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Why the prevailing-wage ordinance is a bad idea

Not widely known, the White House and Capitol building were constructed in large part by blacks, some free, some not — along with immigrants who worked side by side without conflict.

So it comes as a surprise that 130 years later, the Davis-Bacon Prevailing Wage Act was adopted. This is a federal super-minimum-wage law (still with us) that originally was intended to keep blacks, Latinos and immigrants from working on federal construction jobs.

Davis-Bacon requires the payment of prevailing wages on federally funded projects. At the behest of Congress, President Herbert Hoover, who believed it would prevent wages from falling during the Great Depression, signed it into law March 3, 1931. President Franklin D. Roosevelt subsequently concurred.

Regardless of what two presidents believed, Davis-Bacon was approved by Congress after a contractor using “negro laborers” from the South won a contract to build a veterans hospital in New York. Alabama Rep. Clayton Allgood fretted about contractors with “cheap colored labor ... of the sort that is in competition with white labor throughout the country.”

A month after Davis-Bacon became federal law, San Diego approved a new city charter, which included a section modeled after Davis-Bacon, Section 193, titled: “Prevailing rate of wages to be paid on public work,” April 7, 1931. Prevailing wages historically have meant the highest union wages.

Nonunion construction workers have a tremendous advantage over unionized competitors: They often can do a better job, more efficiently, at less cost to taxpayers. Some politicians call this unfair, by attacking quality of work, while never being able to identify nonunion built buildings that are falling down around the city. Prevailing-wage laws remove this advantage.

It’s not only wages, but also union work rules that cost the taxpayers. Until the 1960s, union painters were prohibited from using wider than 6-inch-wide paintbrushes and could not use paint rollers or spray guns. Not being subject to such onerous restrictions gave nonunion workers a clear edge.

I was best man at a friend’s wedding just out of high school when he went to work at the National Steel and Shipbuilding Co. A union steward told Larry to slow down; he was making other workers look bad. Larry said he was just working, not fast, not slow. When he got off work one day, all four of his tires were slashed in the parking lot. This was not an uncommon union tactic.

Fast forward to September 1963 when the people of San Diego voted to amend the city charter and repeal Section 193, which contained the prevailing-wage clause.

The City Council, at the behest of the mayor, voted 5-4 July 30 to reinstate a prevailing-wage ordinance. The sole reason for adopting the prevailing-wage ordinance for San Diego city projects is so labor unions will direct their generous campaign contributions to the mayor and City Council majority that voted for the ordinance. All other wonderful explanations are buffalo chips.

If San Diego were in a foreign country, this would be illegal under the Foreign Corrupt Practices Act. Unions give campaign contributions to council members, and council members contribute taxpayer money to unions, via union workers getting prevailing wages.

With the renewal of the prevailing-wage ordinance this year, the city’s Independent Budget Analyst Report concludes on all city projects for fiscal 2014 the costs could add up to an additional $26 million. This is the equivalent of 520 jobs at $50,000 each wiped out by the City Council.

While the report estimates that the provision will add only 5 percent to total project costs, it also acknowledges possible increases of 25 percent to 37 percent in the construction portion of total costs. Whatever the actual added cost, it’s clear the majority of council members, instead of looking out for the taxpayers, are looking how to finance their next election with labor union support. It also means $26 million will not be available for fixing the atrocious condition of city streets.

The council voted in 2003 to require prevailing wages to be paid on water and sewer construction projects of more than $10 million. Richard Mendes, the city utilities general manager, estimated that on just one project — the planned Miramar sewage treatment plant — it would add $6.9 million to the cost.

Frank Belock, city engineer, said it would add about $25 million to water projects over the next five years. Now you know why your water bills have been skyrocketing, with high water bills leading to dying lawns and the uglifying of San Diego.

A relative handful of union workers will get the prevailing wages and everyone else will get to pay the increased costs in higher water bills. Walter Williams, commenting on prevailing wages (Davis-Bacon) noted, “Because most black construction workers aren’t union members, the law has the effect of freezing them out of jobs.”

Not only is the city’s prevailing-wage ordinance a throwback to Jim Crow laws keeping blacks, Latinos and nonunion workers from competing for jobs, but when residents are needlessly forced to pay higher water and sewer bills, they have less money for other necessities, relegating them to a lower standard of living.

Undoubtedly, the union workers who will be getting the higher so-called prevailing wage will be grateful. The workers harmed, much like the minorities under Davis-Bacon and other minimum wage laws, are invisible to the council and probably don’t make campaign contributions, anyway.

It’s as plain as the nose on your face; the council majority takes care of those who take care of the council and with the cost hidden within all waters bills few residents are expected to notice. How clever!

In summary, based on experience since 1931, those harmed the most will be minorities and nonunion workers willing to do a better job at lower cost by adopting union-prohibited new technology. Regardless of intent of the law, economist Walter Williams writes, “While today’s supporters of the Davis-Bacon Act talk differently, its racially discriminatory effects are the same.”

Schnaubelt, president of Citizens for Private Property Rights, has been a commercial real estate broker for 35 years and was a San Diego city councilman from 1977 to 1981.

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1 UserComments
Motoko 6:53am August 27, 2013

There is nothing in the Davis-Bacon Act that prevents a Non-Union contractor from winning a taxpayer funded project. The only difference is the Non-union shop must agree to pay his/her workforce the prevailing rate at minimum. In many cases, municipal, county, state and federal engineers use the local prevailing rates to calculate the labor cost of a project. Today, in the 21st Century, with estimating software and cost analysis programs, predict fairly well what a project will cost. This notion of “Cheaper” and “Saving” money is a logical fallacy. What you are really saying “Cheater” and “Shaving money” because the Contactor is charging the same price for the project but pockets more money for himself by not paying his workforce what he should be paying them. They get away with it too because the contractor doesn’t have to tell the engineer what he is paying his workers on a non-DBA job.