Prevailing Wages?
It's a tough question. On the one hand, when taxpayer dollars are used to fund construction projects, the community has an obligation (morally and legally) to pay at least an average wage - usually called the prevailing wage - to the people that work on the project. On the other hand, keeping wages on public projects slightly higher might sometimes put a roadblock in the way of an important public project - and keep upstart contractors out of the game.
The state's prevailing-wage law of 1959 was intended to ensure that public works projects would be performed by contractors who hadn't undercut standard wages and training to win low-bid contracts.Critics, including the Portland Development Commission, say prevailing-wage requirements favor Anglo-dominated union contractors over minority-owned and small business contractors. The rules also could add 5 percent or more to construction project costs, commission officials say.
Of course, there's also a key question -- how much money does it take to make a project a "public project"?
The state labor commissioner, Dan Gardner, has pulled together a task force to examine the issue.
State Labor Commissioner Dan Gardner on Monday named 15 construction industry, union and housing leaders to a task force to study wages required for public-private development.
Meanwhile, the issue is hitting hard right now. In Portland, the downtown Meier & Frank redevelopment project got mixed up in the prevailing wage issue - until the Labor Commissioner let the project off the hook. (Which he did while slamming the PDC for the process.)
A recent cloud hanging over the long-awaited redevelopment of the downtown Meier & Frank department store lifted Friday when the state labor commissioner concluded that Oregon's prevailing-wage law did not apply to the $137.3 million project.Earlier this week, a key developer had threatened to pull out of the project if the wage law were deemed applicable, claiming that higher compensation requirements would push construction costs too high. ... Labor Commissioner Dan Gardner sharply criticized the PDC, both for not seeking clarification on the matter earlier and for sounding public alarms about the issue's threat to the project.
How much difference does it make?
Reliable estimates on the effects of the wage law are hard to come by. The labor bureau said studies show the difference may be less than 5 percent. "At the same time, studies also show higher quality work, so the actual cost may be less," said Marc Zolton, a labor bureau spokesman.A recent informal survey showed that a worker involved in building demolition was paid a prevailing wage, including benefits, of $28.48 an hour, while a similarly employed nonunion worker was paid $28.13, a difference of 35 cents, or 1.2 percent, Zolton said.
So, there's your questions. How important is the prevailing wage law? How much public money should be enough to trigger it? When balancing the economic interests of builders and workers, what role should the government play? What should be rules of the game?
Discuss.
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June 25, 2005
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Jun 25, '05
The argument that prevailing wage laws undermine minority-owned contractors is patently false. It may be true that minority-owned contractors pay lower than the prevailing union wage for privately contracted work. But no one is forcing them to pay those same lower wages on public projects. I'm sure their workers would be happy to earn the higher prevailing wages for the duration of some public project. I've worked in construction and my brother is a small non-union contractor. He loves to win bids on public projects because he can build more labor costs into the bid and pay his guys higher wages for the duration of the work. So far none of them have ever turned down the higher wage.
Does the law result in higher costs? Higher than what? Sure most construction projects could be done cheaper if we imported crews of Guatemalans or Pakistanis or Nigerians to do the work. That's how the railroads were built. With imported Chinese and Irish labor. But there's nothing wrong with demanding higher standards when public money is being spent in the 21st century.
Notice this discussion is always about labor costs. How about demanding that all the other contributors to public projects take a cut too? A lot of electricity goes into public projects. Perhaps PGE can take a 10% cut. The insurance companies and lenders could take 10% less. Labor isn't the only factor in the costs of public projects. Why is labor always the focus and not the many other entities that are earning profits on public projects?
Jun 25, '05
when taxpayer dollars are used to fund construction projects, the community has an obligation (morally and legally) to pay at least an average wage
Obligation to whom?
The unions who contribute to politicians that vote for overpriced public projects?
It is certainly not any obligation to the taxpayers that public project costs are jacked up unnecessarily.
And don't give me the "we need to assure quality workmanship" BS. We can assure that with appropriate levels of bonding. Prevailing wage statutes, on the other hand, are just an accepted form of graft.
Jun 26, '05
Using the Tram for the prevailing wage debate, the unions always stand in full support of every illegitimate wasteful project no matter the cost or lack of public benefit. They feed the politicians who make these awful decisions and attack anyone who tries to stop them. The Tram, if built, will be union built resulting in a greater waste and insult for the public. Marvelous.
Jun 26, '05
Graft, corruption, or any other vice you care to mention is nobody's special purvue, management or labor. However, thanks to their position in the power structure, managers have opportunites to pad budgets, cook the books, or commit similar large-scale fraud. Remember Enron? How about Haliburton's "missing" millions in Iraq?
We need to be clear here, a job that employs union labor is not union-run. It is run by a company that employs unionized workers. It's a job where workers are likely to earn a living wage, have healthcare for themselves and their family, and work in a safe environment. The prevailing wage extends, for a time, the benefits of organization to other workers. Treating workers fairly should be part of the cost of doing business.
Steve and panchopdx, back in the early days of this country, we had a system that maximized profit by minimizing labor costs, indentured servitude and slavery. Today we have marginally better circumstances for farm workers, janitors, and others who work in "undesirable" jobs. Would you like to find yourself in that situation? OK, maybe you are too special for it to happen to you. Are you saying it is OK for somebody else to work a full time job (maybe more than one) and remain in poverty? Perhaps you are, I don't know, but that's not the kind of world in which I want to live.
If cutting expenses is necessary, then why not look to executive salaries? Workers are hit first because they have the least power. The union works toward a level playing field. The prevailing wage helps extend that protection to more workers. I'd think that in this day and age, we'd be trying to widen the embrace of justice and equality, not reduce it. I'd think we'd be saying "hey, it's great that you are earning a good wage for your work," not the opposite.
11:16 a.m.
Jun 26, '05
One point that seems to be ignored is the term "prevailing wage". As defined in the article as "standard wages".
I've worked as a skilled blue collar layout welder/fabricator for most of my career. The most I've made on an Oregon job is $15.50 per hour.
I had the alternative of getting on a union waiting list and paying them for the privelege of being #1325 in line, while people whose entire tool inventory and knowledge base consisted of the ability to own and operate a shovel, (and be related to some other union member) made 50% more than I did. They also churn the top few hundred insiders through the jobs multiple times while the rubes wait for their chance.
So what exactly is the prevailing wage and who deserves to get it?
Just wondering.........
Jun 27, '05
Interesting to here about the problem with a union and immediately set about to prpose the union be destroyed. Well, there are problems with this government now too, but I am not about to propose its destruction.
Personally, I am opposed to the exceptions we make to rules that should bind everyone. If the contractor can't "make it" on our minimum wage, he can look to skin owrker's somewhere else. We like ours with a little skin left. They can actually contribute to several layers of the economy as opposed the the layer that keeps that extra cash in their own pocket rather then spread it around.
PS - Never did get my trickle from Reagan. YOU?!?
Jun 27, '05
Re Kent's comment that: "But no one is forcing them to pay those same lower wages on public projects. I'm sure their workers would be happy to earn the higher prevailing wages for the duration of some public project." Check out the Bureau of Labor and Industry site and you'll see that BOLI does not allow its contractors to pay higher wages for public projects only. They call it "averaging out." Kent is simply wrong here (and what his brother is doing is called fraud isn't it?)
Jun 27, '05
PDX voter wrote:
Treating workers fairly should be part of the cost of doing business.
Doesn't anyone see through these euphemisms?
The difference between the market wage (which is way above a "living wage") and the "prevailing wage" for construction workers is nothing more than to a government handout.
They earn this extra wage entitlement in about the same way that welfare recipients earn their food stamps.
BTW, pointing to other potentially corrupt government contracting practices as being worse (e.g., Haliburton), doesn't strengthen your argument.
Jun 28, '05
"They earn" is the most telling statement made. What exactly do you do that beats the snot out of you every day working in every kind of weather using dangerous tools that turns this into welfare. Lets really get the costs down and use illegals, screw those hardworking construction monkey citizens.
Boli requires prevailing wage be paid for the duration of the project the contractor is engaged in, when our non-union crew moves on to residential framing, it's back to the regular pay (low).
Everybody involved in a prevailing wage job knows the labor costs involved, the field is dead level, minority or Martian, pay the wage while making the bid, you're in. High bonding drives out the small operator, not prevailing wage.
I love it, non-union construction wages are at 60% of 1980 and somebody on Blue Oregon thinks the lazy layabouts are overpaid.
Jun 28, '05
What exactly do you do that beats the snot out of you every day working in every kind of weather using dangerous tools that turns this into welfare.
Doesn't really matter as long as: (1) the people who pay for my work do so voluntarily and (2) they believe that they are getting a good value for their money.
Contrast to prevailing wage:
(1) If you gave each taxpayer the option to reduce his share of a public project by paying a market wage, at least 90% would take it over the prevailing wage share; and,
(2) Go ahead and poll taxpayers as to whether they believe they are getting their money's worth from their tax contributions for public projects paid at the (artificially increased) prevailing wage rates. See if you get manage to get more than 33% support.
Jun 28, '05
Re Kent's comment that: "But no one is forcing them to pay those same lower wages on public projects. I'm sure their workers would be happy to earn the higher prevailing wages for the duration of some public project." Check out the Bureau of Labor and Industry site and you'll see that BOLI does not allow its contractors to pay higher wages for public projects only. They call it "averaging out." Kent is simply wrong here (and what his brother is doing is called fraud isn't it?)
Actually my brother's not in Oregon. He is a contractor in Juneau Alaska and deals with Federal prevailing wage laws because he was a subcontractor on the renovation of several Federal office buildings in Juneau. He operates under the Davis-Bacon Act for Federal prevailing wages and I'm pretty sure that Act only applies to Federal work and not to other non-contract work done by the same employees.
I had just assumed that the State and Federal prevailing wage laws were similar. Apparently they are not. The State law sounds much stricter than the Davis-Bacon Act. In which case my comment is obviously wrong. If what you describe is true, then obviously it sounds like the state of Oregon has much bigger sweetheart deals for the unions than the Federal government does.
Jun 30, '05
The "Little Davis-Bacon Act" (Oregon) functions for one reason, to protect the union wage scale. The BOLI wages are directly extracted from the union rates. They do not represent the industry wages. It is an extraction of taxpayer dollars to support the union. It has nothing to do with work competency. Our crews had two wage scales. With one scale the taxpayer paid well above the normal work wage scales. Davis-Bacon is an artificially high scale. The dollar amount difference is staggering.