Samantha Draper, a research analyst for Smart Cities Prevail, a nonprofit organization that advocates for prevailing wages and public infrastructure, is responding to the July 11 editorial "Will cities seize the opportunity of wage ruling? Court offers savings on construction." The editorial said a state Supreme Court ruling "is a blow to organized labor but a boon to taxpayers. If they have the political will to take advantage of it, struggling municipal governments can save a lot of money."
The California Supreme Court has ruled that charter cities can exempt themselves from prevailing wage requirements for public works projects funded through municipal funds. While the decision settled outstanding legal issues, it only brought public policy considerations to the fore. The Bee's editorial offered a misleading view of prevailing wage standards on public construction costs.
Economic studies by organizations such as the Economic Policy Institute and the Federal Highway Administration debunk claims that eliminating prevailing wages saves money. Because construction labor typically is less than a quarter of a project's total cost, savings claimed by prevailing wage opponents don't exist. In fact, during the past several years, public works construction prices fell by 20 percent due to massive shrinkage in construction demand. Claims that removing prevailing wage will save on total construction costs simply don't pass the laugh test.
Fiascoes in Oceanside and Palo Alto illustrate the problems with simplistic thinking about public works construction. Oceanside taxpayers are paying 65 percent more per square foot on a non-prevailing wage project than was originally planned with prevailing wages. The Oceanside Harbor Center is more than a year behind schedule after the contractor admitted being unable to complete it. In Palo Alto, an attempt to build a library on the cheap without prevailing wages faces massive cost overruns and extensive delays that have the city considering litigation.
In contrast, Gilroy recently completed a library project on time and under budget. Although a charter city with the authority to ignore prevailing wages, the city chose not to after doing its own research. Gilroy's public works staff understood that complex engineering and design elements cannot be executed by unskilled workers and that prevailing wages attract qualified contractors, ensuring quality construction completed on time and on budget.
Prevailing wages support local economic development at a time when cities' economic toolboxes are shrinking. Gilroy's and Palo Alto's library projects were put out to bid at nearly the same time, but Gilroy's library used 6 1/2 times more local contractors than were employed in the building of Palo Alto's library. That means more taxpayer money stayed in the local economy.
The case is clear for prevailing wages as a tool for quality construction, middle-class wages and local economic development. Prevailing wages remain the best value for taxpayer money on public works construction.