August 28, 2017
Other Voices

Prevailing wage: Good for workers, good for business

Kimberly Glassman

Gov. Malloy and the legislature are considering deep cuts to municipal aid in order to rectify an over $3 billion budget deficit. Connecticut's Conference of Municipalities (CCM) is rightfully concerned, and looking for other means to keep municipal budgets balanced. One of its main proposals is to raise the thresholds as to when our state's prevailing wage law is triggered on public construction projects.

Connecticut's current prevailing wage thresholds are $400,000 for new construction and $100,000 for renovations. If a project falls below that threshold, then workers only have to be paid the minimum wage. When CCM proposes an increase to the thresholds, they're proposing that more construction workers be paid the minimum wage rather than the family sustaining prevailing wage.

The truth is CCM's proposal will make Connecticut less competitive. Our neighboring states, Massachusetts and New York, have a zero threshold on prevailing wage, meaning that the wage protection is triggered on dollar one on public works projects. Rhode Island's prevailing wage threshold is $1,000, which is less than the federal threshold of $2,000. And New Jersey's threshold is $15,444. We don't want to lose skilled workers to our surrounding states.

Opponents to prevailing wage perpetuate a misconception that the wage protection somehow only benefits union workers or union companies. But that is not true. Non-union contractors also perform work on publicly funded projects. And all construction workers, regardless of union affiliation, benefit from the prevailing wage law. Prevailing wage rates are based on surveys conducted by the U.S. Department of Labor of what local contractors actually pay workers on public works projects in the state.

CCM has argued that the state and municipalities could save up to 30 percent if there was no prevailing wage requirement. That is simply not true. Labor costs account for only 22 percent of total construction costs.

In fact, Indiana State Rep. Ed Soliday, a Republican whose state repealed its prevailing wage law in 2015, was quoted this past April referencing the claim that opponents made that repeal of the law would save taxpayers 22 percent in construction costs. "[They claim] there's some magic state out there that's going to send all these workers into work for $10 an hour and it's just not going to happen. There's not 22 percent savings out there when the total cost of labor is 22 percent. It's rhetoric. So far, I haven't seen a dime of savings out of it."

Twoprofessors of economics at the University of Utah, Peter Phillips and Cihan Bilingsoy, conducted a study in 2010 entitled "Impact of Prevailing Wages on the Economy and Communities of Connecticut," which found that repeal of the prevailing wage law would result in the loss of $21.6 million in income tax revenue.

Other studies have shown that every dollar spent on a prevailing wage project generates a $1.50 in economic activity — that's money spent at local businesses such as restaurants and auto body shops. Prevailing wages keep workers off public assistance and allow them to contribute to our local economies.

In April of this year, the Midwest Economic Policy Institute conducted a study entitled, "Prevailing Wage and Military Veterans in Connecticut," which found that a weakening of prevailing wage would hurt our returning veterans, which account for 6.6 percent of Connecticut's construction workforce.

The study found that if we increase thresholds, the average income for veteran blue-collar construction workers would decline by over $5,100 annually, and that approximately 270 employed veterans would lose their employer-provided health plan and another 160 would fall below the poverty line and qualify for food stamps.

Further, there is already a shortage of skilled tradespeople in the construction industry. Recruitment and retainage of construction workers will become more challenging if governments continue to lower their wages. On July 24, 2017, the Bristol Press published an article in which Stephen E. Sandherr, chief executive officer of the Associated General Contractors, said: "The need for more craft workers in fields like construction is growing every month."

To be clear, if the legislature capitulates and increases the thresholds of our prevailing wage law, it will be a symbolic gesture at best. CCM and our elected officials are under no illusions that weakening wage standards for construction workers won't realize any significant savings for our municipalities. If CCM were actually committed to lowering the cost of public construction, they would look to our arcane procurement code or exorbitant permitting fees.

This proposal is merely a political football. We need our legislature to craft a budget that works for all people, not play games with middle class families' livelihoods.

Kimberly Glassman is the director of the Foundation for Fair Contracting of Connecticut.

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