Legislative Update: Lower prevailing wages not ‘savings’

Following is today’s edition of the WSLC Legislative Update newsletter (PDF version):

Efforts to undermine prevailing wage
standards harm middle-class families

 OLYMPIA (Mar. 21, 2013) — Do you recall any state legislators running for election last fall by promising to lower your wages? We don’t. And yet, the 2013 state legislative session has brought a surprising number of proposals to do just that.

Bills have proposed to create a sub-minimum wage for new hires, to help businesses get away with illegally denying overtime and minimum wages, and to undermine prevailing wage standards so contractors can pay construction workers less money, to name just a few.

In the case of prevailing wages, several bills were introduced in the Republican-controlled Senate to exempt various types of public-works projects from those standards, including fire repair projects, rural school projects, and projects in “distressed” counties. (Just what a distressed county needs: lower wages and more out-of-state contractors and workers!) Thankfully, none of those bills survived the most recent cutoff.

The one that remains alive is SB 5107, which would more broadly apply residential prevailing wages — which are lower — to mixed-use buildings, including work on utilities, streets and other structures associated with the project. Under current law, all work on such projects must pay higher commercial wages.

The bill’s supporters are trying to portray it as an attempt to clarify conflicting federal and state standards, not an attempt to lower wages. Sen. Janéa Holmquist Newbry (R-Moses Lake) adds, “It will help us create more low-income housing.”

She is suggesting that SB 5107 would save money so more low-income housing can be built. But every dollar it “saves” is a dollar taken out of a construction worker’s pocket. Cutting wages to build more low-income housing. Is that a vision for Washington state that reflects our values?

Prevailing wage laws are designed to outlaw wage exploitation in public construction contracts by preventing the undercutting of local standards. Because public works contracts go to the lowest bidder, it is in the public’s best interests to make sure that tax dollars are not spent on fly-by-night contractors that pay substandard wages to obtain contracts. These standards, which are set by scientific surveys of actual wages paid in local communities, ensure that anyone awarded a government contract pays at least those prevailing wages.

Critics would prefer to have the invisible hand of the free market work its magic rather than maintain a prevailing wage—or a minimum wage, for that matter. But low-balling contractors that pay substandard wages are more likely to have less experienced or poorly trained workers. They are also more likely to have brought workers from out-of-state who are willing to work for less. We should not reward them with public contracts.

The truth is, there is no evidence that prevailing wage laws result in higher costs for the government.  In fact, a 2008 study by the Economic Policy Institute refutes claims that prevailing wage laws raise the cost of government projects. That research concludes that prevailing wage laws also help to reduce occupational injuries and fatalities, increase the pool of skilled construction workers, and actually enhance state revenues.

Which brings us back to SB 5107…

“I look at this and I wonder why we want to say that utilities and streets and sidewalks are ‘residential’ when clearly that is public infrastructure,” said Sen. Bob Hasegawa (D-Seattle). “So I have to come to the conclusion that (SB 5107) along with the other prevailing wage bills are just ways to cut wages for working families and would harm our middle class.”

All Senate Republicans, Republocratic Sens. Rodney Tom and Tim Sheldon, and freshman Sen. Mark Mullet (D-Issaquah) voted to pass SB 5107, on a 26-23 vote.

The Washington State Labor Council, AFL-CIO strongly urges the House to reject it. When contractors compete on the basis of skill and productivity, we all benefit. When they compete to have the lowest wages or labor standards, we all lose.

Local control (when it’s OUR locals)

Until this year, Republicans had been in the minority in both houses of the State Legislature for more than a decade. Not coincidentally, until this year, Republican state legislators tended to oppose state intervention in local issues. Having the state step in and tell local communities — especially those run by Republican elected officials — what they can and can’t do in their own counties and towns is generally frowned upon by our friends in the GOP.

But then Tom & Tim handed them the keys to the State Senate. And now guess who’s intervening?

The Republican-controlled Senate has passed SB 5726 to water down the Democratic-controlled City of Seattle’s paid sick leave ordinance. Anyone working in Seattle whose company’s physical location is outside city limits would be exempted, as would employees who spend more than 15% of the hours they work in a year outside of city limits.

It’s not hard to imagine how businesses that don’t want their employees to have paid sick leave will react. They will dispatch and rotate employees in and out of Seattle city limits just long enough to be exempted. They might even move their offices outside of the city to take advantage of the loopholes.

The corporate lobbying groups pushing SB 5726 portray it as a compromise between legislators who supported a bill that would have completely banned cities from passing any sick-leave ordinances, and those who think the Senate should just butt out. That’s like saying, “I punched you in the face as a compromise between leaving you alone and killing you.”

Many of these very same corporate lobbyists appeared before the Seattle City Council to make their case against the proposed ordinance. And when they realized it was going to pass, they got language inserted to accommodate some of their concerns. But, in their wisdom, Seattle’s elected city leaders voted 9-1 for an ordinance that didn’t create loopholes like the ones proposed in SB 5726.

People should not be forced to work sick just to keep food on the table for their families. When employees don’t have access to paid sick leave they are a danger to their co-workers and they are a danger to the public.

The Washington State Labor Council, AFL-CIO strongly urges the House to reject the Senate’s attempt to second-guess and intervene in Seattle’s paid sick-leave ordinance.

‘Our needs have outgrown our means’

Lawmakers received the all-important state revenue forecast on Wednesday, which determines the hole they have to fill in the biennial budget. The good news: the continual revenue shortfalls of recent years’ forecasts appear to have passed and tax collections are now coming in as projected. The bad news: that still leaves an overall budget shortfall of about $1.3 billion to maintain current services. Plus, the state Supreme Court’s mandate to increase education funding could cost anywhere from $500 million to $1.7 billion over the next two years.

In the face of this challenge, Republican talking points have not wavered. Sen. Andy Hill (R-Redmond), Senate Ways and Means chairman, repeated the mantra on TVW, “We have to live within our means.”

WSLC President Jeff Johnson offers a different take.

“I say we need to recognize that our needs have seriously outgrown our means,” he said. “If we don’t want to become a second-rate economy with a widening income and opportunity gap, then we need to raise the revenue that we need to properly invest in Washington State and our residents.”

Johnson added, “We look forward to Governor Inslee’s proposal on closing tax loopholes.”