COMMENTARY | COLUMNISTS | GEORGE HAWKINS

'Prevailing wage' fact and fiction

San Diego’s City Council has confirmed its desire to apply California’s artificial construction wage to city-funded projects. The vote was along party lines with Democrats voting yes and Republicans voting no. Nothing has changed. It is still an expensive decision, intended more to curry favor with organized labor than anything else.

The argument against this state mandated wage structure is burdened by a euphemism. Opponents have an uphill battle.

Politicians are quite adept at employing euphemisms. The Affordable Care Act is supposed to make health care more affordable and also moderate insurance costs. Critics contend it will not work and, in fact, current evidence shows that health insurance costs have been rising.

The Patriot Act sounded good but it included serious intrusions on privacy and individual freedoms. Conservatives bought the name. We are less free as a result. Euphemisms work.

We encounter the same difficulty when we argue against the imposition of California’s mandated construction wage system. It is called a “prevailing wage” program.

Who can complain about being sure construction workers on public projects are paid a prevailing wage for the same work they do when they are applying their skills and efforts on private construction projects? I can’t. I don’t. When I first encountered this prevailing wage concept in the late ‘70s I thought it was a good idea. The euphemism tricked me.

There are facts and fictions associated with California’s construction wage determinations. Here is a fiction. Non-union contractors can’t bid on such work. That is simply not true. Any contractor can bid on projects covered by this wage requirement.

Here is another fiction. California’s artificial construction-wage structure requires merit shop contractors to contribute to union benefit programs. Again, that is untrue.

Another fiction involves quality. Some argue that the law is the only way to get merit shop contractors to train their employees and that the overall effect is improved construction quality. Not so. Today virtually every contractor, union or merit shop, trains its employees through high quality, state approved and monitored training programs or belongs to an organization that provides them. It is the best way to stay competent and competitive. The skill brought to a job isn’t improved with an artificial wage structure.

Apprenticeship training can be required without imposing the state’s wage structure. San Diego has been doing this for years.

Here is the biggest fiction. Supporters claim the wage structure that California’s Department of Industrial Relations establishes is the rate that prevails in the private sector. It isn’t.

Here are some of the facts. The system the department uses to decide what rates apply seldom involves any look at private sector wage and benefit schedules.

The calculations embedded in the prevailing wage statute create a bias. The specific, to the penny, wage and benefit amount that appears for a given craft classification in a county or group of counties that would appear in a survey is the one that is called the prevailing wage. If, for example, 100 wage and benefit amounts for a worker classification are gathered and just two are exactly the same while each of the remaining 98 is slightly different, the two constitute the amount that prevails. Obviously, that is an exaggerated example, but it makes an accurate point.

Union agreements require contractors to provide every member of a particular classification with exactly the same wage and benefit package. Merit shop contractors have a different system, one that rewards an employee for skill, experience and effort on generally an individual basis.

To agree with other merit shop contractors to pay the same amount for the same classification without the cover of a collective bargaining agreement is illegal. Thus, merit shop wage levels seldom influence any wage survey in California.

To make the bias complete, if there is a survey, work that was covered by a previous wage determination is included. The previous wage determination would have mandated that all contractors, including merit shop contractors, pay the same exact amount of wage and benefit dollars for each hour worked by everyone in a worker classification. Department of Industrial Relations officials know this and don’t bother with a look at the private sector. They just declare union scale to be the rate that must be paid.

Here is another fact. Applying California’s artificially developed wage structure to public construction often increases costs. It never reduces them.

Hawkins is retired after 35 years as a construction industry association manager. He was 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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