As you may have read in the newspaper, the Modesto City Council and many others have recently moved to expand their prevailing-wage policies. What you probably haven’t heard about are the benefits of this policy to the Valley and the state as a whole.
First, let me dispel the myth that this is somehow going to cost these cities staggering amounts of money. Studies have shown that prevailing-wage projects have similar to equal up-front costs compared with other projects. This fact has led to cities across the state to pay prevailing wage far more often than not on locally funded projects.
Prevailing wage laws were first passed in the 1930s to encourage higher quality workmanship and more local hiring on taxpayer-funded projects. It has worked, and that’s why leaders from both political parties — including Presidents Ronald Reagan and Bill Clinton — have supported keeping it around for more than 80 years.
For decades, large infrastructure projects have been completed with prevailing wage at a good value to taxpayers. The California High-Speed Rail Project that will one day have trains rushing through the Valley is a good example of a project that receives both federal and state funding, and is being built using prevailing wage.
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Analysts estimate that during the first five years of construction, this project will generate 20,000 good-paying construction jobs, with that number increasing as the project expands to connect San Francisco and Southern California through the Valley. Because of prevailing-wage policies, these jobs are far less likely to be exported to workers from other states. And that will be good for all of us.
Previous studies in California and other states have shown that prevailing-wage projects are more likely to come in on time and on budget, produce more productive workers and more efficient work sites, fewer workplace injuries, and $1.50 in economic development locally for every tax dollar spent on projects.
One recent comparison between two projects in nearby California communities showed that locally based contractors made up more than 71% of those working on the prevailing-wage project, while fewer than 12% were from the local area on the non-prevailing-wage project.
A study released in March, “Building the Golden State,” put the importance of prevailing-wage standards in the clearest terms yet, concluding that California would lose nearly 18,000 jobs if prevailing wage were eliminated. These job losses wouldn’t just be in construction, but across the spectrum.
The study also found that elimination of prevailing-wage policies would lead to more than $1.4 billion in reduced economic output, and $1.5 billion in lost wages.
Starting with two policy options that have the same sticker price, it’s easy to see why prevailing wage is a good investment.
Take the fact that construction workers who aren’t paid prevailing wage can earn incomes near or below the poverty line and may not have access to benefits like health care. These costs ultimately get passed on to taxpayers in the form of increased spending on social-welfare programs.
A study conducted in 2011 found that a typical non-prevailing wage worker in Santa Clara County could qualify for more than $8,000 in public assistance — a cost that is certainly not reflected when comparing project bids.
Often elected leaders are asked to make close calls between good policy choices, but in this case the benefits of prevailing wage far outweigh any downside.
That is why leaders from across our state have long chosen to use prevailing wage, and local economies are better as a result. With 18,000 good-paying jobs on the line, it is hard to see how anyone would oppose this beneficial policy.
Daniel Parra is mayor pro-tem of Fowler and works as a computer systems analyst for Northrup Grumman.