Missouri House bill would do away with prevailing wage law
By TIM ROWDEN
Jefferson City – GOP lawmakers in the Missouri Legislature have opened a new front in their anti-worker attacks focusing on the building trades with a plan to dump the state’s prevailing wage law.
Prevailing wage laws govern the wage rates paid to construction workers on government-funded public works projects.
The base wage is set annually, calculated using contractors’ own reports of what workers are actually earning. House Bill 1931, sponsored by Rep. Warren Love (R-Osceola), would allow contractors to start negotiations for salaries at minimum wage instead.
"That is the lowest that they could pay, but that would be highly unlikely," Love told the Committee on Workforce Standards.
Committee member Jon Carpenter (D-Gladstone) noted that states without a prevailing wage are among the country's poorest and least educated.
"We have states that for decades have been right-to-work states or haven't had prevailing wage laws on the books," he said. "All the data actually says that those states are the poorest, the least educated, the least healthy states in the country, and that's after decades of being right-to-work and not having prevailing wage on the books."
NO COMPETITIVE EDGE
Jeff Aboussie, executive secretary-treasurer of the St. Louis Building & Construction Trades Council, was among those to testify against the bill.
“Depressing wages doesn’t create a competitive edge,” Aboussie said. “When you depress wages, you also depress the skill level of people who have been highly trained and promote a safe working environment.”
In fact, Aboussie said, the St. Louis Building Trades have such a stellar apprenticeship program and such a highly trained workforce that they are often sought after for projects in right-to-work and non-prevailing wage states, including traditionally anti-union southern states, because their skills and training ensure the job will be done right the first time, completed on time and on budget.
“We build buildings with fewer people, safer and ahead of schedule,” Aboussie said. “It’s all part of our training environment. We have workers called all over the country, including Louisiana and Georgia, and it’s because of our skill level.”
What’s more, Aboussie said, depressing wages doesn’t reduce construction costs.
“People think that just by lowering wages, it’s going to be a savings,” Aboussie said. “The cost per square foot is the same.”
The advantage of prevailing wage, Aboussie said, is it levels the playing field for union and non-union workers alike, based on contractors accurately reporting the wages paid per hour on jobs in their region.
“I think the biggest advantage of the law is it promotes fairness,” Aboussie said. “It’ provide a level playing field for everyone to compete.”
That kind of logic carries little weight in Jefferson City, Mike Louis, president of the Missouri AFL-CIO said.
“We provided testimony of all the reasons why this is not good for Missouri workers, but once again, I feel that our testimony with some of the members on the committee just falls on deaf ears, because their train of thought is ‘bust unions,’ and that’s what this is all about,” Louis said. “They’re trying to pass any anti-labor bill they can.”
One committee member argued that dumping prevailing wage and establishing right-to-work in Missouri would help attract new businesses to the state – never mind that those businesses would pay the lowest possible wages and drag the state’s economy down, as evidenced by a recent report by the Illinois Economic Policy Institute, Colorado State University-Pueblo and Smart Cities Prevail.
CHOOSING THE LOW ROAD
The Report, titled “The Economic, Fiscal, and Social Impacts of State Prevailing Wage Laws: Choosing Between the High Road and the Low Road in the Construction Industry,” compared states with and without prevailing wage laws to assess the impact of these policies on a variety of economic and social factors: including job creation, wages, worksite productivity, rates of in-state contracting, impacts on taxpayers, reliance on government assistance programs, and effects on communities of color and veterans.
“Our study confirms that states without prevailing wage laws not only undermine workmanship, productivity, and workforce development programs that promote construction career pathways for racial minorities and veterans, but millions more is spent in these states on food stamps, EITC (Earned Income Tax Credit), and public forms of insurance for low income blue-collar construction workers, with smaller overall economic output, higher income inequality, and millions less in tax revenue,” said study co-author and Colorado State University Economist Kevin Duncan.
“If all the states with prevailing wage laws in place were to repeal, they could expect to see similar trends, with 400,000 lost jobs, a $65 billion reduction in our national economy and a loss of $8 billion in tax revenue.”
The study found that prevailing wage laws do not increase project costs, as proponents of doing away with the law claim. In fact, labor comprises just 23 percent of total construction costs. Research indicates that when construction wages increase, contractors respond by utilizing more capital equipment, substituting skilled workers for less-productive counterparts and by reducing material and fuel costs that offset any higher labor cost.
In addition, the study found prevailing wage laws:
• Increase worker self-sufficiency: Construction workers in states with prevailing wage laws are eight percent more likely to have health insurance and four percent more likely to have a retirement plan. Adequate prevailing wage laws decrease the probability that a construction worker will earn a poverty-level income by three percent.
• Reduce reliance on public assistance: States with weak or no prevailing wage laws currently spend $367 million more per year on food stamps and Earned Income Tax Credits for blue collar construction workers than states with average/strong PWL.
• Increase income tax contributions: Construction workers in states with strong/average prevailing wage laws contribute over $5.3 billion more in federal income taxes (on average after credits and deductions) per year than their counterparts in weak/no law states.
Repealing prevailing wage, the study found, would strain public budgets.
If all 25 states with strong/average prevailing wage laws weakened or repealed their policies, the loss in federal income taxes and added public assistance expenditures would cost American taxpayers at least $4 billion more every year, according to the study. (See the full report at at www.smartcitiesprevail.org.)
The House passed a similar measure in 2013, but it died in the Senate. That same year, Gov. Jay Nixon allowed another bill to become law without his signature that changed the way Missouri's prevailing wage is calculated.