ConstructionPro Week, Volume: 3 - Issue: 25 - 06/20/2014

Who Should Determine Public Works Wage Rates?

By Bruce Jervis

 

The current political discussion regarding income inequality and livable wages brings to the forefront one of the oldest government wage mandates – the payment of “prevailing” wage and benefit rates on public construction projects. More and more government entities seem to be getting in on the act.

 

In Michigan, the City of Lansing imposed wage rates more stringent than the state Prevailing Wage Act. The Associated Builders and Contractors challenged the ordinance, arguing that wage rates on public construction projects were the exclusive domain of the state. Municipalities had no authority to dictate wage rates. This argument was rejected by an appellate court.

 

So, we now have a situation where wage and benefit rates are being mandated, inconsistently, at the federal, state, and local levels of government. The “prevailing” local rate depends on which government entity is the contracting party. Even assuming that one is philosophically comfortable with government-mandated wage rates, is this not a complicated and burdensome system for companies bidding and performing public works? I welcome your comments.

 

COMMENTS

it should be mandated for rates per state to keep the cost of living wage up for the workers...the only ones who will benefit if we do not have a mandate is the non-union companies...they will charge for example 70.00 per hour & pay their men 22.00 per hour pocketing the difference. That is not fair for the union shops that provide middle class jobs...
Posted by: Mike Prusak - Friday, June 20, 2014 10:39 AM


Prevailing wage is complicated and burdensome. Many states have multiple "locales" anyway. Assuming that one is philosophically comfortable with government-mandated wage rates, the city is effectively just creating their own locale. Why a city would choose to burden their citizens with the additional cost is another matter.
Posted by: Eden Milroy, Pilot Development Partners, Inc. - Friday, June 20, 2014 10:44 AM


As a contractor for more than 30 years, I can tell you there is nothing more corrupted than the Davis Bacon Act. Prevailing wages should be just that. Instead they are what the local area union rates are even if union workers account for .02% of the local area workforce. Now they want (actually do) let local politicians "buy" votes from these unions to bankrupt their local community because when the damage is done these politicians' will be long gone! Those politicians will hope that by then they will be a state assemblyman or representative by selling out to these unions and tell everyone what a shame it is for the town they came from has gone into bankruptcy. What do you want to bet that when the time comes look at the problems with that particular community, that same politician will deny with vigor any responsibility? :)
Posted by: Jim Hanley - Friday, June 20, 2014 10:51 AM


@Mike Prusak, for us in KY we have certified payroll reports. Non-union workers receive their prevailing wages and fringes just like the union workers only difference is they do not have union dues deducted from their pay. The non-union workers receive all of their prevailing wage.
Posted by: Patrick Abrams - Friday, June 20, 2014 11:01 AM


What this really comes down to is that there are many agencies, regulatory entities, consultants and specialists that have carved out a niche in the construction field, that have developed regulation and rules for others to follow. Safety, equitable pay, environmental quality, etc have all improved drastically due to the diligent efforts of many people. However, the cost of projects have been exponentially larger due to the inflated overhead required to implement the new rules. Those people who have pioneered change in the industry, still need employment, and attract new talent to their field.

Ten years ago, jokes were made about six people watching one man work. Its no longer a joke, but The list of observers grows every day, as more oversight and monitoring is needed. But the work never changes.
Posted by: Leo - Friday, June 20, 2014 11:14 AM


Mike is point on, some school districts enter into contracts with inspection companies for provision of construction inspectors (full time inspectionn req'd for many CA school and hospital projects)charging the districts more than the minimum prevailing wage and paying the inspectors less. State does not followup on complaints of this practice. These inspections are mandated by state law with the inspectors being tested and certified by the state at a higher level than ICC.
Posted by: ADAguy - Friday, June 20, 2014 11:14 AM


@Mike Prusak: I don't know where you are bidding, but in our area we do not have the ability to pocket the difference. We take our cost and mark it up. If we grossly inflate our profit, we don't get the job. It is called competitive bidding. We are a non-union shop, but most of our wages and benefits are reasonably close to the prevailing wage. By the way, the state/government does not pay the cost - the tax payers do. Unions are one of the corrupting factors in the Davis Bacon debacle.
Posted by: Jim W. - Friday, June 20, 2014 4:00 PM


 









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