“There are three kinds of lies: lies, damned lies, and statistics.” — Mark Twain
The tug-of-war between labor and business is running hot these days as each side grabs for a larger share of a diminished resource pot, especially in the construction field. And the question of wage rates is at the heart of the matter.
That’s what makes a pair of recent skirmishes intriguing.
First we have a study, performed by a University of Utah economist and paid for by the Connecticut Construction Labor Management Council, that suggests the state’s prevailing wage law in public construction is helping Connecticut’s economy. The logic is that the higher wages attract and retain better workers with higher skills that are attractive to employers. The statistics support the position that higher pay also allows construction workers to earn enough to buy homes, pay taxes and, of course, that money turns over several times as it moves through the economy.
While much of that logic is valid from a labor perspective, the conclusion left business people across the state scratching their heads.
Yes, high pay is good for the recipient. But high pay — particularly artificially high pay — is a negative from an employer’s perspective and is a disincentive to doing projects here. In the case of public projects, paying inflated salaries just means less gets done.
Then we have the Minority Construction Council and the Laborers’ District Council coming after the Metropolitan District Commission for hiring out-of-state contractors and subcontractors to work on a $2 billion overhaul of the region’s sewer system. The complaint is wrapped neatly in the guise of concern over the fate of minority apprentices who are having trouble finding work. But there’s a bigger fight here.
“This is a really horrific situation being created by the decision makers at the MDC,” intones Charles LeConche, business manager of the Connecticut Laborers’ District Council. “With over $2 billion involved in this multi-year project, the MDC has the opportunity to jumpstart Connecticut’s economy by hiring talented companies and workers here in the state. Instead, MDC officials choose to bypass our local workers and local companies.”
Really? The MDC just arbitrarily chose not to hire Connecticut taxpayers, the people who are paying for the work?
In reality, the MDC is bound to accept the lowest qualified bid. And on the first $800 million in work, out-of-state firms have won a lot of those contracts.
So much for that argument that the state’s rules mandating inflated pay help the state’s economy.
Labor is positioning itself to defend the prevailing wage law against an expected attack in the next legislative session. That seems a good strategy, given the prevailing political winds.
Prevailing wage laws date to the late 19th century and flourished during the Depression. The original thought was to keep the massive buying power of government projects from driving down wages as contractors bid for the big jobs. But the effect has been to lock in a rate that is the prevailing collectively bargained rate, factoring out of the equation the usually lower nonunion wage rates.
Skip past the union vs. nonunion debate for a moment and focus on the dollars. Prevailing wage laws drive up the cost of these public projects.
Laws that artificially increase the cost of doing business here have got to be in the bull’s eye for the next governor, no matter who it is.
The classically misnamed “prevailing wage” laws are a sacred cow to labor. And so far no politician has dared threaten the critter. But times are changing. The only question is how fast.
Connecticut labor can compete effectively with out-of-state contractors and subcontractors without the state’s thumb on the scale. And without that extra cost imposed by the prevailing wage law, there’d likely be more projects here. That tide would lift all boats.
