Labor aims at school projects (Sacramento)

[Ernesto]

Sacramento City Unified board to vote on requiring bidders to ensure union-style benefits.
School trustees are scheduled to vote tonight on a proposal that would allow only construction companies that hire through unions, or offer union-style conditions, to bid on construction projects of $500,000 or more. The district's current practice is to hire the lowest responsible bidder.
"Project labor agreements are good sound public policy," said the labor council's Matt Kelly. "They ensure proper wages are paid to individuals that work on construction projects and ensure those individuals receive proper benefits."
http://www.sacbee.com/content/news/story/12761799p-13613143c.html

[nedbal]

1. prevailing wage law

History—the first federal prevailing wage law was passed by the Republican
Congress of 1868 and enforced by President Ulysses Grant. The first state
prevailing wage law was enacted in 1891 by the Republican and Populist
legislature of Kansas. The current federal law—the Davis Bacon Act—was
passed by the Republican Congress of 1931 and signed by Herbert Hoover.
The Kentucky law dates to 1940. In 1982 Kentucky schools and some municipal
work were exempted from the law’s coverage but in 1996 the law was re-applied
to school and municipal construction. Currently, collectively bargained wage
rates are required to be paid on public works when a majority of workers of a
particular trade in a local labor market are receiving those wages. When less
than half of an occupation is receiving the collectively bargained rate, then the
prevailing wage is the weighted average of all wage rates for the trade in the
area.
· The Purpose of Prevailing Wage Laws—Prevailing wage laws
were originally intended to encourage the development of a high-skill, high-wage
growth path for the labor market in general, and the construction labor market in
particular. Where prevailing wage regulations are applied, union and nonunion
contractors win public works jobs based on having the most productive, best
equipped and best managed workforce. Under prevailing wage regulations,
wages established in the market through collective bargaining are not undercut
through the power of government. Critics of prevailing wage regulations argue
that the government should use its bargaining power to cut local wage rates.
They contend that local wage rates could be cut by as much as 50%. And they
contend that such a race to the bottom can cut public construction costs
substantially. But you get what you pay for. When wages are cut substantially,
worker skills, experience and motivation also fall off.
Kentucky's Prevailing Wage Law Kentucky's Prevailing Wage Law
Its History, Purpose and Effect
By Peter Philips, Ph.D.
Professor of Economics, University of Utah
October, 1999




Losing Ground: Lessons from the
Repeal of Nine "Little Davis-Bacon" Acts
Peter Philips, Garth Mangum
Norm Waitzman, and Anne Yeagle
Working Paper
Economics Department
University of Utah
February 1995

Like the 1931 federal Davis-Bacon Act, legislation in 41 states has required that the "prevailing" wage
be paid on state-government-funded construction projects. Betwee 1979 to 1988, however, nine states
repealed their prevailing wage laws. (Nine states never had such a law.) The remaining 32 states have
retained prevailing wages. These variations in state experience provide useful information with which
to consider probable effects of additional state repeals or the proposed repeal of Davis-Bacon. This study
found that state repeals of prevailing wage laws had several effects.
First, in Utah, whose experience was examined most closely, the state budget has not benefited
from repeal of the prevailing wage law. The repeal helped drive down construction earnings and as a
result, the state has lost substantial income tax and sales tax revenues. In the decade before the 1981
repeal in Utah, construction worker earnings averaged about 125 percent of average non-agricultural
earnings. By 1993, construction worker earnings had fallen to 103 percent of the average earnings for
Utah workers. This decline in earnings is a result of both lower wages and a subsequent shift to a less-skilled
construction labor force.
Second, also in Utah, the size of total cost overruns on state road construction has tripled in the
decade since repeal in comparison to the previous decade. The shift to a less-skilled labor force

lowering labor productivity along with wages
and the greater frequency of cost overruns have
lessened any possible savings in public works construction costs associated with the repeal.
Third, looking at all the states, and controlling for a general downward trend in real construction
earnings, variations in state unemployment rates, and regional differences in wages, repeals have cost
construction workers in the nine states at least $1,477 per year in earnings, on average (in 1994 dollars).
The costs may eventually be higher as the effects of the more recent repeals mature, driving wages and
training down further.
Fourth, controlling for a general downward trend in the amount of construction training, variations
in state unemployment rates, and regional differences in training availability, the nine state repeals have
reduced construction training in those states by 40 percent.
Fifth, minority representation in construction training programs has fallen even faster than have the
training programs in repeal states. Until the various state repeals, minority apprenticeship participation
mirrored the minority percentage of each state’s population. After repeal, minorities became significantly
under-represented in construction apprenticeship programs.
Sixth, occupational injuries in construction rose by 15 percent where state prevailing wage laws
were repealed.