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Prevailing wage: What it is, and why it's stirring up so much dust

February 11, 2000

In a move that veteran Annapolis reporter Tom Stuckey said might cause more outrage than any legislative proposal he's made this year, Maryland Gov. Parris Glendening announced the day before the opening of General Assembly 2000 that he'd like extend the prevailing wage law to most of the state's school-construction projects.

"This is just crazy," Maryland House Minority Leader Robert Kittleman told The Associated Press. And after the governor said that prevailing wage laws don't drive up the cost of construction, Martin Madden, the Maryland Senate's minority leader, called that statement a "patent lie."

So what is this prevailing wage law, and why is everybody so hot about it? And more important, why should the average taxpayer care?

The prevailing wage law now requires that certain hourly wage rates (determined by a voluntary survey of contractors) be paid to workers on construction projects where the state pays 50 percent or more of the cost.

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Right now, that law doesn't apply to school construction projects unless the state pays 75 percent of the costs, a rare occurrence according to Stuckey's analysis. Glendening has asked that the percentage that triggers the wage rate be cut to 50 percent.

According to a 1999 study by the Department of Legislative Services, the change could add from 5 to 15 percent to the cost of all affected contracts. And that, according to Joan Warner, executive director of the Cumberland Valley Chapter of the Associated Builders and Contractors, will mean taxpayers will get less for each school construction project. That may mean smaller schools, Warner said, or facilities that are not as well finished, she said.

"You're not going to get as much for your money," Warner said.

And that's not just because of the wage rate, according to Mike Henderson, ABC executive for the Baltimore metropolitan chapter.

"It's the work rules that are really expensive," Henderson said, because they prevent the use of so-called helpers, people who are learning on the job. Under prevailing-wage work rules, everybody on the job has to be a journeyman, or in an apprenticeship program.

"That's why you have a lot of guys standing around on these jobs," Henderson said, adding that "plus that, the paperwork is mind-numbing."

Because the survey is voluntary, Warner questions how accurate it can be.

"Who's checking to see if they are legitimate, good surveys? Does that department really check to see if they are accurate?" she asked.

To find out, I called Richard Avallone, the state official in charge of administering the prevailing wage law.

Avallone told me told that contrary to what most opponents of the program say, the prevailing wage is not based only on union pay scales, but in large part on a voluntary survey sent to a group of contractors drawn from a mailing list of more than 700 contractors across the state.

When it's time to do a survey, the contractors in the area being surveyed get 60 days' notice before the paperwork arrives. Right now, it's all done by mail, Avallone said, with no provision for electronic filing and no software program he's aware of that would make it easier to plug the information needed into the survey.

By state law, Avallone said, the survey results are used to calculate the prevailing wage rate for each job - carpenters, bricklayers and drywall hangers, for example - using a 50-40 weighted average.

"If, in one classification, you have 50 percent or more surveyed making $19 an hour, then that becomes the rate," he said. He added that his office also looks at rates being paid on federally contracted jobs and at payroll information that must be submitted by contractors working on state prevailing- wage jobs.

In general, Avallone said, rates set under this law in the metropolitan areas tend to be close to union wage rates, while in the more remote, rural areas of Maryland, the "rates tend to favor the merit shop."

Avallone confirmed Henderson's contention that prevailing-wage work rules require the use of registered apprentices rather than helpers. But noted that "Anyone can run an apprentice program. It doesn't have to be union."

Another deterrent to filling out the survey, Avallone said, is the fact that once the reports are filed, they become public records. Contractors fear that their competitors will come in and inspect them to gain an advantage, although that really doesn't happen, he said.

No matter how the rate is set, it makes sense that if the state mandates higher wages than are being paid now, contractors have two choices - to cut their profit margin or up their bids, which on a school-construction project might result in fewer classrooms for the available dollars.

If passed, the bill might also mean opening up new opportunities for union-based construction companies whose pay rates had previously priced them out of rural areas.

And finally, once workers get a taste of union-type wages, they just might think about trying to unionize, which, for some contractors, would be about as welcome as a second case of the winter flu. Look for this battle to get ugly before it's over.

Bob Maginnis is editorial page editor of The Herald-Mail newspapers.

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