Lawmakers put prevailing wage in crosshairs; laborers object

Missouri's prevailing wage law may not prevail much longer.

The Republican-dominated Legislature has set its sights on repealing or revising the state law.

Missouri Gov. Eric Greitens called for the law's repeal in his State of the State speech because it "drives up the cost of important construction work that needs to get done."

The law requires contractors to pay a state-determined minimum wage for each construction trade on public-works projects.

Minimum-wage rates are calculated by the Missouri Department of Labor on the basis of an annual survey of wage rates. The amount varies by county and occupation.

Chris Heisserer of Kiefner Brothers Inc. surveys the site Friday of the new Cape Girardeau Police Department station to set the center lines for the steel erection.Laura Simon

Supporters said the law drives up costs on taxpayer-funded construction projects of local and state government.

Democrats and labor union leaders argue repealing the law would decrease worker wages and ultimately lead to less tax revenue.

They also argue it would result in nonunion out-of-state workers taking jobs away from local laborers.

In addition, opponents say construction jobs would be populated with less-experienced workers who are at greater risk of injuries and projects would not be completed on time.

Twenty states do not have prevailing wage laws, including many in the South and Midwest, according to the U.S. Department of Labor.

In Wisconsin, a new law took effect in January that exempts local governments from prevailing-wage requirements but retains such requirements for state agency and state highway projects, the U.S. Labor Department reported online.

Pushing for change

Local lawmakers and government officials, along with groups such as Missouri Municipal League and the Missouri Association of Counties, want to see the law changed or repealed.

State Rep. Rick Francis, R-Perryville, said, "Prevailing wages cost our state and local governments and school districts millions of dollars a year."

He said, "It seems a little unfair to charge our taxpayers more than the market rate for labor."

State Rep. Kathy Swan, R-Cape Girardeau, said construction projects "could be done equally well with significantly less tax dollars" if there was no prevailing-wage law.

"From a small-business perspective, it is burdensome and cumbersome to determine wage rates," she added. "It doesn't make good economic sense."

Cape Girardeau city manager Scott Meyer, who worked for the Missouri Department of Transportation as a district engineer, said eliminating the prevailing wage could reduce the cost of contracted street work and other public-works projects in the city.

Under the law, wage rates are calculated on the basis of reported wages. The rates are not averages, but reflect the most frequent hourly wage reported for each construction trade in a county, Meyer said.

State lawmakers have introduced a number of bills dealing with prevailing wages. Many fall short of repeal. One House bill would exempt local governments from prevailing-wage requirements for projects costing $750,000 or less. Another would reduce the cap to $500,000 and exclude metropolitan areas of the state.

Lawmakers also have introduced bills that would exempt only municipalities from the law or exempt only school districts for certain types of projects.

State Rep. Holly Rehder, R-Sikeston, chairs the economic development committee in the House, which has considered nine bills dealing with prevailing wages.

She said she and another lawmaker are working on a substitute bill that would "help smaller communities and school districts get out from under the prevailing-wage law."

Rehder said when it comes to tax dollars, "we need to be as frugal as possible."

She said she is "not sure" state lawmakers would approve legislation to fully repeal the prevailing-wage law this session.

"We certainly don't want to hurt our local contractors," she said.

A pocketbook issue

Rick McGuire, business manager for Laborers Union Local 1140 in Cape Girardeau, said repealing the prevailing-wage law would leave workers with less income.

"We have members who make a living doing prevailing-wage construction work," he said.

In the construction trades, "you don't work every day," he said.

McGuire said labor unions provide skills training for their members and health insurance. A portion of the hourly wages for a union worker goes to fund training, health insurance and a pension, he said.

The prevailing wage benefits union and nonunion workers, as both are paid the same rate on a public-works project, he said.

Major contractors in the Cape Girardeau area have contracts with labor unions and pay the prevailing wage even on nonpublic works projects, McGuire said.

The Southeast Missourian contacted the offices of several local contractors who did not respond to requests for comment.

McGuire said eliminating the prevailing wage will result in decreased pay and elimination of health insurance for construction workers.

Wages will drop by $5 to $10 an hour, McGuire estimated.

"It is a big, big deal to us," he said.

Without prevailing wages, construction workers would have to work 70 to 80 hours a week "to make any money," McGuire said.

Even if the Missouri Legislature repeals the state's prevailing-wage law, local governments and state agencies still would have to comply with federal law, McGuire said.

The federal Davis Bacon Act, passed in 1931, requires prevailing wages be paid on public construction contracts involving federal spending.

McGuire said the "big fear" for labor unions is Congress might do away with the federal prevailing-wage law.

Cape Girardeau County Presiding Commissioner Clint Tracy said eliminating the prevailing-wage law would reduce the cost of constructing roads, bridges and other public-works projects in the county.

"Why does it make any sense that government pays a premium on labor?" he asked.

"It's extra paperwork; it's extra bureaucracy," Tracy said.

He said eliminating the prevailing wage would not result in poorer-quality work. Local governments review construction bids and take the "best and lowest bid," he said.

As a result, a contractor's experience with various construction projects factors into such decisions, Tracy said.

But Patrick Pryor, director of the Eastern Missouri Laborers-Employers Cooperation and Education Trust in Bridgeton, Missouri, said local governments typically award contracts to the lowest bidder.

Pryor said repealing the prevailing-wage law would put contractors who have signed contracts with unions at a disadvantage when they compete with nonunion firms who pay their workers at much lower rates.

Pryor said his organization consists of the Laborers Union and about 800 contractors on the eastern side of the state.

The Laborers Union in Eastern Missouri spends about $1.5 million a year training its workers, he said.

Skilled work force

Studies have shown prevailing-wage laws increase the pool of skilled workers and reduce on-the-job injuries, Pryor said.

Construction workers are employed fewer days a year than office workers, he said. The average laborer makes about $38,000 a year, according to Pryor.

The prevailing wage for most construction trades workers in Cape Girardeau County is about $35 an hour, he said. About $12 of that rate goes for training, health insurance and pension.

By comparison, the total wage package for construction workers in St. Louis County is nearly $46 an hour, Pryor said.

Construction projects will cost more in materials and take longer to complete with nonunion labor, he said.

A University of Missouri-Kansas City study of construction projects in prevailing wage and non-prevailing wage states from 2003 to 2010 says projects in prevailing-wage states were delivered at lower cost because of a highly skilled work force and operating efficiencies.

Repealing Missouri's prevailing-wage law would decrease consumer spending and contribute to as much as $488 million in lost annual economic benefits in Missouri, the study concluded.

But Richard Sheets, deputy director of the Missouri Municipal League, estimated the prevailing-wage law in Missouri increases construction costs for public works projects by as much as 20 percent or 30 percent.

"All local government needs relief," he said.

State Sen. Wayne Wallingford, R-Cape Girardeau, said he is "not sold" on eliminating the prevailing-wage law. Labor unions provide "good training" for their members and "also concentrate on safety a lot," he said.

But Wallingford said the annual survey on which wage rates are based is flawed because many independent contractors don't fill out the form. The result is wage rates that do not accurately reflect the local labor market, he said.

Wallingford said he would like to see a mechanism developed to more accurately determine labor rates in each county.

mbliss@semissourian.com

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