Prevailing Wage Statistics Revealed
MYTH: Cities can cut 20% of their construction costs by eliminating prevailing wage.
FACT: Direct construction labor and fringe benefits accounted for only 22% of total construction costs in California according to the 2007 Census of Construction. To save 20% by cutting wages overall would require paying workers well below the federal minimum wage at an illegal rate if at all. Research shows that lowering local standards for construction wages tends to attract a lower skilled out-of-area workforce resulting in large productivity losses that eat up any hoped for wage savings on the construction project. Cities also open themselves up to higher costs in other areas:
- Prevailing wage standards discourage unscrupulous contractors who typically cheat on payroll taxes, employ low-skilled workers and shirk health and safety requirements on the job site.
- Under-qualified workers and unsafe work environments create a far greater risk in terms of sub-par construction, worker injuries and even fatalities. Some states see injury rates rise as much as 20% or more.¹
- Workers who earn minimal wages are frequently pushed into relying on government subsidies for healthcare, housing and other social services.
MYTH: Prevailing wage takes away valuable city revenue without providing a significant benefit.
FACT: Paying prevailing wage is an investment in a city’s economic development, raising the construction workforce’s skill level and injecting money into the local economy.
- Prevailing wages attract skilled, experienced workers who produce superior projects that last longer and incur much lower repair and maintenance costs. States with prevailing wage requirements show up to 13-15% more value-added per worker.²
- Workers earning prevailing wage spend disposable income on local businesses and services, which generate sales tax revenue, which in turn builds general fund levels.
- Cities thrive when middle-class income earners are able to buy homes, raise families and establish strong, stable neighborhoods.
MYTH: Prevailing wage excludes a large portion of the workforce including minorities and new craftsmen.
FACT: States that eliminated prevailing wages saw decreases in minority participation in construction trades and training programs. Some states have seen training reduced as much as 40%, with even greater decreases among minority apprenticeships.
- Exempting prevailing wage reduces apprenticeship and construction training opportunities up to 40% and minority apprenticeship training by 54%.³
MYTH: Volunteer projects will be forced to end in January 2012 when the volunteer labor exemption law, AB 2537, sunsets.
FACT: Major construction crafts, community groups, Republicans, and Democrats all strongly support exempting volunteer labor from prevailing wage requirements. On September 6, 2011 AB 587 was approved by the Governor and signed into law. AB 587 extends the current volunteer labor exemption until 2017. AB 587 had virtually no opposition. Volunteer labor is critical to the success of California and Smart Cities Prevail supports volunteer labor 110%.
MYTH: Our City shouldn’t have to pay San Francisco prevailing wage rates on Central Valley local public works projects.
FACT: Prevailing wages are determined regionally and in most cases the prevailing wage is significantly lower in the Central Valley compared to the San Francisco Bay Area. Most classifications, such as carpenters, drywall installers, bricklayers, electricians, glaziers, painters, plasterers, plumbers and sheet metal workers, have a lower prevailing wage rate for projects located in the Central Valley.
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MYTH: Prevailing wage laws are only supported by labor unions and the far left.
FACT: Prevailing wage is a bipartisan issue supported by people of all political leanings who care about rebuilding the middle class. Many Republicans, including Senator Rick Santorum and Congressman Paul Ryan support prevailing wage. In 2012, when a proposal was floated at the federal level to remove prevailing wage, 54 Republicans in Congress joined Democrats in voting against the proposal and to support prevailing wage. Democrats like Bill Clinton and President Obama support prevailing wage. And many down-the-middle pragmatists, like former San Diego Assemblyman Nathan Fletcher, support prevailing wage.
¹ Peter Phillips, Kansas and Prevailing Wage Legislation »
² Peter Phillips, Quality Construction-Strong Communities »
³ Peter Phillips, Losing Ground: Lessons from the Repeal of Nine 'Little Davis-Bacon' Acts »