Prevailing wage law comes under attack Contractors say state is losing millions

January 19, 1992|By David Conn | David Conn,Annapolis Bureau of The Sun

Annapolis -- When Bausum & Duckett Electric Inc. won a bid to work on the Crownsville State Hospital last year, a state law required the electrical contractor to pay its workers an average of $22 an hour, $9 more than the company normally pays its non-union workers.

If not for the so-called "prevailing wage" law, which sets what often amounts to a minimum wage for state construction projects, "the state would've saved $230,000 just on the electric part of the job," said Robert W. Procter, president of the Edgewater electrical contractor.

Multiplying that example by hundreds of state projects -- highways and buildings, large and small -- non-union building contractors figure the law adds up to $50 million a year to state construction costs.

The culprit, the contractors say, is a 46-year-old Maryland law that requires contractors on state projects to pay workers the prevailing wage in the county in which the work takes place. With lawmakers searching for savings under every stone in a sort of budgetary Easter egg hunt, the perennial attack on the prevailing wage law has become intense. Usually Republican lawmakers lead the charge, but lately even some Democrats have taken an interest.

"I'd be willing to take some sort of modification, if not repeal" of the law, says Sen. Charles H. Smelser, D-Carroll, the chairman of the Senate's capital budget subcommittee.

Some are floating the idea of limiting the types of project to which the law applies, or changing some of its cumbersome work regulations.

"I think the governor would be very interested in working with legislators to see if there should be changes made to the prevailing wage law," says David Iannucci, chief legislative officer to Gov. William Donald Schaefer. He adds that Mr. Schaefer has no bill pending and isn't likely to sponsor one.

Building contractors acknowledge that it's still an uphill fight but say they are encouraged. "The chances are better now" for repeal or modification of the law, says Harvey Epstein, the lobbyist for the mostly non-union Associated Builders and Contractors (ABC).

That's because of "the enormity of the [budget] crisis we're in, the depths of it, the possibility that repeal or modification [of prevailing wage] could become part of a total package of reduction in expenditures and the manner in which the state operates," Mr. Epstein said.

Contractors argue that, for a variety of reasons, the prevailing wage usually ends up being the much-higher union wage. The law is nothing but a union protection act, non-union contractors complain.

Construction unions argue that the prevailing wage is not the union wage, and far from costing the state money, it's good for Maryland's economy. It helps larger, more reliable firms, who tend to pay higher wages, compete with smaller firms in a procurement process that favors the lowest bidder, they say. And it discourages builders from importing low-paid workers from depressed areas of the country.

"You want to have workers coming in from out of state, willing to live out of a trailer?" asked William J. Smith Jr., a representative of the International Union of Operating Engineers, Local 37. "That's not helping Maryland's economy."

For years, Mr. Smith and his colleagues have fought successfully in Annapolis to preserve the prevailing wage law. But this year they perceived enough of a threat to muster about 500 troops for a General Assembly opening-day rally, where hard-hatted protesters chanted, "Keep prevailing wage!"

Maryland, which first enacted an embryonic prevailing wage law in 1945, determines the wage for every type of construction worker by sending out voluntary wage surveys each year to contractors in every county.

The law was expanded in 1969 just before then-Gov. Marvin Mandel's mammoth school building program was launched. It now applies to projects valued at or above $500,000 for which funding from the state is at least 50 percent, or at least 75 percent on public school projects.

Union participation

The prevailing wage is defined as the rate, including fringe benefits, paid to 50 percent or more of the employees for each job classification in a county. If less than half the workers earn one rate, then the state uses 40 percent; and if less than 40 percent earn the wage, a weighted average is taken.

Non-union contractors argue that most of the state-set wages are union wages, or very close, because it is primarily the unions who take the trouble to fill out the forms.

"One of the big problems is that there is probably not one open-shop contractor out of 50 that will participate in this," says Stanley Ferguson, president of Annapolis-based Ferguson Trenching Co.

Also, he says, a non-union contractor may pay slightly different wages to each person in a job classification, whereas the union rates apply uniformly to every worker. That helps give the unions more influence in the wage surveys, he says.

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