Reevaluating prevailing wage

Reevaluating prevailing wage
State lawmakers may amend portions of a bill passed this session that was meant to streamline the process by which the local prevailing wage is determined for a public works project. Photo: Washington State Department of Transportation

State lawmakers are signaling they may reevaluate a bill they approved earlier this year that was intended to streamline the process by which the Department of Labor and Industries (L&I) determines the prevailing wage to pay private workers involved in public work projects in a given area.

Such a move would be for the purpose of addressing various flaws articulated at an Oct. 23 work session of the Senate Labor and Commerce Committee, among which are the new costs associated with public projects, as well as a provision that could artificially raise the prevailing wage throughout a county.

Under the new rules per SSB 5493, L&I adopts prevailing wage rates for the various occupations affected that include collective bargaining agreements (CBA). The rates are updated biannually in February and August.

Around 80 trades and occupations were impacted by the new law, including carpenters, electricians, painters and crane operators.

At the Oct. 23 work session, SSB 5493’s sponsor Sen. Steve Conway (D-28) remarked that the bill “is a major change in how we determine prevailing wage in this state, so it doesn’t surprise me that we’ve had quite a deal of conversation that’s come up with the application.”

“I think we were trying to streamline the system so that we were saving the citizens of the state of Washington and the dollar amounts that it was taking to do all of these surveys,” Sen. Curtis King (R-14) said. “This was our method of trying to streamline the system we had.”

In some cases, the policy resulted in significant rate increases. In King County, landscape construction labor rates jumped from almost $18 an hour to $37.67, a 111 percent increase. In Spokane County, the rate increase was twice as much, $11.50 an hour to $37.19. Both counties experienced similar rate hikes for truck drivers of more than 20 percent.

One of the flaws in the bill, according to some, is that it didn’t clearly distinguish between residential and commercial rates in many instances. King said that in his county insulation applicators doing residential work are now paid $61 an hour, compared to $15 an hour before, because L&I designates it as commercial work.

“I think this is part of the problem that we need to address as we move forward,” he added.

Associated General Contractors Government Affairs Director Jerry Vanderwood told lawmakers at the work session that the CBA provision makes it “possible for a single company with a single worker to negotiate a CBA with a wage of any size, and that CBA will become the prevailing wage. Theoretically that is possible under the new law.”

It also means that a pay rate under a CBA for a small group of employers could override a lower pay rate agreed upon by far more companies in the area. Because of that, the provision “changes prevailing wage from a neutral playing field to a potential political tool that upends the balance inherent in collective bargaining,” Vanderwood warned.

He added that it turns “the whole notion of multi-employer collective bargaining agreements upside down. What is the value of negotiating a deal for the industry when a single one-off agreement with any wage rate will set the prevailing wage? It also makes the concept of prevailing wage nonsensical. A single firm – one with, say, cash flow problems – that believes it can’t afford a strike would sign a collective bargaining agreement to avoid the strike that would then prevail over the rest of the industry.”

The new law has also led to a large wage hike for trucking related work. Dump truck rates across the state are now over $50 an hour, when in some counties such as Skagit the prevailing wage was $16 an hour a year ago. In Thurston County, dump truck and trailer rates leapt from $17.23 an hour to $52.70.

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