On July 1, the U.S. House of Representatives passed H.R. 3684, the INVEST in America Act, by a vote of 221-201. This $715 billion surface transportation reauthorization and water infrastructure bill represents House Democrats’ attempt to reauthorize the expiring 2015 FAST Act and implement partisan, anti-merit shop priorities in infrastructure spending.
Ahead of the vote, ABC strongly opposed the bill, sending a key vote letter to members of the U.S. House of Representatives in opposition and urging ABC members to contact their members of Congress and tell them to oppose the legislation through an ABC Action Alert.
H.R. 3684 has already set dangerous precedents by elevating the registered apprenticeship program as the chosen method of workforce development, restricting competition from qualified contractors that choose not to be affiliated with a union programs and expanding Davis-Bacon prevailing wage requirements on critical projects. It was amended before final passage through the en bloc amendment process that prevents consideration of each amendment based on its individual merit and helps ensure support for controversial amendments, including an amendment from Rep. Debbie Dingell (D-Mich.) that would mandate project labor agreements on authorized clean energy projects.
After the House passed H.R. 3684, ABC issued a news release slamming several anti-merit shop provisions of the bill. In the release, Kristen Swearingen, ABC vice president of legislative & political affairs, labeled the INVEST in America Act “a dangerous step in the wrong direction for America’s infrastructure.”
The $715 billion legislation is not expected to become law, as the U.S. Senate is currently working with the White House to support a bipartisan infrastructure framework that is reported to include the Senate’s bipartisan surface transportation reauthorization legislation, the ABC-supported Surface Transportation Reauthorization Act of 2021.
ABC will keep members updated about the ongoing infrastructure negotiations in Newsline.
On June 28, eight members of the U.S. House Committee on Financial Services sent an ABC-supported letter to Secretary of the Treasury Janet Yellen expressing concerns about the department’s guidance on $350 billion worth of federal funding for state and local fiscal recovery allocated in the American Rescue Plan and the encouragement of project labor agreements on federally assisted water, sewer and broadband projects.
“At a time when the global pandemic has upended our workforce, disrupted our businesses, and created economic turmoil, this Administration should not be promoting project labor agreements on public works construction projects that will institute arbitrary, discriminatory barriers to recovery at the expense of taxpayers,” the House members wrote. Rep. Ted Budd (N.C.), sponsor of ABC’s priority legislation, the Fair and Open Competition Act (H.R. 1284), led the letter with fellow Republican Reps. Ann Wagner (Mo.), Alex Mooney (W.Va.), William Timmons (S.C.), Andy Barr (Ky.), Warren Davidson (Ohio) and French Hill (Ark.) joining as signatories.
This congressional effort advocating against government-mandated PLAs comes as the Biden administration reportedly prepares an executive order to expand federal agencies’ use of PLAs by replacing President Obama’s Executive Order 13502—which encouraged federal agencies to consider requiring PLAs when awarding contracts of at least $25 million—with an order that is likely to mandate PLAs on more federal construction projects.
As Congress considers infrastructure legislation, ABC will continue to lead advocacy efforts to ensure that any federal investment in our nation’s infrastructure benefits all of the U.S. construction industry, regardless of labor affiliation. Learn more about ABC’s opposition to government-mandated PLAs and support for the Fair and Open Competition Act at freeenterprisealliance.org/foca.
ABC members concerned about the Treasury’s push for PLAs on federally assisted construction projects are encouraged to write the Treasury by July 15 via ABC’s grassroots campaign and ABC members can also write the Biden administration in opposition to the forthcoming pro-PLA executive order.
On April 14, the House Committee on Transportation and Infrastructure hosted a “Members’ Day Hearing” to seek recommendations on the policy priorities of members of the U.S. House of Representatives as they begin to consider legislation to reauthorize surface transportation legislation, which expires at the end of September.
After the hearing, Rep. Ted Budd (N.C.), sponsor of ABC’s priority legislation, the Fair and Open Competition Act (H.R. 1284), sent a letter to the House Committee on Transportation and Infrastructure leadership signed by 26 members of the U.S. House expressing enthusiastic support for a fair and open competitive bidding process and strong opposition to project labor agreement mandates on federal and federally assisted taxpayer-funded construction projects.
Rep. Budd also provided written testimony urging the Committee to consider to include the Fair and Open Competition Act in the surface transportation reauthorization, while also warning the members of the harm that mandating PLAs would have on the construction industry.
“I ask that the committee include my Fair and Open Competition Act, H.R. 1284, in the surface transportation bill. This bill prevents federal agencies and recipients of federal assistance from requiring contractors to sign controversial project labor agreements (PLAs) as a condition of winning a construction contract. This would ensure that taxpayer funded construction contracts are awarded through fair and open competition. This guarantees the best value for hardworking taxpayers by prohibiting a rigged federal procurement process that discriminates against many small construction businesses. Many of the bill’s 45 cosponsors have signed onto a letter asking the committee to include this proposal ” said Rep. Budd. Rep. Budd’s full written testimony can be found here.
In a similar effort, on March 31, Sen. Todd Young (R-Ind.) authored a letter addressed to the leadership of the infrastructure-focused Senate Committee on Environment and Public Works that was signed by eight U.S. senators. Sen. Young is the lead sponsor of the Senate’s Fair and Open Competition Act (S. 403). The letter was also signed by Republican Sens. Tim Scott (S.C.), Kevin Cramer (N.D.), Cynthia Lummis (Wyo.), James Risch (S.D.), Roger Marshall (Kan.), Jerry Moran (Kan.), and John Barrasso (Wyo.).
Since its introduction, the Fair and Open Competition Act has been supported by a diverse coalition of construction and business associations as well as a large group of taxpayer, free market and consumer advocates.
These congressional efforts in support of FOCA come as President Joe Biden’s recently released American Jobs Plan calls on Congress to tie federal investments in infrastructure to ABC-opposed government-mandated project labor agreements/community workforce agreements, as well as prevailing wage regulations via the archaic Davis-Bacon Act, registered apprenticeship programs and the ABC-opposed PRO Act. President Biden’s plan also notably did not address a multi-year reauthorization of the expiring surface transportation legislation (the FAST Act), instead leaving the reauthorization process to Congress to address.
In ABC’s response to President Biden’s plan, president and CEO Mike Bellaman opposed the anticompetitive measures, saying, “Government-mandated PLAs exclude more than 87% of the U.S. construction workforce from rebuilding their communities and benefitting from well-paying middle-class jobs created by taxpayer investments in infrastructure.” Bellaman also pointed out that “taxpayers will spend 20% more per mandated PLA project, which results in fewer infrastructure improvements and less job creation to help America rebound from the pandemic’s economic devastation.”
As Congress begins to consider infrastructure-related legislation, ABC will continue to lead advocacy efforts to ensure that any federal investment in our nation’s infrastructure benefits all of the U.S. construction industry, regardless of labor affiliation. Learn more about ABC’s opposition to government-mandated PLAs and support for the Fair and Open Competition Act at freeenterprisealliance.org/foca.
On March 31, the Biden administration released a more than $2 trillion infrastructure outline titled the “American Jobs Plan.” While the plan calls for federal spending over the next eight years to improve the nation’s infrastructure, including for transportation, broadband, energy, and drinking water, it also includes funding for schools and child-care facilities, affordable housing, workforce development and manufacturing.
Importantly, the Biden plan calls on Congress “to ensure all workers have a free and fair choice to join a union by passing the Protecting the Right to Organize (PRO) Act, and guarantee union and bargaining rights for public service workers.” The ABC-opposed PRO Act threatens the fundamental rights of workers and job creators while putting the recovery of our economy at risk.
Biden’s plan also urges Congress to tie infrastructure investments funded under this plan to ABC-opposed government-mandated project labor agreements/community workforce agreements, prevailing wage regulations via the archaic Davis-Bacon Act and registered apprenticeship programs. All of these policies are likely to increase costs, reduce job creation, decrease the number of infrastructure projects and discourage ABC members and their skilled local workforce from competing for taxpayer-funded construction projects to rebuild their own communities.
Transportation Infrastructure
While the plan allocates $621 billion for “transportation infrastructure,” only a portion of this funding, $115 billion, is dedicated to the nation’s roads and bridges—a fraction of what is needed to truly modernize our nation’s most critical transportation infrastructure.
According to the American Society of Civil Engineers, the United States has a $786 billion backlog of road and bridge capital needs, including $435 billion in repairing existing roads, $125 billion for bridge repair, $120 billion for targeted system expansion and $105 billion for safety enhancements, operational improvements and environmental projects.
Additionally, the plan says nothing about reauthorizing the expiring surface transportation legislation or shoring up the Highway Trust Fund in the future.
Additional Provisions in the Biden Plan
- $111 billion for safer drinking water, wastewater and stormwater systems.
- $100 billion for high-speed broadband.
- $100 billion to upgrade the U.S. power infrastructure.
- $213 billion to “produce, preserve and retrofit more than two million affordable and sustainable places to live."
- $137 billion for public schools, community colleges and child care facilities.
- $28 billion for veterans hospitals and federal buildings.
- $400 billion for “expanding access to quality, affordable home- or community-based care for aging relatives and people with disabilities.”
- $180 billion for research and development in new infrastructure technologies, climate science and innovation, and racial and gender inequalities in STEM and R&D
- $300 billion for strengthening manufacturing in the United States and creating new manufacturing jobs.
- $100 billion for workforce development, which provides $40 billion for a new dislocated-workers program to help workers gain new skills for in-demand jobs, $12 billion for targeting workers in underserved communities and $48 billion to expand existing registered apprenticeship, pre-apprenticeship and community college partnership programs.
Biden’s plan focuses heavily on federal investments supporting prevailing wage rates, project labor agreements, community workforce agreements and registered apprenticeship programs, and calls for Congress to enact the Protecting the Right to Organize (PRO) Act, which implements a slew of costly, anti-small-business policies.
Tax Increases
While the plan calls for spending to complete these projects over the next eight years, that includes tax increases that would take 15 years to cover the cost of the $2 trillion plan, including:
- Increasing the corporate tax rate from 21% to 28%
- Increasing the minimum tax on U.S. multinational corporations to 21% and calculating it on a country-by-country basis to target profits in tax havens.
- Eliminating tax subsidies and tax credits for fossil fuel industries.
- Beefed-up IRS enforcement on corporations.
ABC Responds
In a statement from ABC President and CEO Michael Bellaman, ABC called for fair and open competition and bipartisan ideas the infrastructure plan.
“Our nation is in strong bipartisan agreement that America’s crumbling roads, bridges, schools and water, energy and transportation systems are in desperate need of modernization in order to accelerate our strong economic comeback and keep our country competitive in a global economy. ABC continues to advocate for any plan to modernize our nation’s infrastructure to include policies to reduce costly and ineffective regulations, ensure fair and open competition, address the construction industry’s skilled worker shortage, embrace new technology, and pursue value-adding, public-private partnerships that can help bring critical construction projects to market in a more economical and efficient manner. Unfortunately, much of the Biden plan ignores ABC’s infrastructure policy recommendations, while proposing tax increases on job-creating construction firms that are still recovering from the effects of the COVID-19 pandemic.
“While policy details are still emerging and the infrastructure plan will need to go through Congress, it is disappointing to see the Biden administration support the use of divisive government-mandated project labor agreement schemes on taxpayer-funded construction projects. Government-mandated PLAs exclude more than 87% of the U.S. construction workforce from rebuilding their communities and benefitting from well-paying middle-class jobs created by taxpayer investments in infrastructure. It also means taxpayers will spend 20% more per PLA project, which results in fewer infrastructure improvements and less job creation to help America rebound from the pandemic’s economic devastation. Coupled with a call for Congress to pass the Protecting the Right to Organize Act, it is clear the Biden administration’s infrastructure plan is designed to help powerful donors and special interests instead of all Americans.
“It is difficult to support an infrastructure plan that excludes the 87% of the workforce that chooses not to join a union and promotes the PRO Act, which eliminates workers’ freedom to choose how to pursue their career dreams, places their personal information security at risk and legalizes intimidation and secondary boycotting against a company’s supply chain and customers.
“We encourage President Biden to work with Congress and stakeholders to pursue a bipartisan path forward that would efficiently and effectively modernize our infrastructure, drive economic growth, welcome every construction professional and deliver value to all taxpayers. ABC will continue to work with Congress and the Biden administration to improve the infrastructure plan.”
According to findings of an ABC membership survey published on March 3, 2021, ABC members overwhelmingly support repeal or reform of the federal Davis-Bacon Act and related state and local prevailing wage laws that increase costs and reduce competition from qualified contractors on taxpayer-funded construction projects. The Davis-Bacon Act is a 1931 law that requires contractors and subcontractors that perform work on federally funded or assisted construction contracts in excess of $2,000 to pay a government-determined prevailing wage and benefit rate on an hourly basis to on-site workers.
The survey found:
- 87.9% of participants do not support prevailing wage laws and the Davis-Bacon Act in its current form.
- 83.1% of participants support full repeal of prevailing wage laws.
- 82.1% of participants support reforms to prevailing wage laws.
“The survey results reaffirm that the 90-year-old Davis-Bacon Act, an archaic and costly policy that is far past its expiration date and similar state and local laws in 27 states, must undergo commonsense regulatory reforms or be fully repealed,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “This system of federal, state and local governments setting ‘prevailing wages’ is outdated, needlessly raises construction project costs, stifles contractor productivity and discourages competition from small businesses interested in pursuing federal and federally assisted construction projects.”
Prevailing Wage Regulations Increase Costs and Reduce Opportunity
Approximately 94% of the 350 survey participants believe that government prevailing wage laws make projects more expensive. Meanwhile, 67.6% said the laws result in less competition from subcontractors and 75% said it would make contractors less likely to bid on public works projects in their own communities, paid for by their own tax dollars.
“As the construction industry is suffering from a 9.4% unemployment rate due to the recession caused by the COVID-19 pandemic, and America’s crumbling infrastructure faces an estimated $2.6 trillion investment gap by 2029, lawmakers considering a multitrillion dollar infrastructure spending bill need to do everything possible to maximize taxpayer investments in infrastructure while helping all construction workers and small businesses find quality jobs to rebuild their communities,” said Brubeck.
“The Congressional Budget Office estimates that repealing the Davis-Bacon Act would save the federal government $17.1 billion between 2021 and 2030, but research suggests repealing the Act would actually save taxpayers more than $11.56 billion a year,” said Brubeck.
According to economic models, every $1 billion in extra overall construction spending generates an average of at least 6,500 construction jobs and every $1 billion in extra construction spending on infrastructure generates an average of at least 3,300 construction jobs.
In 2017, a study by the Heritage Foundation estimated 30,000 more real construction jobs would be created on an annual basis if the U.S. Department of Labor enacted commonsense regulatory reforms repeatedly suggested by the Government Accountability Office and the DOL Office of Inspector General, as they would help calculate an accurate prevailing wage in a timely manner.
Survey participants also highlighted how prevailing wage laws harm small and minority-owned businesses, result in more expensive and/or less affordable housing and school construction and make it harder to finance green energy projects and support energy-saving home weatherization.
“Survey participants noted that prevailing wage laws will hit small businesses particularly hard and decrease the hiring of small businesses,” said Brubeck. “This is because it would force them to hire or assign additional personnel to comply with prevailing wage red tape.”
Survey Results Undermine Prevailing Wage Advocate Arguments
The majority of survey participants said prevailing wage laws either harm or have little positive impact on workforce development, attracting a skilled workforce, enhancing project safety, ensuring a quality project delivered on time and on budget and the hiring of local, minority, women, veteran and disadvantaged businesses:
- 60.7% said it makes no difference, while 36.5% said it will harm their company’s investment in workforce development strategies.
- 77.8% said it will not have an impact on their ability to attract skilled workers, while 8% said it would result in attracting less-skilled workers.
- 94.9% said it will make not make a difference in a company’s safety performance on a project, while 2% said it would make a project less safe.
- 92% said it will not make a difference in a project’s construction quality, while 5.1% said it would decrease quality.
- 61.9% said it will make no difference to project’s on-time and on-budget delivery, while 35.5% said it would decrease on-time and on-budget delivery.
- Approximately 65% said it will make no difference in local hiring outcomes, while 27.7% said it would result in worse local hiring outcomes.
- 76.7% said it will make no difference in the hiring of minority, women, veteran and disadvantaged business enterprises, while 18.8% said it would decrease hiring of disadvantaged businesses.
- 77.5% said it makes no difference in the hiring of hiring of minority, women, veteran and ex-offender construction workers, while 19.7% said it would decrease hiring of these disadvantaged workforce populations.
“The survey results undermine arguments prevailing wage advocates cite as a reason to require anti-competitive and costly prevailing wages on taxpayer-funded construction projects,” said Brubeck. “Open-ended responses to survey questions make it clear that prevailing wage laws provide little value and often undermine contractor efforts to upskill and retain a diverse workforce. The truth is, the alleged benefits of prevailing wage laws can be achieved through specific procurement language and strong prequalification standards independent of prevailing wage regulations.”
“Our employees are our company’s greatest asset, and we must continue to upskill them to stay safe and productive in order to deliver to customers a high-quality project on time and on budget,” said one survey participant. “We invest in workforce development through our company training programs as well as participate in government-registered apprenticeship programs in certain trades. We make these investments regardless of whether we are performing prevailing wage work or private work. It makes no difference to our value proposition.”
ABC Membership Not Unanimous on Prevailing Wage Repeal/Reform
Of note, the survey confirmed there are ABC member contractors who support prevailing wage laws for a variety of reasons, despite the fact that they believe it increases taxpayer costs and reduces competition from contractors. In open-ended responses, some contractors characterized prevailing wage laws as helpful to their business because: 1) They allow companies to pay employees an above-market premium that is passed on to taxpayers; 2) They discourage competition from firms that haven’t mastered compliance strategies with the red tape associated with prevailing wage regulations; and 3) They prevent union lobbyists from mandating union-only project labor agreements that lock out the more than 87% of the construction industry that chooses not to belong to a union.”
“Although more expensive, we can compete on a level playing field with unionized contractors on prevailing wage projects, which is not the case with government-mandated project labor agreements, where we cannot compete at all,” said a participant. “One key benefit of prevailing wage laws is that when construction unions lobby for government-mandated PLAs, opponents can point to the fact that workers are already paid union rates; therefore, union-only PLA monopolies are not needed to protect workers and are bad policy. Unfortunately, lawmakers usually do not get the distinction and care more about the politics than policy.”
Some participants supported a government-determined wage floor, but felt that that the current rates are excessive, are not prevailing and are not accurate, while others wanted regulatory clarity.
“Rates in my rural marketplace are identical to rates charged in expensive cities in my state. These rates are not prevailing and do not meet local standards and violate the intent of the Davis-Bacon Act,” said one participant.
“The rates are excessive and are not even close to prevailing rates in our market. The fringe benefits on some union prevailing wage rates are in excess of 60% of the wage rate to make up for chronic pension underfunding by the union,” said another participant.
“We need more clarity on union work rules related to U.S. DOL wage decisions. Cloak-and-dagger policies and enforcement are why businesses distrust government and increase risk costs in bids,” said a participant.
“The union lobby wants to make prevailing wage compliance as complicated as possible so they can use it as a weapon to target competitors and get them debarred if they accidentally are out of compliance,” said a participant. “There needs to be a good-faith exception to differentiate between bad actors and good actors making honest mistakes.”
State Prevailing Wage Laws
A total of 27 states have enacted prevailing laws applying to most or some of their taxpayer-funded construction projects procured by state and local governments, depending on the threshold and applicability of their respective law. Of the 27 prevailing wage states, six states set rates identical to the Davis-Bacon Act, seven states explicitly set rates at the union collective bargaining agreement rate, nine states set rates through a survey process and the remaining states set rates through other methodologies.
Since 2015, Michigan (2018), Arkansas (2017), Kentucky (2017), Wisconsin (2017), West Virginia (2015) and Indiana (2015) have repealed their prevailing wage laws.
Following West Virginia’s repeal, a 2018 study conducted by the University of Kentucky Center for Business and Economic Research found that total costs for public school construction in West Virginia declined by more than 7%. Additionally, the CBER found no evidence that repealing this mandate had any impacts on safety or quality of construction.
Similar research measuring the impact of prevailing wage repeal is underway in multiple states.
Additional ABC Resources on Prevailing Wage Policies
ABC supports the full repeal of the Davis-Bacon Act, as well as any state and local prevailing wage laws that mandate wage and benefit rates. In the absence of full repeal of the Davis-Bacon Act and state prevailing wage laws, ABC also continues to support legislative and regulatory reform efforts designed to mitigate its negative effects and failure to reflect the current market rate. ABC opposes expansion of Davis-Bacon and state and local prevailing wage laws into areas of public and private projects in which it has not been previously mandated.
Learn more about the Davis-Bacon Act at abc.org/DavisBacon and abc.org/Education-Training.
In a victory for ABC, New Hampshire Gov. Chris Sununu vetoed legislation that would have imposed prevailing wage requirements on state projects for the first time since the law was repealed in 1985 on July 19.
The state legislature, both chambers of which were taken over by Democrats in the 2018 midterm elections, passed the legislation during its now-adjourned 2019 session. The ABC New Hampshire/Vermont Chapter testified in opposition to SB 271 at public hearings throughout the legislative process and advocated for an executive veto after the legislation received final passage from the Senate in May.
In a press release lauding the move by Gov. Sununu, ABC New Hampshire/Vermont Chapter President Josh Reap said, “Taxpayers deserve the best possible product at the best possible price, and that’s exactly what Gov. Sununu has ensured by vetoing this bill.”
Gov. Sununu’s veto means that New Hampshire remains the only state in New England that doesn’t require prevailing wage on state projects, and one of 24 states nationally without a statewide prevailing wage law.
“In the midst of a booming economy with record low unemployment, the last thing we should do is reduce competition in our construction markets,” wrote Gov. Sununu in his veto message on SB 271.
As the New York state legislature adjourned in Albany, ABC’s Empire State Chapter members celebrated the successful blockage of an extremely onerous effort to expand prevailing wage in the state well beyond its typical applicability on public works projects.
The effort, widely supported by Democrats in the legislature and Gov. Andrew Cuomo, sought to expand the definition of “public works” to a bevy of private projects receiving more than 30 percent of the project budget from public sources beyond direct public investment. This would have included things like tax-free bonds on affordable housing, various tax incentives on environmental cleanup work and energy-related tax credits, among other sources of public assistance.
Unlike many prevailing wage states, as long as a union claims to represent 30% of the workforce, the state automatically adopts their wage and benefits for prevailing wage work. This expansion, on top of widening the pool of work for which it would be harder for merit shop contractors to compete, could have raised construction costs by as much as 30%. This would have severely harmed New York taxpayers, many of whom benefit from the projects with bottom lines that would have been negatively impacted by the proposed expansion.
Throughout the legislative session, the legislature and the governor’s office worked together to advance the measure through a variety of approaches, including a discussion about narrowing the scope of certain affordable housing projects to which the expansion would apply and even an effort to exclude New York City from the expansion altogether. However, in the face of widespread vocal opposition from ABC Empire Chapter and its members, as well as associated coalition groups, the bill was ultimately defeated.
“There is no doubt that if passed, this bill would have crippled the construction industry,” said ABC Empire State Chapter President Brian Sampson. “Though this is a big victory for the chapter, the battle over expanding prevailing wage is not over, with Gov. Cuomo announcing that this is one of his top three priorities for 2020. We will continue to fight and advocate for even stronger protections against policies that damage the merit shop construction industry in the coming months and years.”
A new report released by the Empire Center for Public Policy on April 24 found that prevailing wage requirements inflate the cost of publicly funded construction projects in New York by between 13 percent and 25 percent. The varying percentages are based on the area or region of the state. Taxpayers can expect to pay billions in extra costs, given the tens of billions the state plans to spend on public projects over the next five to 10 years.
Last year, the New York Independent Budget Office (IBO) released a report on the impact prevailing wage requirements would have on affordable housing projects built with the 421a property tax break. IBO estimated wage requirements would cost the city an additional $4.2 billion, increasing affordable housing construction costs by 23 percent or $80,000 per unit.
The report, entitled “Prevailing Waste: New York’s Costly Public Works Pay Mandate,” also notes that the New York prevailing wage rates include fringe benefits, the entirety of which do not go directly to workers but instead are being used to bolster underfunded and struggling union pension plans.
ABC opposes wasteful prevailing wage laws because they contain outdated job restrictions that do not match the needs of today’s competitive construction business environment. Prevailing wage requirements discourage many qualified small and minority-owned contractors from bidding on public projects. State governments’ complex and inefficient wage rate determinations and work restrictions make it difficult for them to compete with better-capitalized corporations.
On April 7, Arkansas Gov.Asa Hutchinson signed a bill repealing the state’s prevailing wage law. The legislation, SB 601 (Act 1068), was approved by the Arkansas House of Representatives on March 30 by a vote of 70-24; the Arkansas Senate passed the bill on March 21 by a bipartisan vote of 28-5. Arkansas is now the 22nd state without a prevailing wage and the second state to take significant action on the issue this year. Kentucky signed a prevailing wage repeal bill into law in January. In 2015, Nevada made significant reforms to its prevailing wage law, while Indiana and West Virginia joined the list of states without a prevailing wage.
“Arkansas lawmakers have made it a priority to create value for taxpayers and opportunities for qualified local contractors deterred by the state's outdated prevailing wage regulations,” said ABC Vice President of Regulatory, Labor and State Affairs Ben Brubeck. “The number of states choosing to do away with costly and archaic prevailing wage requirements continues to grow and ABC looks forward to supporting efforts to repeal or reform inefficient prevailing wage laws in Ohio, nearby Missouri and other states across the country this year.”
ABC released its latest Merit Shop Scorecard rankings in November 2016. The meritshopscorecard.org website reviews and grades state-specific policies and information significant to the success of the commercial and industrial construction industry. The scorecard grades states on their policies on prevailing wage and project labor agreement (PLA) mandates and Right to Work status, as well as their construction job growth rate, commitment to developing a well-trained workforce, career and technical education (CTE) opportunities and results, and use of public-private partnerships (P3s). Plagued in part by its prevailing wage, Arkansas’ business environment ranked 20th in the country.
ABC opposes wasteful prevailing wage laws because they contain outdated job restrictions that do not match the needs of today’s competitive construction business environment. Prevailing wage requirements discourage many qualified small and minority-owned contractors from bidding on public projects. State governments’ complex and inefficient wage rate determinations and work restrictions make it difficult for them to compete with better capitalized corporations. Studies have shown that state prevailing wage laws can needlessly inflate construction costs by as much as 38 percent.
Kentucky became the 27th Right to Work state and 21st state without a prevailing wage after Gov. Matt Bevin signed ABC-supported legislation. The free enterprise-based laws are historic victories for the merit shop platform and provide tremendous momentum at the state level to begin the 2017 legislative season.
The Kentucky Senate passed HB 3, which repealed the state’s costly and inefficient prevailing law by a vote of 25-12 after the Kentucky House of Representatives passed the bill by a vote of 60-35 on Jan. 5. The Senate also passed Right to Work legislation, HB 1, by a vote of 25-12, which prevents workers from being required to join a labor union in order to accept or maintain a job. The Kentucky House of Representatives passed HB 1 by a vote of 61-34 on Jan. 5. Both bills were signed into law by Governor Bevin (R-Ky.).
“Associated Builders and Contractors applauds the Kentucky Legislature’s decisive actions to promote free enterprise and fair and open competition and looks forward to other states following suit in embracing these merit shop principles,” said ABC Vice President of Regulatory, Labor and State Affairs Ben Brubeck. “By creating new opportunities for all Kentucky contractors shut out by the archaic and costly prevailing wage law, and allowing workers to freely decide whether to join a labor union, the Kentucky legislature has enacted needed improvements to the state’s business climate, ranked 32nd in the country by ABC’s latest Merit Shop Scorecard.”
"Associated Builders and Contractors of Indiana/Kentucky commends the leadership of Governor Bevin, Speaker Hoover, Chairman DeCesare, Representative Koenig, Chairman McDaniel, Senate President Stivers and Leader Thayer for their support of fair and efficient government policies that will benefit all Kentuckians," said ABC of Indiana/Kentucky President J.R. Gaylor. "These leaders articulated the need for a better business environment in Kentucky leading up to last November’s election, were given free enterprise-supporting majorities in both chambers of the legislature by the voters of the commonwealth and have delivered these crucial policies that will help grow Kentucky’s economy.”
ABC released its latest Merit Shop Scorecard rankings in November 2016. The meritshopscorecard.org website reviews and grades state-specific policies and information significant to the success of the commercial and industrial construction industry. The scorecard grades states on their policies on prevailing wage and project labor agreement (PLA) mandates and Right to Work status, as well as their construction job growth rate, commitment to developing a well-trained workforce, career and technical education (CTE) opportunities and results, and use of public-private partnerships (P3s). Plagued in part by its prevailing wage and failure to adopt a Right to Work law to date, Kentucky’s business environment ranks 32nd in the country.
ABC opposes wasteful prevailing wage laws because they contain outdated job restrictions that do not match the needs of today’s competitive construction business environment. Prevailing wage requirements discourage many qualified small and minority-owned contractors from bidding on public projects. State governments’ complex and inefficient wage rate determinations and work restrictions make it difficult for them to compete with better capitalized corporations. Studies have shown that state prevailing wage laws can needlessly inflate construction costs by as much as 38 percent.
ABC supports Right to Work laws because they guarantee workers can seek employment without fearing they will be required to join (or pay) a union if they are hired. These laws simply allow workers who do not want to participate in collective bargaining to opt out of joining the union or paying dues or fees. If all or most of the members of a bargaining unit believe union representation will advance their interests, then nothing in a Right to Work law prohibits them from exercising their federally protected right to organize a union and collectively bargain with their employer. U.S. Bureau of Labor Statistics reports that private sector employment grew 5.2 percent faster in Right to Work states than non-Right to Work states from 2003-2013. Additionally, U.S. Department of Commerce data show that per capita disposable income, adjusted for cost of living, was higher in Right to Work states than the national average in 2013.
Neighboring West Virginia also repealed its prevailing wage law and adopted Right to Work legislation in 2016. Despite rhetoric that both actions would have dire economic consequences, the state’s monthly construction unemployment rate has consistently improved compared to its 2015 rate, and the state now ranks second in the country in year-over-year construction unemployment rate progress according to the latest report.
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