editorial, “Let’s move past prevailing wage,” Dec. 14).

Contractors know Michigan’s prevailing wage laws help stabilize the labor market on publicly funded projects so we can find the workers needed to finish projects and make the best use of taxpayer dollars. I want Michiganders and policymakers to understand there could not be a worse time to repeal Michigan’s prevailing wage law.

I was there when we suspended the prevailing wage laws in the ’90s, and I saw how it devastated our skilled workforce for publicly funded projects. Facing reduced hourly rates, our workforce became transient. Decades of loyalty was supplanted by a revolving workforce forced to focus on finding the best pay. The best workers were lured away by increases in hourly wages, making it harder to complete the schools our children attend, the roads we drive on and other infrastructure projects on time or on-budget.

Repealing Michigan’s prevailing wage laws did not save money or benefit public clients 20 years ago and it will not help them now. Today, we are experiencing the same market trends. All contractors, including Barton Malow, have turned down work due to a lack of available workers. With billions more in publicly-funded jobs coming online this spring, Michigan can’t afford to gamble like we did in the ’90s with our skilled workforce.

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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.

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(One Page PDF of Blog)