The reality of the prevailing wage repeal

By Bryan Hoylman | Oct 20, 2015

CHARLESTON – Prior to the Legislature's decision not to extend the requirement to pay prevailing wage on taxpayer funded projects until Sept. 30 of this year, organized labor unions implored public officials to keep those wage rates in place.

They claimed that without mandated, union-scale wage rates required on public projects, our state would become flooded with out-of-state workers taking the jobs of our men and women here while countless others were forced into poverty.

Over the course of three months without required prevailing wage rates on public improvements, there were countless projects let for bid. An analysis by the Associated Builders and Contractors of West Virginia, which compared projects bid before and during that period, revealed significant cost savings for a number of projects both big and small, without prevailing wage.

However, the group focused the bulk of its analysis on elementary school construction.

In both July and August two new elementary schools in West Virginia were let for bid - the new Suncrest Elementary School in Monongalia County and the new Ceredo Kenova Elementary School in Wayne County, both of which allowed for the market to establish labor costs rather than government mandated wage rates.

We then compared the awarded bid costs of these two schools to that of two other elementary schools recently bid over the course of the past year. These two schools, Cedar Creek Elementary in Gilmer County and Ieager Panther Elementary School in McDowell County both required prevailing wage to be paid during the construction.

The two schools that required prevailing wage had an average cost of $224.50 per square foot to build. Each of these costs was based solely on building construction alone. Additional components such as site work, soft costs and contingencies were all removed in order to limit the amount of variables not directly associated with the building size.

Using the exact same standards when analyzing the two elementary schools that did not require prevailing wage to be paid, the average cost per square foot was only $190, creating a difference of $34.50 in cost for each square foot of construction.

When you apply that difference in cost to the 75,000 square foot facility in Monongalia County and the 63,000 square foot facility in Wayne County, taxpayers ended up with breaks totaling an estimated $2.6 million and $2.1 million respectively.

The architect's estimate, which assumed prevailing wage on the labor portion of the Wayne County school build, was nearly $3 million over the final winning bid cost for building construction.

Although comparing architectural estimations to awarded bid costs aren't always spot-on, labor unions and their supporters have used them to bunk other claims of cost savings during the temporary repeal.

Surprisingly, they've yet to announce their findings on Ceredo Kenova Elementary.

These aren't marginal savings, they're massive and the primary difference between the two sets of data being looked at here was the requirement to pay prevailing wage.

Even when you compare the average square foot cost of $190 to that of a study released last year by the labor unions themselves which claimed the average cost of elementary school construction in West Virginia is a modest $209.03 per square foot, Wayne and Monongalia County taxpayers are still walking away with seven-figure savings on these public projects.

In addition to these two school builds, we also saw two school expansions/renovations that were bid during the temporary repeal period. Not one of these four projects was awarded to an out-of-state contractor.

Interestingly enough, all four were in border counties, in various regions of the state. In Wayne County, where the site of the new school being built is literally just a few miles from two different states, not a single out-of-state contractor even submitted a bid on the single prime building construction.

In Monongalia County, three out-of-state contractors submitted bids to build the new Suncrest Elementary School. However, a well-respected West Virginia contractor was the low bidder and awarded the contract.

In actuality, locating out-of-state contractors being awarded low bids in West Virginia has proven to be more common prior to the temporary repeal than during it. In fact, four out of the last six major highway contracts awarded in West Virginia have gone to out-of-state firms. They all required prevailing wage.

Quite frankly, the notion that devious out-of-state contractors would flood West Virginia's construction market and under bid our companies here with unskilled, cheap labor simply due to the lack of a prevailing wage requirement is almost comical.

In order to bid public work in West Virginia, you must to be a licensed, qualified contractor. You must meet certain bonding requirements that are particularly difficult to obtain, and preserve all workers on state funded projects must receive certified federal safety credentials and projects are under both continuous and rigorous inspections by the architects and engineers who designed them.

Earlier this year, when union leaders pleaded with the Legislature not to allow for three months without a prevailing wage in place, it's not because they were afraid of cheap labor or wage cuts.

It's because they were afraid of actual examples that showed just how much taxpayers are being overcharged for the cost of construction while shedding light on the amount tax dollars that are being funneled directly to their organizations though this special interest hand out.

So the next time you turn on your television or open the newspaper and see thousands of union supporters storming the state capitol making ridiculous assertions about economic chaos and foreign workers coming to steal your job, it can only mean one thing: Someone is trying to spend your money wisely.

Hoylman is president and CEO of the Associated Builders and Contractors of West Virginia.

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