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Prevailing wage: good for local economy, local workers

If something is good for local workers, the local economy and our city’s budget, it should be easy to support, right? It might seem like a no-brainer, but there’s certain to be a heated debate on Tuesday when the San Diego City Council considers applying prevailing wage to local infrastructure projects.

In government contracting, a prevailing wage is the hourly wage paid to the majority of workers, laborers and mechanics within a particular geographic area. Established by state agencies for various trades and occupations used on public works projects, its aim is to ensure a quality work force and ensure that skilled construction workers employed on public works projects are paid at least the wages and benefits that "prevail" for such work in their local communities.

California’s prevailing wage law has been in place for more than 50 years. It was modeled after the federal prevailing wage act, which was signed into law by President Herbert Hoover in 1931. It’s the law of the land for federal and state public works projects, along with the almost 500 general law cities in California.

It’s not required in California’s charter cities; still, more than half of those cities voluntarily comply with the state’s prevailing wage structure. The city of San Diego is considering joining those cities that provide the prevailing wage as baseline of pay for taxpayer-funded public works projects.

Why should a charter city adopt a prevailing wage ordinance? First, government should be a responsible contractor. Prevailing wage ensures workers on taxpayer-funded infrastructure projects don’t also have to rely on taxpayer-funded services like food stamps, emergency room health care and subsidized housing. Taxpayer dollars shouldn’t be used to create such low-paying jobs that taxpayers then have to contribute more to subsidize workers’ basic needs.

But there is more to prevailing wage than just quality jobs. The public has a compelling interest in having a well-trained, qualified local work force to build our public projects in the least amount of time – doing it once and doing it right. I’ll never forget attending Army Airborne School and thinking it wasn’t the best idea to jump out of an airplane with a parachute produced by the lowest bidder. Major public works projects should be no different. Build it to last and with a quality and well-trained work force. It is not only the right thing to do, but also the long-term fiscally responsible thing to do.

Prevailing wage laws also ensure the preservation of a highly skilled work force in the construction industry and incentivize investment in apprenticeships programs to train a new generation of workers. Qualified workers on a project mean fewer injuries, fewer change orders and a quicker completion time.

It’s worth considering the analytical work done by respected academic institutions that make the empirical case for the real value of prevailing wage. A study done in 2011 by Colorado State University examined the use of prevailing wage in the city of San Jose. The report found that prevailing wage on city projects in San Jose increased countywide economic activity by $164 million, increased local jobs by 1,510 and increased local tax revenues by close to $2 million over a five-year period. Where prevailing wage is used, the local work force is used, and taxpayer dollars are recycled into the community from which they came.

This same study wanted to assess the legitimacy of the criticism that prevailing wage laws lead to higher costs. They analyzed two library projects of similar size built in the same time frame. The results were clear. The Mitchell Park Library in Palo Alto was built without prevailing wage and cost taxpayers $430 per square foot, with only 12 percent of the work going to local contractors. In contrast, the Gilroy Public Library was built with prevailing wage and cost taxpayers $326 per square foot and had 71 percent of the work going to local contractors, who in turn helped support the local economy.

Despite these facts, a handful of states have taken action to abolish previous prevailing wage requirements. A separate study performed at the University of Utah revealed the very negative consequences these states have experiences since making that change. The states that abolished prevailing wage saw a tripling of cost overruns on public projects, a 15 percent increase in construction injuries and a 40 percent decline in apprenticeship training. Construction workers' wages fell -- as did income and state tax revenue.

It would seem this issue is one that could unify a broad base of support. Unfortunately, like so many things today, it has become a knee-jerk partisan issue. The votes on the issue in City Council committee broke down on partisan lines with Democratic members supporting the effort and Republicans opposing it.

It hasn’t always been this way. Republican Gov. Goodwin Knight signed California’s prevailing wage law. U.S. Sens. James David and Robert Bacon, both Republicans, authored the federal requirement for prevailing wage known as the Davis-Bacon Act. Republican President Herbert Hoover signed it into law. Granted, I know all too well how the Republican Party has changed, but this issue at its core doesn’t have a partisan history.

At the state level, the co-author of a measure to apply prevailing wage protections to all California cities is Republican Sen. Anthony Canella. Canella, a civil engineer and former mayor, said, “It is important that we close this loophole that allows certain firms to game the system. Those firms know that they can marginally undercut prevailing wage to win a contract.” Clearly, not everyone views this through a partisan lens.

Opponents often argue prevailing wage is a giveaway to unions. No charge is more quickly jumped on to evoke emotion than something is a “payback to the unions.” But the facts are clear on this issue: Prevailing wage applies to all workers, both union and non-union. But it acts as a disincentive for contractors to import lower skilled workers from other parts of the country, which not only avoids undercutting the local work force, but also helps support the local economy.

It can be difficult to approach charged issues in a thoughtful, open-minded way, but this approach can reveal important facts previously missed by a quick judgment based on the party line. This is what happened to me once I took a closer look at the hard data on prevailing wage in the construction industry. Prevailing wage has the power to lower costs, provide greater value to taxpayers, ensure quality work and timely, well-built local infrastructure projects as well as generating more tax revenue for local governments and helping sustain a struggling middle class. It is truly a win-win for taxpayers.

Prevailing wage provisions have served the federal government well for almost a century and the state of California for more than 50 years. I urge the council to put aside partisanship and do the right thing for the people of San Diego. Let's ensure prevailing wage is paid to our local workers on our public works projects.

Nathan Fletcher is a former California state Assembly member and Marine Corps veteran.

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User Response
6 UserComments
Marcy C Krinsk 11:26am September 26, 2013

Is there really any other choice for Mayor?

Scott Littlehale 3:13pm July 31, 2013

Mr. Fletcher in this op-ed does something that is all too rare among policymakers in California: tap into rigorously conducted research in order to inform his views and policy stances. I wish that certain local news media (besides the SDDT!) would take a page from NF's book and open up their ears and minds to this sort of information.

Smart Cities 1:09pm July 31, 2013

Nathan Fletcher gets it on prevailing wage – so refreshing to see someone stand up for the middle class. Prevailing wage helps build strong families and strong neighborhoods, and that’s exactly what we need right now. Thanks for doing the right thing!

Brian Brady 3:21pm July 30, 2013

The Davis-Bacon Act was passed to institutionalize racism. It's no surprise then that the intended consequences of that bad legislation are felt today. The construction industry offers the best opportunity for young people to enter the economic ladder. By raising wages to an artificial "minimum", it excludes many entry-level workers from gaining access to the labor market. Is it any wonder that African-American unemployment is over 25% today? Economic freedom means that anybody, regardless of their skin color, should be afforded to opportunity to compete for jobs. Price fixing almost guarantees that those who need that opportunity won't receive access to it. Mr. Fletcher knows this and should answer why he supports policy which inflicts economic pain on minority communities.

Red Grant 9:45am July 30, 2013

Did Nathan Fletcher lose his mind on prevailing wage? http://www.sddt.com/Commentary/article.cfm?Commentary_ID=193&SourceCode=20130729tzb&_t=Did%20Nathan%20Fletcher%20lose%20his%20mind%20on%20prevailing%20wage#.UffrD22ZZgf

dcurtin 5:00pm July 29, 2013

Nathan Fletcher has earned his reputation as a thoughtful, reasonable, pragmatic problem solver. It is all too uncommon in the current polarized political atmosphere of today. I hope San Diego finds a way to keep him and others like him in the political arena.