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Robert Heise letter: Associated Builders and Contractors opposes use of prevailing wage

To the Editor: The Cloquet City Council is considering a measure by which they will use Minnesota's Prevailing Wage Calculation to mandate wages for city construction projects. The Minnesota Chapter of Associated Builders and Contractors is oppos...

To the Editor:

The Cloquet City Council is considering a measure by which they will use Minnesota's Prevailing Wage Calculation to mandate wages for city construction projects. The Minnesota Chapter of Associated Builders and Contractors is opposed to this measure.

Associated Builders and Contractors is a national association representing 23,000 merit shop construction and construction related firms in 79 chapters across the United States. The Minnesota Chapter represents nearly 400 member companies with over 20,000 employees.

Reasonable people can disagree about the role government plays in establishing wages in construction. Other than setting a minimum wage, government is not involved in setting wages in any other field, why are the construction trades the exception?

Prevailing wage is an issue that affects any contractor who wants to bid public work funded by the state or federal government. Originally instituted during the depression, the intent was to prevent cheaper labor from out of state from taking good jobs from native Minnesotans who needed the work. While the intent was noble, and at the time, effective, the method for calculating Minnesota's prevailing wage is as outdated as the construction methods used during the depression.

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In Minnesota, the state uses a "modal method" to determine prevailing wage. A survey is sent out to contractors, and when the responses come in, the most commonly reported wage, exact to the penny, is the prevailing wage. As an example, if five wages are reported for pipe fitters, and three of them make between $32 and $34 per hour, but two fitters make $38 per hour, prevailing wage would be $38, since it is reported twice. Worse than that, if no wage is repeated, the highest wage is considered prevailing. This method is outdated, unfair, and not statistically valid.

On March 22, Minnesota Associated Builders and Contractors testified in support of a bill authored by Representative Bob Gunther (R-Fairmont) that would have changed the prevailing wage calculation to a "Median Method." That means that in the example discussed above, with three wages between $32 and $34 per hour and two at $38 per hour, prevailing wage would be $34 per hour, since it is the wage exactly in the middle of the five reported wages, and truly reflects what people in the trade are earning.

Another problem with the current prevailing wage method is that two contractors can set the rate for an entire county. The bill by Representative Gunther addresses that because the survey that would be used to determine prevailing wage would be the Department of Employment and Economic Development's (DEED) Occupational Employment Statistics. These are the numbers used for determining unemployment benefits and are not published until there is a 75 percent return rate from the contractors who were surveyed. This ensures a large enough sample that the prevailing wage is an accurate reflection of what employees are being paid in a given county.

Minnesota's prevailing wage law is broken, and unfair to taxpayers. It would be unwise for Cloquet to institute this measure of wage control. Prevailing wage is an unfunded mandate and is not required on a construction project funded by local units of government! This measure would simply put Cloquet at a competitive disadvantage by limiting the prospective number of bidders.

Robert Heise, president

Minnesota Chapter of Associated Builders and Contractors

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