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8/16/2010
Prevailing wage - badly in need of reform
It’s welcome news to hear at least a few WI counties and legislators are challenging Wisconsin’s onerous and costly prevailing wage rules.
Outagamie County is one of 17 counties formally seeking reforms in the prevailing wage rate law, made more complicated to administer since the threshold for covered projects was lowered from a previous high of $243,000.
…. State Sen. Robert Cowles, R-Green Bay, is among the co-sponsors of a bill seeking reforms once the next Legislature goes into session in early 2011, under a new governor with Jim Doyle not seeking another term.
Cowles said the language lowering the previous threshold is one burdensome element of the new law, which he charged skirted normal legislative channels.
The Post-Crescent article does a good job exposing the extreme costs of prevailing wage regs for municipal taxpayers. Read the whole thing.
Chris Terry, vice president of CVS Trucking in Kaukauna, which employs three drivers to operate three dump trucks, thinks reforms are badly overdue for the law.
She said she's not against unions. She's not against paying truck drivers a fair wage. But as a subcontractor, her firm is unable to increase its hourly contracted rate to meet the much higher mandated rate under the laws. In a market that pays drivers $16 to $20 an hour, her firm has to pay up to $41 an hour on projects covered by DWD provisions or the state Department of Transportation. "I'm looking for some fairness in that wage," she said. "I'm mandated to pay double (by the prevailing wage laws). People have to know what this is doing to small business."
But local governments have to budget for the acceptable bid.
Prevailing wage rates have long been a source of huge concern for me. This 2007 piece is a quick and dirty explanation of the wheres and whyfors of the expensive provision.
[H]ere’s the bottom line for me. When federal block grants are used to build affordable housing, when those block grants are used to make home repairs in Appleton’s Neighborhood Revitalization program, when a school is built, when the county or city or state contracts to build a road, we taxpayers are paying inflated labor rates to get those projects done. 5% or 10% or 38% - whatever the savings – certainly our state budget could dearly use those bucks. And our municipal budgets. And our county budgets. And our school budgets. Prevailing wage rate laws are a huge drain on public project spending in Wisconsin. The argument is a slam-dunk.
Jo Egelhoff, FoxPolitics.net
COMMENTS
I serve as Town Clerk in a small, primarily agrcultural town, and have so served for the past 14 years. Never before have I seen a more egregious abuse of local government than this, when taken in concert with the legislative mandate to cap our local tax levy. The state legislature has deemed town, village and city governments to be "big spenders" and thus has taken upon themselves the mantle of Protector of the Taxpayer by limiting the authority of us voracious tax bullies. Yet somehow they don't see these high wage rates as contributing to property taxes..., huh?!
Since the combination of lousy legislation cited above most towns are unable to pave even a mile of road a year. All we can do is plow the snow, fix the shoulders and plug potholes.
While our Gen. Trans. Aid payments have held fairly constant, the cost of paving a mile of town road is now somewhere north of $100K. In my town our aid payment for this year is about $66K.
The liberals who presently (and only temporarily) run our govenment need a lesson in November about what WE think a big spender looks like. Here's hint, folks: They buy trains we can't afford to operate and use our taxes to build over a hundred roundabouts we didn't ask for.
Duke (Mon Aug 16 10:27:51 2010)
while prevailing wage is surely hurting Wisconsin counties and local municipalities is also hurting small businesses in such away that many employers are putting people on unemployment and cutting benefits. This is direct argument against DWD's report that it helps stimulate the economy. DWD's argument that prevailing wage provides quality construction is also not a valid argument. The people who are getting paid PW do the same quality job whether they are on a private or public project. If they didn't do a quality job,they wouldn't be employed.
Wisconsin sends out approx. 17,000 surveys. approx. 2000 are returned and they only use 1600 of those to determine the wage. DWD uses only the top 51% of the survey throwing out the bottom 49%. By asking on the survey to list all public and private projects the survey becomes skewed to reflect the mandated PW not the actual wage the employer would normally pay (using only the top 51% of numbers submitted) they survey is wrong. In a market where truck drivers are consistently pd. 16.00-20.00/hr state wide they are now getting pd. 24.00-41.00/hr.
Those numbers do not reflect the market wage which is what "prevailing wage" is suppose to do. It is much more reflective of a union rate (although they are different) b/c Wisconsin, also by the way of the survey, uses about 70% of numbers submitted by union companies even though only 25% of construction firms in Wisconsin are union. The small businesses are not accurately represented. Sub-contractors are told by the prime what their hourly rate is going to be pd (ie 75.00/hr) and then are mandated to pay about 40% out in PW (ie 38.69/hr and overtime 50.63/hr on anything over 10hrs per day --not the normal 40 hr work week)doing the math you can see that PW is detrimental to small business and many will be going out of business as a direct result of the unreasonable PW.
People need to contact their representatives to let them know how this is gross government overspending and is hurting everyone. Tax payers need to stand up for responsible use of their money
Chris (Tue Aug 17 09:11:35 2010)
Chris, You seem to know a lot about Prevailing Wage. Do you have any ideas as to how we can reform it? How can I help?
Buck (Wed Aug 18 21:38:11 2010)
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