Prevailing Wage is Good for Delaware and Workers

By Reps. Ed Osienski and Mike Mulrooney


(This editorial was published in the Nov. 16 edition of The News Journal)

 

Recently, certain groups, agencies and legislative colleagues have made statements in support of prevailing wage reform or repeal. Their belief is that with revenue down and spending tight, we should look at cutting costs through deregulation – in this case, Delaware’s prevailing wage regulations. There are a lot of misconceptions and misinformation about this law, which must be addressed.

Prevailing wage laws set wages and fringe benefits for workers on state-funded projects. The prevailing wage rate is determined by surveys sent to contractors in all trade classifications, such as carpenters, plumbers and electricians. The purpose of the survey is to collect information on current marketplace wage and fringe benefits being paid in each county to tradesman working on private and public construction projects. The Department of Labor attempts to give each contractor, union and nonunion, equal opportunity to be included in the final database. If more than half of workers are paid at the same rate, that rate shall be the prevailing wage rate for that classification of work. In the absence of a majority, the average of the wages paid determines the rate. This method establishes the true, current construction market rates for the area.

Opponents argue that prevailing wage rates drive up construction costs, a simplistic view that equates higher wages with higher overall construction costs. Wages and benefits are only about one-third of overall construction costs – and that percentage has been falling. Prevailing wage requirements help ensure that competition among contractors in the bidding process is focused on areas of overall cost efficiency, high productivity, and innovative methods. The most qualified and responsible contractors will find other cost-saving measures before reducing wages and benefits of his or her work force. A contractor who has a good safety record will save on insurance costs, workers compensation rates, and legal fees. A contractor who pays his vendors and suppliers on time has better rates on material, supplies and equipment rentals.

Competitive contractors use labor-saving technology and more innovative work practices to reduce unit labor and per-square-foot costs. Contractors who manage a job well make fewer mistakes, waste less material and have little-to-no punch-list items. A contractor who is competitive in all of these areas will be the most qualified and responsible to work on taxpayer-funded projects.

Under prevailing wage, contractors are permitted to pay apprentices enrolled in a state-registered apprenticeship program much less than the prevailing wage for skilled journeypersons. This encourages contractors to invest in a good training program. When workers are well-trained, contractors save and benefit from intangibles such as lower supervision costs, higher worker productivity and less worker turnover. When workers are poorly paid and unskilled, a construction job becomes a temporary job until something better comes along.

In the four years after Kansas repealed its state prevailing wage law, apprenticeship training fell by 38 percent, while minority apprenticeship training fell 54 percent. This “forsake the future” for the sake of today’s dollar weakens the industry. Prevailing wage laws help the construction industry prepare for the future as it builds in the present.

Compare school construction costs before and after Michigan suspended its prevailing wage law. There was no difference in cost, but the suspension created a corrosive, competitive environment where contractors seek a competitive advantage by using young, inexperienced and sometimes desperate workers. These laws are more important today because of the temptation some contractors face to exploit a vulnerable immigrant workforce.

Extensive economics literature shows that applying prevailing wage requirements to state-subsidized construction is likely to lead to a series of benefits that will not occur if prevailing wage is repealed: construction wages that allow the workforce to enter the middle class, have better healthcare and retirement contributions to reduce the use of state services, greater apprenticeship opportunities to educate and develop the next generation of skilled workers, and the more effective functioning of the construction labor market overall.

Prevailing wage standards are a fundamental building block for a strong, local and “high-road” economy based on high skills and high wages. Delaware’s prevailing wage law has served the public well, and we should look to strengthen, rather than weaken, the effectiveness of achieving these important purposes.

 

The following state representatives have co-signed this letter: Reps. Michael Barbieri, Paul Baumbach, Andria Bennett, Gerald Brady, Stephanie T. Bolden, Bill Carson, Debra Heffernan, Earl Jaques, James “J.J.” Johnson, Quinn Johnson, Helene Keeley, John Kowalko, Majority Leader Valerie Longhurst, Larry Mitchell, Trey Paradee, Charles Potter, Speaker Pete Schwartzkopf, Darryl Scott, Bryon Short, Melanie George Smith, Majority Whip John Viola, Rebecca Walker, Dennis E. Williams and Kim Williams.