Prediction: An Explosion of California Cities Freeing Themselves from Costly State-Mandated Construction Wage Rate Laws

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California Supreme Court Issues Decision Upholding Local Control, Fiscal Responsibility, and Taxpayer Savings against Union Political Power

This morning, the California Supreme Court issued a decision in State Building and Construction Trades Council of California, AFL-CIO v. City of Vista that allows California’s charter cities to establish their own policies concerning government-mandated construction wage rates on taxpayer-funded public and private construction projects.

I predict that numerous charter cities in California will establish their own policies concerning government-mandated construction wage rates, and numerous cities that do not have charters will now seek voter approval for charters.

This is a badly-needed victory for supporters of local control, fiscal responsibility, and saving money for taxpayers. The timing could not be better. Finally, after five years with this case winding through the courts, fiscally responsible local governments have a clear and easy option to free themselves from a few of the intrusive union-backed laws of the California State Legislature.

How Does the State Determine Construction Wage Rates?

State-mandated construction wage rates often do not reflect the actual prevailing wage rates for a construction trade in a market region. This is one reason why many of California’s 121 charter cities (including the latest, El Cajon) establish their own policies concerning government-mandated wage rates for purely municipal construction projects.

Under the laws and regulations of the State of California, the state does NOT determine wage rates by surveying contractors or workers or by looking at statistics from the California Economic Development Department. Instead, state bureaucrats collect union collective bargaining agreements, parse through them to identify every required employer payment (even payments that are NOT employee compensation – called “Other”), and add up all the payments and declare the total as the “prevailing wage.” Some of these collective bargaining agreements cover half of California or all of California!

Sample Construction Wage Rates

The state sets the wage package for a bulldozer driver in Sacramento (Group 4, Area 1) at a straight time total rate of $62.00 per hour$37.15 + $24.12 in fringe benefits + $0.73 for “Other.”

The state sets the wage package for a basic carpenter in Sacramento (Area 3) at a straight time total rate of $56.60 per hour$31.62 + $22.69 in fringe benefits + $2.29 for “Other.”

The state sets the wage package for someone holding a stop/slow sign at a road site in Sacramento (Group 3, Area 2) at a straight time total rate of $42.93 per hour$25.89 + $16.91 in fringe benefits + $0.13 for “Other.”

Unions and Democrats in Legislature Have Blocked Attempts to Reform Prevailing Wage

Democrats and union lobbyists have blocked reasonable legislative efforts to reform how the State of California defines a “public works” project and how the State of California calculates its construction wage rates. In January, the Assembly Labor and Employment Committee voted down two comprehensive bills introduced by Assemblywoman Shannon Grove (Assembly Bill 987 and Assembly Bill 988) that would have made government-mandated wage rates more accurate and limited the definition of “public works” to actual government projects (ending prevailing wage mandates on private construction projects that get any sort of government assistance). The legislature even rejected a tiny bill (Assembly Bill 1958) to raise the project cost threshold for state-mandated government wage rates from $1000 to $2000 (to match the federal level) and index it to inflation!

I intend to aggressively encourage cities to take advantage of their local charter authority and free themselves from the costly burdens of the state legislature. I am also developing an aggressive model charter that gives cities authority to exempt themselves from numerous oppressive state laws.

3 comments

  1. […] Prediction: An Explosion of California Cities Freeing Themselves from Costly State-Mandated Construc… – Dayton Public Policy Institute – July 2, 2012 Category: Construction Labor Issues, Government Fiscal Issues, Prevailing Wage / Tags: Charter Cities, Newport Beach/Costa Mesa Daily Pilot, North County Times, Prevailing Wage, San Diego Union-Tribune […]

  2. […] First some background about California Prevailing Wage. Wages on public works construction in California (which apply whenever any public money is involved) are based on an examination of construction union Collective Bargaining Agreements (CBAs) for each of the major municipalities in California. Essentially, whatever the unions are paying their workers is the wage that the state requires all public works contractors to pay in that region. For instance, the CBA for a bulldozer driver in Sacramento determins the wage that the same tradesma…. […]

  3. […] I anticipated in my July 2, 2012 article Prediction: An Explosion of California Cities Freeing Themselves from Costly State-Mandated Construc…, the past three months have seen a flood of California cities seeking voter approval for charters, […]