Revised 'prevailing wage' bill exempts rural cities, counties
Opponents say the idea would cost taxpayers millions of dollars. Advocates argue it would reduce Iowa's reliance on undocumented workers and provide higher-quality projects that would be less likely to face cost overruns.
"It's a live round," said Rep. Rick Olson, a Des Moines Democrat who plans to lead floor debate on the proposal. "With the compromises, I think the necessary vote has been captured" for it to win approval.
Gov. Chet Culver, in his Condition of the State speech earlier this month, encouraged lawmakers to debate the so-called "prevailing wage" issue.
House File 810, in essence, would require contractors and subcontractors to pay employees who work on public projects the same average hourly wage and benefits as those paid in private projects.
Last year, the bill failed to gain legislative traction after some rural lawmakers argued that it would place economic strains on their schools, towns and counties.
This year, however, unions in support of the proposal are advocating for amendments. Cities with a population fewer than 20,000 people and counties with fewer than 40,000 people would be exempt unless a project's cost was $3 million or more, according to a copy of proposed revisions provided to The Des Moines Register.
Democratic leaders acknowledge those amendments are under consideration.
"There's a lot of supporters for it" among House Democrats, said House Majority Leader Kevin McCarthy of Des Moines.
Some studies in states with prevailing wages estimate the laws add 20 percent or more to the costs of public projects. Others, however, show there's a cost savings once other factors are considered.
For example, a study that was paid for and released within the past year by the Iowa State Building & Construction Trades Council estimates that states with prevailing wage laws produce 13 percent to 15 percent more value from their work than states without the laws. The study, by University of Utah economics professor Peter Philips, also points out statistics indicating that work-site accidents are 25 percent lower in states with prevailing wage laws.
"At worst, it's a wash for costs anymore," said Bill Gerhard, president of the Iowa State Building & Construction Trades Council. "It could even make projects more economical, because if you pay better wages you're going have more trained and productive people, and the job is going to be done right and tend to come in on time."
But opponents dispute the calculations and say the laws would dramatically increase taxpayer costs.
"It's just bad public policy for taxpayers," said John Gilliland, senior vice president of government relations for the Association of Business and Industry. "There's a tremendous burden on taxpayers in this state. Everybody up here is aware of it. Everybody talks about it. This is a public policy that would just add to that burden."
The building trades council is a union that represents workers who would benefit from higher wages and be more competitive with nonunion labor under a prevailing wage law. Groups such as the Association of Business and Industry represent businesses, many of which fear they could be harmed by being forced to pay higher wages.
House Minority Leader Christopher Rants, a Sioux City Republican, said his party is largely against prevailing wage laws. He called the proposal a "money grab by the unions" and "political payoffs" to Democrats.
"I get that they're trying to use a divide-and-conquer technique," Rants said. "These amendments say we'll only raise taxes in the urban areas and not the rural areas. Well, how smart is that? Not very."
Iowa is one of nine states that have never had a prevailing wage law; nine others have repealed the wage laws while other states have substantially altered their provisions.
Ohio lawmakers, for example, exempted schools from prevailing wage laws in 1997. A report generated by the state's budget office two years before the exemption estimated that a complete repeal of the law would save the state and its local governments between $80 million and $236 million a year.
Tom Gillespie, a lobbyist for construction trades council, said the proposal would standardize wages to a point that would help retain skilled laborers in the state. Standard wages would make it less likely that contractors would turn to undocumented workers, he said.
"At least we wouldn't see contractors attempting to use undocumented workers just so they could pay lower wages for public construction," Gillespie said.
The Iowa League of Cities, which represents most Iowa towns, is opposed to the prevailing wage proposal. The group's director, Alan Kemp, said the argument about the proposal tempering the use of illegal workers is flawed.
"What will end up happening is you may still have (undocumented) immigrants, but you just increased the wages for those individuals," Kemp said.
