Prevailing Wages

Prevailing wage laws don't raise construction costs

A congressman from New York was infuriated when the construction of a veteran's hospital in his district was awarded to an Alabama-based businessman, and this "out-of-town" competitor proceeded to import thousands of workers from the Deep South. Neighboring communities were also upset because the work was done by a contractor with no knowledge of New York standards for safety or training. The low-paid and unskilled workers were herded onto the job and housed in shacks.

The spectacle inspired the congressman to partner with a senator from Pennsylvania to create legislation to keep the federal government from engaging in construction work in any state that would create an environment for unfair competition or undermine the labor conditions in that state. The senator, a former secretary of labor, argued that "the least the federal government can do is to comply with the local standards of wages and labor prevailing in the locality where the building construction is to take place."

The year was 1931 and the senator and congressman were James Davis and Robert Bacon - both Republicans. Closely following in the footsteps of the federal Davis-Bacon Act, many states, including California in 1931, enacted their own prevailing wage laws, popularly referred to as "Little Davis-Bacon Acts."

By paying prevailing wages there is less pressure put on workers' compensation costs and community social services. It also encourages the use of the largest privately financed system for education in the country, apprenticeship training. Apprenticeship training programs in construction are the foundation of a productive and safe construction work force and quality workmanship.

The need to protect local economies from unscrupulous businessmen is still an issue. In an age where accounting firms and power companies pillage the economies of entire states, and tennis shoe companies resort to child labor to make an extra buck, we cannot simply trust that they will do the right thing in our localities. University studies, including one by the University of Utah, show that the alleged ill effects of the Davis-Bacon Act are nonexistent while the benefits are significant.

Surprisingly, some local governments and school districts were not aware of the benefits or lacked the fortitude to confront those contractors that were compromising the system. Due to their lack of understanding of the big picture, their apathetic approach to the issue was costing them on many different levels. As a former enforcement agent for the state labor commissioner, I witnessed numerous examples of school districts and municipalities shooting themselves in the foot because contract representatives did not understand the requirements, or were too timid to enforce them, or in some cases intentionally refused to follow up on prevailing wage requirements.

The good news is the state Department of Industrial Relations has come to realize that this behavior exists and, armed with new legislation (Assembly Bill 1506) they are beginning to "take the bull by the horns." AB 1506 forces public school districts to be more proactive by requiring labor compliance programs that are in place before state dollars for construction projects can be accessed. It applies to any projects begun as of last month.

This action has been met with the usual smokescreen about driving costs, but there is plenty of evidence to the contrary.

Contributed by Mel Sakata, Prevailing Wage Officer 2002-2016

Mauricio Velarde, Current Prevailing Wage Officer