Nathan Fletcher declared in a tweet Thursday that he’s been on vacation. Some vacation!
Apparently he has enjoyed his leisure time taking “a closer look at the hard data on prevailing wage in the construction industry” and writing a detailed opinion piece for the July 26 Daily Transcript (“Prevailing wage: Good for local economy, local workers”).
Fletcher was recently a member of the state Legislature, where he consistently voted against union-backed bills expanding state-mandated construction wage rates. He voted in 2011 against extending this state mandate to refuse hauling (AB 514) and private solar generation facilities that provide electricity to schools (SB 136). He also voted against a bill that increased penalties for companies that do not pay the correct prevailing-wage rates (AB 551).
Perhaps he assumed at the time that state-mandated construction wage rates increase the costs of public works construction and are absurdly complicated and full of traps for contractors.
Maybe he noticed the conflicts among trade unions concerning jurisdiction over certain job classifications, or tried to figure out ambiguous travel pay for some trades, or heard concerns from non-union contractors about governments giving unions certified payroll records that expose the home addresses of employees. Maybe he saw that some construction trades claim that a “locality” for workers includes all of Southern California or even all of California.
Now Fletcher has approached this issue “in a thoughtful, open-minded way” and decided that the city of San Diego should stop exercising its constitutional right as a charter city to set its own rules concerning government-mandated construction wage rates.
He wants the San Diego City Council to vote on July 30 to fulfill the May 8 request of Mayor Bob Filner to require construction companies to pay state prevailing-wage rates on city projects.
I can’t ruminate about prevailing-wage policies with the credibility of a professor at UC San Diego. Nevertheless, as a layman I’ve written three editions of an influential and accurate (but much-detested) 92-page report comprehensive report entitled “Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions?”
I note Professor Fletcher’s suggestion that people who oppose the imposition of California’s prevailing-wage law at local governments haven’t approached the issue in a “thoughtful, open-minded way.” So I opened my mind and examined his claims in the Daily Transcript.
He overlooks how the state does not actually calculate prevailing-wage rates based on surveys of contractors and workers or even on wage data collected by the California Economic Development Department. In practice, the state obtains collective bargaining agreements for construction unions in every trade in every union local jurisdiction, adds up the employer payments indicated in those agreements, and declares the total to be the “prevailing wage.”
One consequence of the state using union collective bargaining agreements as the basis for determining so-called prevailing-wage rates is that rates include payments to union slush funds, even though these funds are not a direct benefit for workers.
Why are taxpayers obligated to shell out their money to funds described in state prevailing-wage determinations as “other,” so that the San Diego Electrical Industry Labor Management Cooperation Committee can turn around and give $10,000 to the Proposition Z campaign for the San Diego Unified School District?
It shouldn’t be a surprise when the city of San Diego Office of the Independent Budget Analyst anticipates a 5 to 10 percent cost increase if state prevailing wage is imposed on city contracts. When the state determined that the private Hilton San Diego Bayfront hotel was actually a public works job, equivalent to a courthouse or post office, workers were suddenly owed more than $8 million. California prevailing-wage rates are not market wage rates.
To support his arguments, Fletcher cites from a study he claimed was done at Colorado State University. Actually, it was produced by the union-oriented Working Partnerships USA program in San Jose and funded by companies bound to employer payments in collective bargaining agreements.
Despite its pretenses to scholarly research, the report has not been peer-reviewed, makes broad assertions about a tiny sample size, and does not provide source data to support its assertions. (Its data appear to be wrong.) It neglects the concept of opportunity costs. It fails to control for other variables besides government-mandated wage rates. Its definition of “local” is almost as absurd as the “locality” in state prevailing-wage laws.
Any attempt to read this report would quickly reveal that it isn’t a credible guide for how elected officials should spend taxpayer money on government contracts. Fletcher should have approached the Working Partnerships USA report with a critical eye, rather than an open mind.
Finally, Fletcher harkens back to the halcyon era of the 1930s, when a few Republicans supported an early version of what is now known as the Davis-Bacon Act. He neglects to mention why some Southern Democrats voted for it to become law. He does seem to understand the law restricts entry of some people into the construction workforce, however.
Fletcher thinks it’s a “no-brainer” for the San Diego City Council to impose state prevailing-wage mandates on city construction contracts. But anyone with a brain — and a concern for fiscal responsibility — would have strong reservations about voluntarily adopting another costly state mandate at the demand of Mayor Bob Filner and the union operatives now filling the power vacuum in the mayor’s office.
Kevin Dayton is president and CEO of Labor Issues Solutions LLC in Roseville, California.