The cost of prevailing wage to the construction industry

When a so-called policy group stakes out a position, at the very least one would expect the position to stem from an accurate foundation. A group calling itself Smart Cities Prevail, on a website with that name, fails that simple test.

Apparently this group confines its analysis to processes used by the state and federal government to set the wages and work rules for construction paid for with tax money. At least, that is all I could find during a short review of the material posted there. The system is euphemistically called "prevailing wage" laws.

The group makes a number of claims regarding the effect of such laws and says these required wages are "…the average pay rate for a construction worker in a given geographic area." In California, that is not even close to correct.

In the Golden State, unelected regulators identify these mandated rates, almost universally, as union scale. The system is designed that way and it succeeds. Yet, unions represent less than one-fifth of the California construction industry workforce.

California law says the Department of Industrial Relations, if it attempts to determine this rate and does not find a majority of the wages and fringes to be of the same value in a labor market, it is to conclude the mandated rate is "…the single or modal rate being paid to the greater number of workers" in a labor market. Because union members are all paid the same rate in a single labor market, the results are foreordained.

From this baseless and incorrect starting point, representatives of the construction trades and those who believe unions are simply the best thing to happen ever, make some startling claims. Some of them strain credulity.

For example, the president of a local union-backed "taxpayer association" says the repeal of California's current wage control law would cause the state to "immediately lose 17,500 jobs across the economy."

Immediately? Even over a longer stretch of time, it doesn't seem reasonable to conclude that this will occur.

The president of this so-called taxpayer group appears to have made this statement based on a study. We've all learned that studies can be, and often are, manipulated to obtain the results the sponsors of the studies want. Do an Internet search and you can find a vast array of evaluations, many of them done by well-educated people and their research assistants, on each side of this argument.

These reports are generally criticized based on the funding arrangements. Common sense cuts through this battle of models, upon which these studies are frequently based. If you raise the wage structure, you increase the cost of the product. Counter claims of increased productivity and better skill and training are bogus. I know there are studies saying those are some of the benefits of these laws. There are other studies which come to exactly the opposite conclusion.

Coincidentally, this most recent surge of data and illogical claims set the stage for California's single-minded bunch at the Capitol in Sacramento. The current Legislature has already made it difficult for charter cities that chose not to elect this inflated prevailing-wage system, a choice which the courts themselves have approved.

When that decision came down, the Legislature said if these locally governed cities don't voluntarily require the state wage system, they could lose state money. Now the Legislature is attempting to make certain that even some privately funded construction is subject to this arbitrary law, work that traditionally was awarded based on legitimate competition.

The primary supporters of these government imposed wage systems are construction unions. It is simple to understand why. It is a matter of following the money.

Legislators benefit from campaign contributions. Public construction with arbitrary, excessively high-wage requirements and featherbedding work rules, favor the groups that already have those wage schedules and rules in their contracts.

Non-union contractors stay away from such work when they can. More union members working means more dues and fees are collected by the union bosses, which means more campaign contributions are available to support lawmakers.

The obvious benefit is more union money to help lawmakers win elections. "You get me elected and I will get you the work." This circular quid pro quo is offensive, expensive and unfair to taxpayers.

Hawkins is retired after 35 years as a construction industry association manager. He was a broadcast reporter and news anchor in Denver. As a Navy officer, he saw action in Vietnam in the River Assault Squadrons and is the recipient of a Silver Star and Purple Heart.

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