IT ISN'T BROKEN, SO DON'T FIX IT
by Robert L. Balgenorth
In the construction industry, as in most others, you get what you pay for. If you employ a talented management team and a crew of skilled, well-paid workers, you will get a project that's completed within the budget, and on or ahead of schedule. Payment of the prevailing wage to construction workers on public works jobs is the best guarantee that skilled crews will build dams, roads, bridges, schools, jails, prisons and many other built-to-last public works.
EFFICIENCY
Under a prevailing wage system, bids are submitted based on contractor efficiency and competence. Without prevailing wages, public works bids often are won by the contractor willing to make the deepest wage cuts.
C.C. Myers, the California contractor who rebuilt California's Santa Monica Freeway after the Northridge earthquake, came in under budget and well ahead of schedule. "That kind of operation doesn't come cheap," Myers said. "But investing in skills is what brings the overall cost of construction down."
Ironically, Myers' company won the accolades of a governor whose new wage averaging regulation would undermine a prevailing wage system that has worked well for more than 60 years.
There are more compelling statistics from the Federal Highway Administration that bear witness to Myers' statement. In the 10 states that do about half of all the highway and bridge work in the U.S., the six states that paid prevailing wages - Illinois, Pennsylvania, New York, Michigan, Missouri and California - built nearly 75 more miles of roadbed and almost 33 more miles of bridges for $557 million less than the four states that did not pay them. The wage package in these six states were more than double those of the predominantly non-union states of Texas, Georgia, Florida and Virginia!
Economists at the University of Utah studied that effects of the repeal of prevailing wage laws between 1979 and 1988 in nine states. Public works construction cost savings were estimated at 1.7%. But there was a tripling of cost overruns on public works; a 15% increase in construction injuries; a 40% decrease in apprenticeship training; and an even greater decline in the training of minority apprentices. Moreover, those states lost tax revenues becuase the pay cuts reduced the purchasing power of construction workers and their tax bills.
LOSSES
Under California's new wage averaging scheme, even the wildest savings estimate is $600 million short of the anticipated losses in sales and income tax revenues, according to a study by a University of California economist.
In California last year, counties and cities representing more than half the state's population approved resolutions supporting the long-time method of determining the prevailing wage. Those who advocate its repeal are offering the false hope that con artists dangle before their victims--you're going to get something for virtually nothing. If you believe that, I've got a bridge I want you to build.
Robert L. Balgenorth is president of the State Building and Construction Trades Council of California, Sacramento.
This article was reproduced from the March 10, 1997 edition of ENR Magazine.