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Discriminatory wage laws stifle competition

Have you ever heard of “prevailing wage” laws? How about “Little Davis Bacon”? If you have never heard of these laws, you need to learn about them.

Why? Because they have a direct impact on your quality of life and the taxes you pay.

“Little Davis Bacon” laws apply to wages paid on government contracts for construction. So, any school or government building must pay what is supposedly the “prevailing” wages in the community where the work is taking place.

The initial reason for these Depression-era prevailing wage laws was to prevent government contractors from undermining local wage rates by importing workers from low wage areas.

Sounds good, right? We all want workers to be paid the “prevailing wages” on construction projects. It is the fair thing to do. However, that is not what prevailing wage laws have become.

There are very powerful special interests that have a tremendous stake in the outcomes of the prevailing wage determinations. These are the building trades unions.

That’s because they know that if the actual “prevailing wage” in a community were the wages paid, they would not be competitive with merit shop contractors when bidding on public works projects.

The truth is that prevailing wage rates are actually quite a bit higher than the actual wages that prevail in a community or area.

This does not mean that merit shop contractors do not pay competitive wages. In fact, in the free market, merit shop contractors must pay excellent wages or they will lose their quality workers to other companies.

The fact that Davis-Bacon/prevailing wage rates are not an accurate assessment has been long known. A report issued by the General Accounting Office (GAO), which is Congress’ auditing agency, recommended that the Federal Davis-Bacon Act be repealed. It stated that, in 57 percent of the wage determinations reviewed, the US Department of Labor had adopted union wage rates without conducting a wage survey of all contractors, both union and nonunion.

Here in New Mexico, the circumstances are worse.

In 2009, Senate Bill 33 was passed and became law. This law states that prevailing wage shall be determined by the director of the Labor Relations Division of the Department of Workforce Solutions, at the same wage rates and fringe benefit rates used in collective bargaining agreements as supported by the unions.

This bill was one of Gov. Bill Richardson’s pay-offs to big labor. It passed along party lines.

So that’s it? In New Mexico, all wages on public works projects must be determined by the unions, with no regard for merit shop contractors input?

The law created by Senate Bill 33 is not only discriminatory, but it inhibits competition and results in public works projects costing more than they should.

This is especially troubling in light of the fact that less than 6 percent of the construction industry here in New Mexico chooses to be a signatory to the unions.

There is one line in the law that does allow for the director of the Labor Relations Division to use some discretion when determining the prevailing wage. This line states that “the director shall give due regard to information obtained during the determination of the prevailing wage rates.”

The director fairly used this discretion when determining the prevailing wage and is now being sued by the New Mexico Building Trades.

Associated Builders and Contractors backed legislation introduced by then-Sen. Kent Cravens in the 2011 legislative session to repeal Senate Bill 33. The bill was given three committee assignments in the Senate and was effectively killed in the first committee – Senate Corporations.

Both Associated Builders and Contractors and Sen. Cravens suffered derision from legislators who clearly do not realize the implications of this bad law.

Ultimately, prevailing wage laws should be repealed. But, until then, we will again attempt to educate our lawmakers so that similar legislation to repeal SB 33 can be introduced during the next 60-day session in 2015.

You, as a taxpayer, deserve it.