Newspaper Column: Prevailing wage law change will cost taxpayers

A fool and his money are soon parted.

In Nevada those fools are the taxpayers who keep electing Democrat majorities to send to Carson City to pick their pockets.

Assembly Bill 154, sponsored by a raft of Democrats, would roll back the minor headway made just two years ago to cut the cost of public works. It would raise the cost of construction of university and public school buildings by reimposing the so-called prevailing wage on more projects.

Prevailing wage laws require that workers on public construction jobs to be paid no less than the “prevailing” wage in the area where the work is being done. The wage rate is set by the state Labor Commissioner based on a survey of contractors. The survey is so time consuming that in reality only union shops bother to comply, meaning the prevailing wage is the highest union wage.

AB154 would require that contractors doing any university or public school work exceeding $100,000 pay prevailing wage, down from the current $250,00. It also requires the full prevailing wage instead of the current 90 percent.

Las Vegas Democratic Assemblyman Chris Brooks, chief sponsor of the bill, testified before the Assembly Government Affairs Committee recently and actually claimed the bill would save money.

“Research shows that prevailing wage laws lead to more workforce training, a more educated and experienced workforce, safer construction and government savings because workers depend less on social programs,” Brooks said. “Prevailing wage laws are better for the economy because they support the middle-class incomes that boost consumer spending. Eliminating the prevailing wage does not save money and can actually cost more money.”

Warren Hardy of the Associated Builders and Contractors contested this allegation of savings by pointing out that a contract for construction of a middle school in Clark County received a low bid of $2.7 million during a brief period a couple of years ago when the prevailing wage was dropped for schools, but when the prevailing wage was reinstated the low bid jumped to $3.6 million.

In 2000, A.D. Hopkins wrote a series of articles for the Las Vegas Review-Journal, outlining the profligacy of the prevailing wage law. One article stated: “Nevada’s prevailing wage law costs taxpayers about $2.3 million extra on every new public high school being built in Clark County, according to a database analysis by the Review-Journal.”

In 2012, Geoffrey Lawrence penned a column for the Nevada Policy Research Institute website on Nevada’s expensive prevailing wage law. He noted how a plumber in Mesquite might expect to be paid less than $20 an hour for most jobs, but, if it is a public works project by a state or local government entity, that same plumber would be paid, by law, more than $70 an hour.

Lawrence’s piece pointed out that an NPRI analysis estimated that prevailing wage requirements cost Nevada taxpayers nearly $1 billion extra over 2009 and 2010. The state’s biennial general fund budget is less than $7 billion. “That’s why prevailing wage reform needs to be at the top of the agenda for the Nevada Legislature in 2013,” Lawrence wrote.

NPRI in its “Solutions 2015” handbook estimated the law required the state, cities, counties, school districts and other government entities to pay 45 percent higher wages than necessary — a cost to taxpayers of $1 billion a year.

For a little historical perspective, the prevailing wage law is a vestige of the Jim Crow era and is modeled on the Davis-Bacon Act of 1931 that was expressly intended to keep cheaper Southern black laborers from getting jobs on public works projects.

The discriminatory nature of prevailing wages persists to this day.

Hardy of the Associated Builders and Contractors said during testimony on the bill that his organization does not have a problem with federal prevailing wage law but does object to the way the wage is calculated in Nevada, which results in unions setting the prevailing wage.

“The overwhelming majority of small businesses, the overwhelming majority of minority-owned businesses, the overwhelming majority of women-owned businesses are non-union,” Hardy said. “These folks are not union contractors. So what you’re saying is, we need to build laws, which is what the prevailing law does in this state quite frankly, to incent the hiring of union contractors. That disenfranchises small businesses, women- and minority-owned businesses because they are overwhelmingly nonunion contractors.”

A version of this column appeared this week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel and the Lincoln County Record — and the Elko Daily Free Press.

If Dems want more revenue for schools, cut spending

The Democrats in Carson City have rolled out their wish list of new taxes they want to impose in order to raise more money to spend on public schools.

Sort of like faith in the idea that more spending of your money will improve the public schools.

First they came up with an 8 percent tax on all entertainment admissions — movie tickets, concerts, plays, dance, sporting events, golf outings, strip clubs — that they said might raise $50 million though that is a ballpark guess, so to speak.

Now they want to jack up the job-killing payroll tax, especially on mining, and say it might raise $255 million, if there are any jobs left to tax.

Even Republicans have a plan to tax mining that they say would raise $300 million.

Nevada State Education Association already has an initiative that will appear on the November 2014 ballot to tax mining and raising what they say will be $800 million.

The stories are unclear as to whether those figures are annual or biennial, like the general fund budget.

But no one is even talking about cutting spending and using that money for education — as futile as that might be.

You see bills that would have reformed the public employee pension program and partially repealed the prevailing wage law never got out of committee, never got a vote and one never got a hearing in committees headed by Democrats who say they want to increase public education funding.

Repealing the prevailing wage law alone would save at least a half a billion dollars a year.

But, no, they’d rather continue to waste money they get now and add more of your money to waste in the future.

This chart from the Cato Institute shows how effective increased education spending has been thus far:

Prevailing wage law: Bill might be camel’s nose under this tent

Quietly coursing its way through the legislative labyrinth in Carson is a bill sponsored by Sen. Ben Kieckhefer that would exempt school districts and the university system from having to comply with the prevailing wage law on construction projects. In fact, I can’t find a single news story mentioning the bill — Senate Bill 146.

The prevailing wage law requires that contractors working on state and local public works projects pay workers according to a schedule created by the state labor commissioner. That schedule is derived from a survey of contractors to find what the marketplace pays. But the survey is so time consuming that in reality only union shops bother to comply and thus the “prevailing wage” is always the higher union wage.

State Sen. Ben Kieckhefer (Las Vegas Sun photo)

In 2000 a story by A.D. Hopkins in the Las Vegas Review-Journal reported this inflates the cost of labor on public works projects by 41 percent and cost the taxpayers of then-booming Clark County an extra $2.3 million for every new public high school being built.

In advance of this year’s legislative session, Nevada Policy Research Institute published its “Solutions 2013” handbook with a litany of recommendations for lawmakers. It reported that the prevailing wage law artificially inflates labor costs on public works projects by about 45 percent and costs taxpayers more than $1 billion a year. NPRI pointed out that 10 states have repealed such laws since 1978.

A.D. Hopkins

As currently written SB146 adds to NRS 338.080’s exemptions to the prevailing wage law: “Any contract for a public work to which a school district, a charter school or the Nevada System of Higher Education is a party.” And: “A public work of, or constructed by, a school district, a charter school or the Nevada System of Higher Education.” It also requires twice-a-year reports to the Legislature on what the costs of labor were under the exemption and what they would have been under the prevailing wage schedule — apparently as way to document what the R-J and NPRI have already documented and is uncontradicted.

So, the question for Sen. Kieckhefer is: Why merely exempt schools and universities? Why not repeal the whole damned thing and save the state’s taxpayers $1 billion a year?

I emailed Kieckhefer and his secretary with this question and got no reply.

But I suspect the bill may well be a stalking horse designed to get the discussion on the table for these two popular entities who are always crying poverty. Then the bill could be amended simply to read: NRS 338.02o-338.090 is hereby repealed.

It has been years since Hopkins reported on the waste caused by this law, and SB146 is about as close as we’ve gotten to some action from our lawmakers.

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