By Tom Crofton
The Commoner Call (5/30/17)
A critical piece of labor protection under assault in Republican rule is the idea of Prevailing Wages, known nationally as Davis-Bacon legislation, and creating what are described as “White Sheet” jobs. This legislation applies to construction work on public projects. During the era of an expanding economy and strong union lobbying, congress and state legislatures believed work done on public infrastructure should pay a living wage.
The concept of prevailiing wages was introduced in the 1930’s when an Alabama construction firm transported workers to New York to work on a hospital project and only paid then the lower wages they would have earned in their home state. This put both New York and Alabama workers at a great disadvantage. In response,congress pass the Davis-Bacon Act in 1931, requiring prevailing wages for federally funded projects.
This legislation did not require union participation but ensured that the level of compensation for public construction was similar to the benchmarks set by union contracts. Importantly, the benchmarks were defined for complete compensation packages including health and pension costs.
The growing attack on workers
The wave of conservative success in state and national elections has made it possible for Republicans to gut these equality benchmarks for public projects. Wisconsin republicans have also moved the jurisdiction for enforcement of prevailing wage law to the Department of Administration, a Walker-controlled agency that has – under the guise of consolidation for efficiency – been dismantling accountable government since 2010.
Efforts to include this policy shift in the budget were derailed through push–back by construction unions (nearly half of whose members voted for Walker). Instead, a separate bill has been introduced in Madison and consideration of a national measure has started in Congress.
State Sen. Leah Vukmir and state Rep. Rob Hutton, both Waukesha County Republicans, said this week they were introducing such a bill. The GOP lawmakers said it would help dig the state’s road fund out of a huge hole.
“We think that one of the best ways of dealing with some of the inefficiencies (at the state Department of Transportation) is to repeal the prevailing wage,” said Vukmir.
In 2015, the Legislature ended prevailing wage requirements for local government projects. That includes the new Milwaukee Bucks arena, which is under the control of a local government special district.
Unions say eliminating the law would cut wages and invite so-called “gypsy contractors” from out of state to bid on Wisconsin projects. Terry McGowan, president of the Wisconsin Operating Engineers Local 139, said the repeal effort is something pushed by conservative groups like Concerned Veterans for America, which has produced a web ad promoting repeal of Wisconsin’s law.
“They are trying to justify something that somebody in Wichita, Kansas is telling them to do,” said McGowan, noting Witchita is the hometown of the anti-worker Koch brothers, prominent Walker backers. “Other than being ideological legislation, I’m not sure what they’re trying to accomplish.”
In the Assembly, Majority Leader Jim Steineke voiced his support for the legislation, saying “we need to find any and all savings within the DOT.”
Democrats and unions point to a Legislative Fiscal Bureau analysis made public in December by Assembly Speaker Robin Vos, which determined that repealing the state’s prevailing wage law would have an “uncertain” impact on cost savings.
We need to go beyond simply stopping this attack on the American worker. Now is the time to begin to weave a new fabric of worker/citizen solidarity to replace the fractured, co-opted, and decaying labor institutions, that were paid for by the sweat and blood of our predecessors a hundred years ago.
Attorney Leslie A. Sammon notes, “The 2015-17 budget bill repealed Wisconsin’s prevailing wage law for local governmental units, such as villages, towns, cities, school districts, and sewerage districts, effective January 1. Local governmental units are also prohibited from passing any ordinance or other enactment requiring payment of prevailing wages.”
So much for the local control espoused by conservatives.
Gary Wetzel, a Medal of Honor winning Vietnam vet and American Legion worker rights advocate notes, “Prevailing wages help support the largest system of privately financed vocational training in the country — skilled trade apprenticeship programs. These programs enable those interested in construction to acquire the training they need to build a career in the industry.
“Opponents of prevailing wage policies argue that repeal saves money. They claim a low-skilled, undertrained construction worker making rock-bottom wages will produce the same product as a higher-skilled, professionally trained craftsman. I can tell you from experience that is simply not true.
What low-road contractors save in labor costs never materializes as savings for taxpayers. That’s because taxpayers end up footing the bill for reduced worksite efficiency, higher injury rates, and the prospect of needing to go back and fix work that wasn’t done right the first time by a contractor who by then is long gone, resulting in higher material and energy costs.”
How exploitation works
A great local example of prevailing wage in practice is the difference between firms such as Friede Associates, Kraemer Brothers, and union–signatory firms such as Findorff and Cullen.
Friede and similar non-union firms pay a few supervisors a wage near the benchmark union wage but offer significantly worse benefits. Their line workers are drawn when possible from the pool of farm families because this labor pool knows how to work hard and will do so even in bad weather. The companies take advantage of the poor wages for local ag labor. They pay $10-15 per hour less than prevailing standards and their benefits are also much cheaper. These firms usually do not bid White Sheet jobs because they don’t want to let their employees in on the secret that they are being under–paid.
Entry level employees are treated as “nail pounders” rather than being trained in the variety of skills the trades need. Their benefits do not transfer to other companies easily. While their 401(k) retirement plans can transfer the fees and manipulation of plans by stock market sharks make them poor replacements for defined benefit plans. Companies often match as little as a few hundred dollars annually to an employee’s contributions. Union plans require $5 or more dollars per hour contribution from employers ($10,000 per annum).
Investing in workers instead of exploiting them
Kraemer Brothers uses a model of riding just below prevailing wage (around $1 per hour less) and offers the same dollars for benefits as union plans, but puts them all on the check. Its employees are then able to purchase their own benefits, or if a spouse has a good plan (such as State Employee insurance) they can pocket the money. Their plan is not transportable and employees are expected to accept layoff until being recalled. Often they must travel out of state. This company has been known to lay–off an entire crew one day hire on the same number of people the next day at lower wages. They bid on prevailing wage jobs because they pay enough to meet the standards but can underbid because their business model is designed to be slightly cheaper since prevailing wages are not exactly union scale in most places.
Signatory union contractors have identical labor costs so their competition is based on being efficient in the office and on the jobsite, and using the best training available to their employees. Productivity varies from job to job, and company to company, but the best crews can out–compete non–union firms consistently in quality and quantity. Cheap does not mean good. Best practices can be 30% more productive than standard ones. Valuing the folks at the face of production and giving them the responsibility to improve quality and productivity gives workers a “buy-in”, and makes their careers more meaningful, translating to better performance for the contractor and the client.
Misclassification
Due to the fractured nature of the construction trades, agreements have been made to divide work among different trade unions. The higher levels of skills required by some, along with some sophisticated bargaining have created a sliding scale for compensation packages across the industry. Misclassifying tasks, i.e. having under–skilled workers do jobs they are not supposed to do is a way for contractors to save money. Zenith Corp, a non-union firm is famous for using laborers to do carpenter and finisher work, saving as much as $10 per hour per man. Union firms also play this game sometimes which leads to the question of whether we as workers can all get on the same team and practice some solidarity. The “divide and conquer” strategy has been around for a long time in the workplace.
The goal of building a peaceful, prosperous, sustainable world is not utopian. We are however, up against a committed foe. An accelerating race–to–the bottom for workers is the plan from conservative majorities. Waking up to our interconnectedness as workers means not buying cheap goods of questionable quality when they fit our momentary materialistic whims. We need to extend a hand to those at the bottom, supporting the “Fight for 15” effort to raise the minimum wage. We need to support new efforts such as the Working Families Party to go beyond happy talk corporate liberalism that may call a worker an“associates” while lowering wages.
Prevailing Wage is one more thread of the American Dream being unraveled by the Right. We need to go beyond simply stopping this attack on the American worker. Now is the time to begin to weave a new fabric of worker/citizen solidarity to replace the fractured, co-opted, and decaying labor institutions, that were paid for by the sweat and blood of our predecessors a hundred years ago.
(Mural Art from the Labor Temple, Madison, Wisconsin.)