Prevailing Wage

Prevailing wage was the issue du jour in the Assembly Government Affairs Committee. While three bills were on the agenda, the committee barely got through two of them due to the large amount of people that signed in to testify.

I stepped forward in strong support of AB 298, a bill introduced by Heidi Gansert, who worked with Clara Andriola of the Associated Builders and Contractors. This bill would make much-needed and long-overdue reforms to the prevailing wage process.

For those of you who don’t know, any contractor who bids a public works project in this state that costs more than $100,000 must pay his workers “prevailing wage.” This is sometimes known as “Little Davis-Bacon,” after the federal law of the same name that came to pass in the 1930s.

The idea is to ensure that workers are paid a “fair” wage and one that represents the average wage in the area. The problem is that the way the system currently works, the formula favors collective bargaining agreements and taxpayers get left holding the bag.

The short version of the process is that the State Labor Commissioner sends out a survey to every licensed contractor in the state, who fills out the wages they pay in various trade categories on every project they worked on. The list also includes the location (county) that each job was performed in.

A few issues:

1. Very few companies actually fill out the survey. This makes the sample that much more unreliable. There is a specific sub-group of companies that are very good at returning these surveys: union contractors. Why? Because their collective bargaining agreement requires them to. I stated on the record today that is incumbent on this Chamber and the trade groups that we work to educate employers about how important it is to fill out this survey. It could mean more money in their pocket!

2. When filling out the survey, a contractor is required to list the work done on private AND public projects. This means that public project wages, which are inflated by the prevailing wage, are included in the final formula scheme. In other words, prevailing wages help determine the prevailing wage!

3. It is important to note that there is a large chunk of the prevailing wage rate that never gets into laborers pockets. Some of that wage gets funneled back to labor unions, which use that money for other things besides worker safety and welfare.

One of the beauties of AB 298 is that it would exempt K-12 and higher education construction projects from the prevailing wage requirements. During my testimony, I mentioned the Chamber’s strong support of the failed WCSD-1 failed school revitalization ballot campaign last year. I pointed out that we could build more schools and serve more children if we spent extra prevailing wage money on building school facilities.

Truth be told, the Chamber opposes any type of prevailing wage law (see page 7 of our Agenda for Economic Vitality in Nevada).

When asked by one Committee member if the Chamber supports eliminating prevailing wage completely or just reforming it, I replied: “Both.” AB 298 is a good first step.