Bryan Hoylman: State’s prevailing wage issue defined

Bryan J. Hoylman
President/CEO
Associated Builders and Contractors of WV

For many in West Virginia, the recent spat over the reform
of prevailing wage laws has created as much confusion as it has concern. Organized
labor unions came to the West Virginia Capital in droves to protest any changes
to our state’s prevailing wage laws that, they claimed, would “cut workers’
wages.” Now they are standing strongly behind the newly proposed methodology,
and are waging a public affairs offensive to ensure that taxpayers are unaware
of what this process was actually intended to do, determine a true prevailing
wage.

Prevailing wage, despite what many assume it means, does
have a defined meaning. It is the rate that prevails in the market. Thus, the
wage should reflect what construction companies in W. Va. pay their workers, on
average, in a given classification. However, the prevailing rate of wages has
historically reflected only that of collective bargaining agreements of
organized labor unions, the highest wage rates paid for commercial construction
in the state and not the rate that actually prevails.

Between the year 2008 and now, prior to the recession
starting, the prevailing wage in West Virginia rose 24 percent. When you
compare that to all other industries, it was the highest wage increase of any industry
in the state. It just so happens, this is the only industry where the
government mandates the wage.

Wage rates for unskilled, entry level positions are also well
above market rates. The mandated prevailing wage for a class one laborer in W.
Va. was approximately $42.00 an hour. Yes, individuals working on public
improvements with no experience, training or specific expertise were required,
by law, to be paid in excess of $40 for every hour of work performed, and only
when working on projects funded with state tax dollars. Keep in mind, were
talking about the low end of the wage classifications here. Average market
wages for unskilled basic laborers is usually around $10-$12 an hour. However,
when taxpayers foot the bill, that road flagger you see holding a sign on your
way to work is making more than our state’s nurses and teachers.  

There is also an excessively high mandated fringe benefit.
Under normal circumstances, and according to the United States Census Bureau,
employee benefit packages equal roughly 25 percent of their pay. But, in West
Virginia when taxpayers fund a public improvement, construction workers are mandated
to be paid anywhere from 50-80 percent of their pay package for benefits. For
union workers, the bulk of this fringe benefit is turn over directly to the
organized labor unions themselves to fund their various “programs.”

The reason labor unions seek to quash any attempt to
determine a true prevailing wage has nothing to do with workers’ wages, safety
or quality. It’s because without a mandated, artificially inflated wage in
place, they simply can’t compete for state work. This is about losing their
competitive edge, along with the free flow of taxpayer dollars in to union
coffers through their excessive fringe benefit packages. The laws in West
Virginia were designed to give this advantage to unions and their workers, but
it’s important to note, that nearly 80 percent of the state’s construction
workforce chooses not to join an organized labor union.

The newly presented methodology by Workforce West Virginia
changes very little from the old process to the new. It relies almost solely on
individual surveys which have no minimum rate of return; it is using existing
prevailing wage rates, the inflated rates that are in dispute, to determine the
new prevailing wage rates and it incorporates a mandated fringe benefit, rather
than allowing for the market to establish them accordingly. The law which was
passed and codified in to W. Va. code earlier this year did not call for any of
these factors to be used; in fact it cited specifically how to do it without
using these methods. Yet, the process is being implemented regardless of the
intent of the lawmakers who passed it, and the taxpayers who supported it. Despite
a temporary repeal of this mandate, which may ultimately save taxpayers
millions of dollars in just a few months, we don’t anticipate the new
methodology to yield market based results once it is fully implemented. This
would explain why organized labor unions went from strongly opposing the new
law, to stealthy supporters with, of course, little regard for the state’s
taxpayers.

Road funding is currently a major issue in West Virginia. An
even bigger issue is how the state is going to fund the improvements. If we
don’t tackle prevailing wage and do it right, it simply doesn’t matter where
the funds come from.

We are kidding ourselves if we go through an exhaustive
process to free up hundreds of millions of dollars but are still paying road
flaggers $42 an hour. That’s not an investment. That’s larceny.