Prescription for recovery: cut wages

Members of the Nevada Legislature are promoting a means of improving the Nevada economy by slashing wages on public works projects.

They want to carve out exceptions to “prevailing wage” laws, which require that the approximate average local wage be paid on public works.

In earlier legislatures, measures to do away with prevailing wage laws altogether failed. Now critics of the practice seem to be trying to incrementally erode them. This year there are measures to exempt education projects and projects below certain financial thresholds from the prevailing wage laws.

In public works, the prevailing wage is decided with a survey of the wages paid to most workers in an area. The prevailing wage helps prevent the large expenditures for government contracting from disrupting local construction markets, but critics say union wages inflate the average, and the surveys do not truly reflect the market. Prevailing wage laws date back to the Gilded Age that followed the Civil War.

In the Nevada Legislature so far, there are four bills, though not all seek to curb the practice.

Assembly Bill 37, introduced for Clark County, allows that county’s officials to enforce prevailing wages if the state labor commissioner does not.

A.B. 211, sponsored by Assemblymember Ira Hansen of Washoe County, seeks to exempt public works costing less than $20,000 from prevailing wage requirements, twice the current threshold.

A.B. 218, also sponsored by Hansen, tinkers with the requirements for prevailing wages.

Senate Bill 146, sponsored by Sen. Ben Kieckhefer of Washoe and Carson, would exempt education construction from prevailing wages.

Assemblymember Cresent Hardy of Clark County has said he and his small counties colleague John Ellison will also introduce a measure in the Assembly that exempts education construction and will raise the threshold at which prevailing wages are paid.

“One of the issues that I’ve got in my bill is increase the threshold to 1.5 million,” Hardy said, “which I truly believe that not only schools but other municipalities will be able to do maintenance and repair projects without having to go through the prevailing wage process, which will create jobs and actually help get some maintenance items done for our schools without having to deal with that process also at the same time.”

Union activist Andrew Barbano responded, “Increasing the threshold is the construction equivalent of the Rostenkowski-caused savings and loan crisis under Bush the Elder. It turned stable S&Ls into casinos.”

Hardy also said, “The other issue is, the way the reporting is done, through the labor commissioner presently. Typically, if 51 percent [is] turned in by unions, it automatically goes to that rate.”

Barbano: “These cats need to go back to school. The wage surveys are voluntarily compiled and turned in by employers. Some contractors are reluctant to participate in the annual survey because they don’t want to disclose wage information to their competitors.”

Hardy: “Right now you have DETR [Nevada Department of Employment, Training and Rehabilitation] that already does a rate survey, analysis survey on wages throughout the state, which I believe is a fair rate. And it doesn’t include all the collective bargaining ingredients that the labor commissioner has to deal with which don’t even go into the pocket of the employee. A large amount of that money goes back—in those prevailing wage rates—goes back into those unions for items that I don’t even know what they are when you look at the chart. The labor commissioner has all of those and we can’t get answers for a lot of it, what it even is, that they’re reporting.”

Barbano said that if Hardy has evidence of what he is saying and hasn’t turned it over to authorities, he is concealing felonies—which is a felony in itself.

“The survey reflects area-standard wages, not just union rates,” Barbano said. “Unions get monthly dues, usually around $30 to $50 a month. They may also get contributions to their health and welfare funds, i.e., health insurance and retirement payments, which unions have negotiated for their members. … At best, this underinformed disinformation disseminator is endorsing low-wage, no benefit work.”

Hardy: “And then the other situation that happens is the way that it’s reported, is that if somebody from the rural counties don’t report the shop, the non-union shop doesn’t report, because it costs a lot of money to put all this paperwork and reporting together, so it doesn’t get reported like at the same way the unions do, because the unions make sure they pay for their people to get their reports out, so it continually [grows], and right now you’ve continued to have because of overtime and everything else, prevailing wages [in] many cases is higher than the actual rate than the unions are charging with the collective bargaining agreements.”

Barbano: “Again, employers compile and turn in the surveys.”

Hardy is in the construction business. He said wages could be cut by perhaps 25 percent by doing something about prevailing wage law. Republican leaders last week linked changes in prevailing wage with changes in the Public Employee Retirement System. Assembly Republican floor leader Pat Hickey said action on the two issues is not the price of cooperation with the Democrats on other issues, but did also say at the same news conference that leaders from the two parties will begin meeting on ideas for changing the state’s tax structure.

Democratic leaders were critical of the prevailing wage and pension proposals as worker-bashing that does little to help the state’s economy.