Opinion: Commentary: A Prevailing Wage Will Grow the Economic Pie

Opinion: Commentary: A Prevailing Wage Will Grow the Economic Pie

Virginia is only one of just eight states that has never had a prevailing wage law. A majority of states do. Construction workers on projects covered by prevailing wage laws must be paid the minimum “prevailing” wage and benefit levels that vary by occupation and geographical areas.

The best known prevailing wage law is the federal Davis-Bacon Act, a bipartisan bill from 1931 that applies to all construction with $2,000 or more in federal funding. Previously, I introduced a prevailing wage bill in the General Assembly in an effort to prevent low bidders on state works projects from undermining local area wages. Though it didn’t pass, I expect that with a majority Democratic General Assembly after the November elections such a bill has much better odds of passage. That is a good thing for not just local construction workers who won’t have to worry about their wages going down, but also to our Virginia economy, which will benefit because it supports local businesses with increased productivity, safety and quality workmanship, and provides the taxpayer with high-quality public works projects.

Three things can happen when big construction jobs are bid out without a prevailing wage. First, cut-rate contractors from out of state, or out of the country, may come in hiring less-trained workers and undermining the local market rate, thus bringing down wages for all local workers similarly situated; second, they take taxpayer dollars back to their home states; and finally, they do not invest in worker training.

The old argument that a prevailing wage raises overall construction costs is a fallacy as higher construction wages are often offset by greater productivity, better technologies, and other employer savings, such as through increased safety. In fact, in Ohio, “The Economic, Fiscal, and Social Effects of Ohio’s Prevailing Wage Law” peer-reviewed research study, which took 16 years, showed that there was no increase in construction costs based on their prevailing wage. Furthermore, prevailing wage laws increase the supply of apprenticeships and worker skills. Because, without a prevailing wage law, most construction workers change employers when they move from project to project, employers have little incentive to invest in worker training. Finally, worker safety increases because the skilled workers know what they are doing on dangerous work sites, and that saves on workers’ compensation costs and work hours lost to injuries.

The solution is to pay a prevailing wage rate that would be determined by the Commissioner of Labor for public contracts on the basis of applicable prevailing wage rate determinations made by the U.S. Secretary of Labor under the provisions of the federal Davis-Bacon Act. Then, these workers will have increased consumer purchasing power and spend the bulk of their money in our local community. They pay taxes locally and at the state level, so it’s no surprise that states with strong prevailing wage laws have more money for schools, healthcare facilities, infrastructure, public safety, and vital services for our communities and our fellow citizens.

Enacting a prevailing wage will grow the economic pie for all Virginians. I’m proud to have patroned this legislation and I look forward to its passage as it is a top priority of mine.