Thursday, June 13, 2013

Senator Tarr, Municipal Officials Call for Greater Transparency in the Prevailing Wage Law

Senate Minority Leader Bruce Tarr (R-Gloucester) joined with several municipal officials this week to call for greater transparency and accountability in the setting of the prevailing wage for public construction and maintenance projects.

Tarr joined with the Massachusetts Municipal Association (MMA), the Massachusetts Highway Association and other municipal officials Tuesday afternoon to testify before the Joint Committee on Labor and Workforce Development in support of Senate Bill 893, An Act relative to setting the prevailing wage rate, and Senate Bill 896, An Act providing for increased transparency in the prevailing wage.  Both bills were filed by Senator Tarr and co-sponsored by State Representative Lenny Mirra (R-West Newbury).

“Today we begin the process of bringing increased transparency and accountability to the process of setting the prevailing wage in Massachusetts,” said Senator Tarr.  “The law has been in place for over 100 years, but most people have no idea how it works or how much it impacts municipal finances.  Billions of taxpayer dollars are spent subject to its provisions, and it’s critical that accountability and transparency govern its operation.  The changes we are proposing will not only achieve those goals, but also the integrity that comes with a system that has the ability to consider all of the relevant facts to establish accurate wage rates that reflect market costs, and not those of a narrowly focused model with limiting restraints.”

“Prevailing wage makes every project we do a lot more expensive and results in higher taxes at both the state and local level,” added Representative Mirra.  “It raises costs so much that some projects simply don’t get done and that results in construction workers staying home collecting unemployment instead of on a job collecting a pay check.  Our communities suffer as well because necessary repairs are not getting funded.”

Senate Bill 893 would require the Director of the Department of Labor to set the prevailing wage rate, taking into consideration wages established by collective bargaining agreements or understandings in the private construction industry between organized labor and employers.  This bill would provide the director with the flexibility of setting the prevailing wage based on regional wage differences.

“Many of the Commonwealth’s smaller communities are required to pay the prevailing wage rate for projects using the rate that is based on the labor market areas for larger communities (Boston, Springfield, Worcester) or arbitrary sub-regions,” noted MMA Executive Director Geoffrey Beckwith in written testimony submitted to the committee.  “In many smaller communities this mandates a pay scale based on the highest labor market in other regions, not on the local market.”

Beckwith added that, “Many communities, especially those with smaller populations or located in less urban settings would achieve significant savings if they could use local wages in the region, not the prevailing wage determined by actions outside the region.”

Peter Durkee, Director of Public Works for the town of Georgetown, cited a local school construction project that cost the community $47 million but would have cost 10 to 15 percent less without the prevailing wage, savings which would have gone to both the town and the state.

Diane Norris, Assistant Town Manager for Danvers and Chair of the MMA Public Works Policy Committee, testified that the prevailing wage law can often increase the total cost of a project by as much as 20 to 30 percent.  This leads to less work getting done, fewer jobs created and more deferred maintenance, she said.

“We do a lot less work than we would do with a prevailing wage that reflects the entire market, not just a segment of the market,” Norris said.

Senate Bill 896 would establish a 12-member commission to review the effectiveness and practicality of establishing fair wage rates under the current Massachusetts Prevailing Wage Law, and to consider whether the use of other methodologies could yield rates which more accurately reflect prevailing market rates. The bill also directs the Department of Labor Standards to provide information on the state’s website that details the current prevailing wage rates and the methodology by which those rates are determined.

Norris told the committee one of the problems with the current law is that “the people who pay” the prevailing wage rate – taxpayers and cities and towns – “are not at the table” when it comes to setting the rates.  Senate Bill 896 would address this concern by requiring the Department of Labor Standards within the Executive Office of Labor and Workforce Development to conduct at least one public hearing per year on issues relating to the prevailing wage law.

Also testifying at Tuesday’s hearing were David Knowlton, President of the Massachusetts Highway Association, and Stephen Rollins, who served as Hanover’s Town Manager for 25 years and previously served as Weston’s administrative assistant to the selectmen as well as town treasurer.