SB 7 Will End Loophole to Avoid paying Prevailing Wage

Robbie ColumnMay 2013 - SB 7 Will End the Charter Cities’ Loophole to Avoid Paying Prevailing Wage

Of my predecessor Bob Balgenorth’s many great legacies from his 19 years as State Building Trades president, one of the most remarkable was his relentless fight for workers on public works projects to earn prevailing wage.

Once again, prevailing wage is under attack, and so the State Building Trades is going on the offensive in the Legislature to make sure all construction workers in California earn what they deserve.

A little history is in order. Back in the 1990s, Republican Governor Pete Wilson figured he could make his corporate friends happy by scrapping California’s longstanding prevailing wage regulations. But Bob unified Building Trades workers in opposition, organized massive demonstrations in Sacramento and Los Angeles, produced persuasive pro-prevailing wage videos, and gathered and organized academic studies proving to communities the economic benefits of paying prevailing wage.  As a result, Wilson would leave office with prevailing wage intact. Then, in new Governor Gray Davis’ first year, he signed Building Trades-sponsored legislation to codify the worker-friendly modal rate for determining prevailing wage into California law.

The new state law left our enemies only one avenue to avoid prevailing wage: charter cities. The anti-union lobbying group the Associated Builders and Contractors (ABC) adopted the tactic of trying to trick officials of cash-strapped cities into believing that they could save money by eliminating prevailing wage by becoming charter cities, and exempting themselves from state law. Unfortunately, some have.

Of California’s 482 incorporated cities, 121 are now charter cities, making them free to exempt themselves from various state laws. Of those, 70 choose to comply with the state’s prevailing wage law. Others require partial compliance, and others either specifically forbid prevailing wage or allow it to be avoided.

The State Building Trades wants to change that. We have sponsored bipartisan legislation, Senate Bill 7, co-authored by Democratic Senate President pro tem Darrell Steinberg of Sacramento and, notably, Republican Senator Anthony Cannella of Ceres, to make charter cities eligible for state funds for public works projects only if they pay the prevailing wage. This is similar to successful legislation we carried two years ago to make local governments eligible for state funds only if they lacked blanket prohibitions on project labor agreements.

Steinberg said he is carrying the bill because he believes creating middle class jobs with decent wages is the key to California’s economic recovery. “We can’t afford to shortchange workers and taxpayers by ignoring the economic net benefit of California’s prevailing wage law,” he said.

His co-author, Cannella, is a Central Valley Republican, who said his background as a former mayor and civil engineer makes him a strong supporter of prevailing wage. “It is important we close this loophole that allows certain firms to game the system. Those firms know that they can marginally undercut prevailing wage to win a contract,” Cannella said.

The public works projects of the 1930s, such as Hoover Dam, were built by the best-trained workers earning fair wages. Those well-built projects have lasted decades and continue to benefit us today. Prevailing wage enables apprenticeship training. This guarantees cities that expertly-trained local workers will build their projects. Without it, bidders are forced to cut corners on training and apprenticeships to get low bids, and quality suffers.

California’s construction workforce is rapidly aging. We need a strong prevailing wage throughout the state to encourage young people to enter apprenticeships and tackle the next generation of infrastructure and public works. 

Our state has a compelling interest in being a place where under the lowest bid, a streamlined, well-trained work force builds our projects in the least amount of time, doing it once and doing it right; and where construction workers earn decent wages for doing so. We have a compelling interest to see that state funds spent on municipal public works projects are spent accordingly.

As long as ABC and its ilk can use charter cities to drive their race-to-the-bottom agenda at the expense of workers, taxpayers and consumers, they’ll always keep on trying.

With Senate Bill 7, we can close that loophole and protect the wages of working men and women in all of California, including its charter cities. We are working tirelessly for its passage, and we will repeatedly ask for your help in the months ahead.


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