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Now in California: Nation's Most Prominent Union-Oriented Prevailing Wage Scholar

A leading intellectual advocate for government policies that favor and benefit construction trade unions is on sabbatical from his home university and spending several months in proximity to one of California’s union-oriented labor institutes, the Institute for Labor and Employment (an affiliate of the Miguel Contreras Labor Program) based at the University of California, Berkeley.

IMG_5333Over the past 20 years, University of Utah economics professor Peter Philips has become the nation’s preeminent academic in support of government-mandated construction wage rates (so-called “prevailing wage”). Construction union leaders appreciate his studies that purport to show that prevailing wage did not increase the cost of school construction in Ohio, Michigan, Kentucky, and other states in the 1990s. In addition, they appreciate his testimony before state legislative committees and local governments throughout the country. His article about prevailing wage in British Columbia was published this month, and his article about prevailing wage (“common wage”) in Indiana is supposed to be published in January 2015.

Some of his recent work has argued that California’s charter cities do not benefit from using their constitutional authority to enact municipal prevailing wage policies that deviate from state prevailing wage law. His study entitled The Effect of Prevailing Wage Regulations on Contractor Bid Participation and Behavior: A Comparison of Palo Alto, California with Four Nearby Prevailing Wage Municipalities was published in Industrial Relations: A Journal of Economy and Society, described as “the Institute for Research on Labor and Employment’s top-ranked academic journal.”

(For a response to this article, see the www.UnionWatch.org article Journal Article on Prevailing Wage Debunked, But Only Outside Academia and my analysis entitled University of Utah Study on Government-Mandated Construction Wage Rate (“Prevailing Wage”) Policies in Five California Cities: Not a Reliable Tool for Policymakers. Also, see Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions? – 4th Edition.)

Professor Philips has also written studies on other construction labor issues. For example, he released The Economic and Environmental Impact of the California Environmental Quality Act (CEQA) in March 2013, when the State Building and Construction Trades Council of California was opposing proposed changes to environmental laws that would hinder their ability to exploit these laws to obtain Project Labor Agreements from developers. This study was reported in www.UnionWatch.org in the article Opponents of CEQA Reform Cite New Study with Union Connections(For examples of this practice of environment permit extortion, or “greenmail,” see the www.UnionWatch.org article Revised List of Union Actions in 2013 Under the California Environmental Quality Act (CEQA).)

Professor Philips reports that his study on the employment impact of solar power plant construction in California will be released in November 2014, in conjunction with a press conference in Oakland featuring the Sierra Club, Obama Administration officials, and construction union leaders. Most solar developers in California have signed Project Labor Agreements with construction unions to avoid delays caused by union objections to the projects under the California Environmental Quality Act. (See the www.UnionWatch.org articles Unions Extensively Interfere with California Solar Photovoltaic Power Plant Permitting and Did Unions Hasten Demise of California’s Solar Thermal Power Plants?)

On October 13, 2014, Professor Philips was the lecturer for a colloquium at the Institute for Research on Labor and Employment at the University of California, Berkeley entitled Prevailing Wage Laws in Construction: Wage Mandates as a Means of Promoting Collective Bargaining. Attendees appeared to be predominately graduate students and labor institute personnel, although a researcher of the union-affiliated organization Smart Cities Prevail was also there.

I reserved a spot in advance for myself, as instructed in the announcement for the colloquium, and no one hassled me about being there. In fact, Professor Philips asked me a question at the end of the colloquium. I was able to make a few remarks at a forum where different views about the fundamental roles of government and unions are probably quite uncommon.

Here are some of my observations from the hour-long presentation on prevailing wage by Professor Philips.

    Labor Institute director Michael Reich introduces Professor Peter Philips.

    Labor Institute director Michael Reich introduces Professor Peter Philips.

  • Professor Philips was introduced by Michael Reich, Professor of Economics and Director of the Institute for Research on Labor and Employment. They met in the 1970s in the very room where this colloquium was held 40 years later. Older generations seem to dominate the fading academic field of what was once called “industrial relations.”
  • Professor Philips genuinely believes in the “virtues” of collective bargaining and supports the concept of government intervention to encourage collective bargaining in the construction industry. He frequently refers to the development and support of “human capital” in a “turbulent” industry and believes unions fulfill that role by providing sustained employee benefits and training. One of his slides appeared to show a “Non-Union” maid throwing bathwater out the window with “human capital” in it. (A slide showing a union official throwing bathwater out the window with “taxpayer money” in it was not included in the presentation.)
  • He emphasized to the PhD students at the colloquium that “being effective” requires speaking and crossing three arenas: economic, legal, and political. This conforms to the contemporary idea of university labor institutes as not merely research operations, but activist programs meant to pursue advancement of society through a progressive political agenda. (Your tax money in action.)
  • He asserted that groups such as Associated Builders and Contractors (my former employer) and conservative think tanks claim to oppose government-mandated prevailing wages because of concern for fiscal responsibility, but in reality are motivated by a desire to eliminate government policies that allow unions and unionized contractors to be competitive. At the same time, he claims prevailing wage does not increase costs of construction. A few students asked about this apparent contradiction: why does government need to impose a prevailing wage to help unions if prevailing wage does not increase costs? In response, Professor Philips hedged his bets and suggested that prevailing wage raises the cost of construction about 5%. Then he claimed that prevailing wage opponents cite higher percentages of savings because 5% does not inspire elected officials to eliminate the policy.
  • He contended that “Merit Shop” was a much better “descriptor” for non-union construction than “non-union,” because in this system workers are paid “variegated” wages based on merit, rather than a common wage based on collective bargaining. (Obviously he does not regard this particular recognition of “merit” as beneficial to human capital.) He briefly discussed the rise of the Associated Builders and Contractors construction trade association from its founding in 1950 through its dramatic expansion in the 1970s as it worked with the Business Roundtable to curb inflation.
  • He contended that class lines were blurred in construction: someone who starts in the industry as an apprentice can become a company owner. This is a challenging statement for union activists and academic advocates of unionism who believe class consciousness is essential to establishing “workplace democracy” through collectivism. It reminded me of claims I’ve heard over 20 years from both union and non-union officials that the ultimate ambition of a union apprentice is to become a union business agent, while the ultimate ambition of a non-union apprentice is to become a company owner.
  • Professor Philips is critical of what he sees as non-union efforts to infect construction with “Taylorism,” that is, breaking the work process down into small distinct responsibilities within a mass production system. He sees “human capital” developed through comprehensive union-sponsored apprenticeship training as a contrast to Taylorism. He also describes the non-union business model as “myopic bidding,” which I took to mean narrow consideration for a specific project without consideration of long-term costs.

It seems that Professor Philips is spending some of his time in California working on a project to describe how the Merit Shop operates, with the intent of contrasting it to the alleged virtues of a collective workforce. Here’s how Professor Philips seems to perceive Merit Shop construction:

  • A large Merit Shop company has a core workforce of very-well-paid, exceptionally talented and motivated long-term employees who travel regionally to work on significant construction projects. Some of these workers participated in or graduated from union apprenticeship programs but ultimately become disgruntled with their unions for ideological reasons or personal grievances. They tend to be zealous backers of the Merit Shop movement.
  • Below these core workers are two systems: (1) workers hired through a traditional process of submitting resumes in order to perform single jobs and then casually released at the end of the project without health insurance or other benefits; and (2) an extensive “highly articulated” network of small non-union subcontractors, either self-employed or with a small number of loyal, closely-tied employees.
  • For training, Professor Philips claims that the Merit Shop wants government to provide subsidies to train workers in vocational programs, as opposed to choosing to fund worker training themselves through employer payments to formal apprenticeship programs.

While Professor Philips is in California, he would like to talk with some Merit Shop contractors about their business practices. Keeping in mind that Professor Philips has some presuppositions about labor relations (as all people have), you may contact me as an intermediary if you are interested in talking to him about your business.


Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

 

With Senate Bill 7, California Unions Advance Plot to Neuter City Charters

More than 30 California cities are likely to defy top union officials by asking their citizens in 2014 to vote on enacting a “home rule” charter for local control.

Cities want to free their purely municipal affairs from costly union-backed state mandates, for reasons revealed in these recent articles:

Unions Rise to Defense of “Prevailing Wage” Rates Jeopardizing Hotel Project in Redding – www.LaborIssuesSolutions.com – February 15, 2013 and Redding Needs a Charter to End Nonsense Definition of Private Hotel as a “Public Works” Project – www.LaborIssuesSolutions.com – January 31, 2013.

Stanford Professor Warns Costa Mesa about Pension DebtOrange County Register – February 27, 2013 and City’s Pension Outlook Called ‘Stark’ – Newport Beach/Costa Mesa Daily Pilot – February 27, 2013. (With the failure of the Measure V charter in November 2012, Costa Mesa is now in the union paradigm with a proposed solution to raise taxes.)

A Former Mayor of a Southern California City Provides an Intellectual Argument for City Charters and Local Government Authority – www.LaborIssuesSolutions.com – February 19, 2013 (a commentary on Reasons to Consider Becoming a Charter City – San Diego Union-Tribune – February 19, 2013).

For a powerful example of how charter cities are saving money and being more cost-effective in their city operations and services, see Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions? Cities recognize that exercising the power of a charter can free their municipal affairs from the grip of the state legislature and the special interest groups entrenched at the capitol. A staff report about city charters to the Murrieta City Council for its October 2, 2012 meeting was blunt about the need for cities to enact charters:

…a knowledgeable, involved electorate should both propel and constrain the direction of its own city. Local control has always been a paramount matter of residents, businesses and the Murrieta City Council. Yet state legislators and previous gubernatorial administrations continue to impose far greater mandates, while at the same time hindering the ability of local governments to operate successfully. With little ability to protest, local governments have watched as the state government continues to balance its budget deficits on the backs of fiscally responsible local jurisdictions…The voice of cities in Sacramento has become mute due to a combination of special interest groups, influential political campaign contributions and tone-deaf lawmakers passing unfunded mandates. This process has left cities with little ability to petition the state government…

A city charter is a unique document that acts like a constitution for a city adopting it. Overall, this puts more control into the hands of the residents instead of state legislators and gives a community greater independence to determine its own destiny. Cities typically enter the process to become a charter city to become more autonomous. A charter city has more flexibility and has ultimate authority over municipal affairs. The charter city provision of the state Constitution, commonly referred to as the “home-rule” provision, is based on the principle that a city, rather than the state, is in the best position to know what it needs and how to satisfy those needs. The home-rule provision allows charter cities to conduct their own business and control their own affairs. Therefore, a charter maximizes local control. Such benefits of a charter city are greater flexibility on public works contracts and other changes in the procurement process, more control over economic development practices, and less reliance on the state.

Right now there are 121 charter cities in California, up from 107 in 2007. But there are aggressive opponents who regard cities’ exercise of their charter authority (as cited above from the Murrieta staff report) to be an attack on their hegemony. In 2011 and 2012, unions spent jaw-dropping amounts per voter on campaigns to convince voters to reject reasonable proposed charters.

Charters were defeated in Rancho Palos Verdes, Auburn, Costa Mesa, Escondido, and Grover Beach, to the dismay of civic leaders whose local grassroots efforts were rolled over by well-funded union-backed professional campaign operations. Unions are now ready to crush California’s federalist rebellion once and for all in 2013 and 2014.

As one strategy, they are infiltrating and trying to neutralize the League of California Cities as an organization that provides information to cities looking at charters. A union-affiliated group called www.SmartCitiesPrevail.org is trying to influence the League of California Cities through sponsorship, partnership, and participation in the League’s Transportation, Communication & Public Works Committee.

Unions are aggressively opposing charters when proposed on the local level and are trying to derail proposals through charter review commissions (a strategy that worked for unions in Elk Grove, Redding, and other cities). See the newspaper articles listed below for evidence.

Union lobbyists also have a bill now in the California State Legislature (Senate Bill 7) introduced by Senate leader Darrell Steinberg and a Republican State Senator, Anthony Cannella. It will cut off state funding for cities that use their constitutional charter authority to establish their own policies concerning state-mandated construction wage rates. (See Bill Introduced in State Senate to Suppress Authority of California’s Charter Cities to Establish Their Own Policies on Government-Mandated Construction Wage Rates – www.LaborIssuesSolutions.com – February 20, 2013.)

This bill adopts the same concept of crushing charter city authority as did the union-backed Senate Bill 922 in 2011 and Senate Bill 829 in 2012 (two bills pushed by Senator Michael Rubio, who just resigned to take a lobbying position with Chevron). These two laws cut off state money to charter cities that adopt policies prohibiting those cities from requiring construction contractors to sign a Project Labor Agreement with unions as a condition of work.

Threatening to withhold money as a tactic to force a government to submit to centralized authority may remind you of warnings in the dissent in the U.S. Supreme Court decision in June 2012 concerning the constitutionality of Obamacare:

Structural protections – notably, the restraints imposed by federalism and separation of powers – are less romantic and have less obvious a connection to personal freedom…The fragmentation of power produced by the structure of our Government is central to liberty, and when we destroy it, we place liberty at peril…[The] practice of attaching conditions to federal funds greatly increases federal power…This formidable power, if not checked in any way, would present a grave threat to the system of federalism created by our Constitution…Coercing States to accept conditions risks the destruction of the “unique role of the States in our system.”

While the same principles would seemingly apply to the relationship of state and local governments, forces at the state capitol seem to prefer an overbearing centralized government that can solve problems with broad strokes of alleged social justice.

With bills such as SB 922, SB 829, and SB 7 deemed as acceptable modes of governance by the legislative supermajority and the governor, I anticipate a union-backed effort in the future to repeal outright the section of the California Constitution (Article XI, Section 3) that allows cities to govern their own municipal affairs under a charter. It would be an effective way to eliminate another one of the diminishing number of checks and balances that interfere with utopian schemes planned under the benevolent and enlightened one-party state.

Then there is the strange case of Republican Senator Anthony Cannella, who is so proud of undermining local control and raising costs for taxpayers that he used the Senate Republican Caucus communications operation to proclaim his legislative achievement to a gullible press. Here’s a Tweet:

It didn’t go unanswered. I responded with this Tweet:

Senator Cannella may not realize (or may not care) that he represents two cities – Modesto and Merced – that use their charter authority to set their own policies concerning government-mandated construction wage rates (so-called “prevailing wages”). Here is the Modesto policy, set by a 1995 resolution: Modesto Prevailing Wage Policy and Staff Report. Here is the Merced practice: Merced Exempts Rental Housing Preparation from State-Mandated Government Wage Rates (Prevailing Wage). Oh well, sometimes the union lobbyists in Sacramento are a more important constituency than the people back home in the Central Valley.

With the help of Senators Steinberg and Cannella, union lobbyists intend to direct their legislative puppets from Los Angeles and San Francisco to suppress the small and medium-sized cities trying to determine their own financial destinies. To protect union power, these cities must submit to centralized power exercised by the state legislature and Governor Jerry Brown.

In the meantime, the local federalist rebellion continues. In addition to the cities of Temecula and Murrieta, the following California cities are now publicly moving forward on asking their citizens to approve a charter in 2014 (with several more soon to begin public discussion):

Costa Mesa

Outsourcing Back in for Costa MesaOrange County Register (editorial) – February 6, 2013

…passage of Measure V would have made the privatization task easier. But the union outspent Measure V proponents by more than seven-to-one. However, Mr. [Councilman Jim] Righeimer said he hopes a new charter measure will be put on the June 2014 ballot…Within 60 days the council will hold a study session on how to set up the independent committee for the new charter measure.

Escondido

Escondido Mayor Touts Urban Renewal, Embracing DiversitySan Diego Union-Tribune – February 20, 2013

Delivering his annual State of the City address to nearly 300 residents and business leaders gathered at the city’s arts center… [Mayor Sam] Abed said he also wants the city to take another shot at becoming a charter city, which would increase Escondido’s independence from Sacramento and reduce the cost of some city construction projects.

Moreno Valley

Moreno Valley: City to Explore Becoming Charter City – Riverside Press-Enterprise – February 26, 2013

The Moreno Valley City Council on Tuesday, Feb. 26, unanimously approved establishing a subcommittee that would explore becoming a charter city and appointing two council members to it.

Moreno Valley: Charter City Committee Could Be Created  – Riverside Press-Enterprise – February 25, 2013

The Moreno Valley City Council on Tuesday, Feb. 26, is to follow through on plans to determine whether to become a charter city. The council is set to vote on whether to establish a charter exploratory subcommittee and appoint two council members to it.

Buellton

Buellton Continues “Home Rule’ Talk – Santa Ynez Valley News – February 7, 2013

The idea of changing Buellton to a “home-rule” city is on hold again after City Council members decided to set up a workshop for more discussion about a draft plan…City Manager John Kunkel said the committee wants voters to be comfortable with the measure and, if the council wants to have a dialogue with unions, there is no rush.

Charting Best Path to Buellton’s Future – Santa Ynez Valley News (editorial) – February 7, 2013

…being a charter city does mean that local elected officials and voters can make more of their own decisions, and are therefore better able to tailor policy to fit specific local needs…Being a charter city also lets local government off the hook for paying a prevailing wage. Labor unions don’t like that possibility…

Arroyo Grande
Arroyo Grande Considering City Charter – www.CalCoastNews.com – January 28, 2013

The Arroyo Grande City Council has created a committee to explore the idea of becoming a charter city in order to cut costs…Many union members oppose city charters because they allow exemptions from state-mandated prevailing wage agreements. City staff says adopting a charter could save Arroyo Grande $50,000 to $300,000 annually.

Study Under Way to Find Out if Arroyo Grande Should Try to Become a Charter CitySan Luis Obispo Tribune – January 27, 2013

A committee has been convened to study whether Arroyo Grande should try to become a charter city, a move that officials say could save money and give it more local control. The idea, however, faces stiff opposition from local union members…

California cities have two choices about their financial futures: enact a charter as an way to become more cost-efficient, or raise taxes. Guess which choice the unions want?

Kevin Dayton is the President and CEO of Labor Issues Solutions, LLC and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com.

Charter Proposals for California Cities Continue Provoking Union Opposition

California Governor Jerry Brown claimed in his State of the State address that California now has “a solid and enduring budget.” His Finance Department even predicts state budget surpluses.

Despite the jubilation at the state capitol inspired by tax increases and one-party rule, California cities seem skeptical, as shown by their continued efforts to exercise their state constitutional rights to govern their own municipal affairs, free of costly and burdensome state mandates. And unions remain determined to undermine them.

The elected council of the Central Coast city of Arroyo Grande has appointed a committee to determine if it should ask voters to approve a home-rule charter, and union officials are interfering through “stiff opposition.” The elected council of the Central Coast city of Buellton is going to hold a workshop on a proposed charter, as union officials fight the proposal there too.

Meanwhile, on January 22, 2013, the Newport Beach City Council voted 7-0 to exercise its home-rule power as a charter city to establish its own policy concerning government-mandated construction wage rates (so-called “prevailing wages”). See the text of the resolution below.

RESOLUTION NO. 2013-6

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH EXEMPTING LOCALLY FUNDED PUBLIC WORKS PROJECTS FROM PREVAILING WAGE

WHEREAS, the California prevailing wage law requires contractors on public works projects to be paid the general prevailing rate of per diem wages for work of a similar character in the locality in which the work is performed;

WHEREAS, under the California Constitution, Article XI, Section 5, the laws of charter cities supersede state law with respect to municipal affairs of the city;

WHEREAS, the California Supreme Court has held that the wage levels of workers constructing locally funded public works are a municipal affair, and therefore a charter city’s prohibition on the payment of prevailing wage supersede state law; and

WHEREAS, the City of Newport Beach (“City”) is incorporated as a charter city, and thus the City may exempt locally funded public works projects from prevailing wage to conserve the City’s limited resources.

NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows:

SECTION 1: The City of Newport Beach exempts locally funded public works projects from prevailing wage, unless: (1) prevailing wage is compelled by the terms of a federal or state grant or is otherwise funded from a source that requires prevailing wage; (2) the public work is a matter of statewide concern; or (3) the payment of prevailing wage is separately authorized by the City Council, because the project is of a complexity and nature that the public interest would be served by requiring prevailing wage.

SECTION 2: This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting this resolution.

ADOPTED this 22nd day of January, 2013.

The January 22, 2013 staff report to the Newport Beach City Council recommended that it establish its own government-mandated construction wage rate policy:

…the City of Newport Beach, as a charter city, is not required to pay prevailing wage for locally funded public works projects. The City may adopt either an ordinance or a resolution to affirm its municipal autonomy and conserve valuable financial resources by exempting itself from the prevailing wage requirement for locally funded public works contracts. In the absence of an ordinance or resolution, the City may exempt itself from the payment of prevailing wage through the insertion of language into individual contracts (i.e., creation of an “actual conflict” through explicit contract terms). However, to ensure consistency staff recommends the adoption of the attached resolution. The attached resolution provides an exemption for public works projects, unless: (a) prevailing wage is compelled by the terms of a federal or state grant, or other funding source; (b) the public work is a matter of state-wide concern; or (c) the payment of prevailing wage is separately authorized by the City Council due to a project’s complexity or nature that the public interest would be served by requiring prevailing wage” to the third type of project for which the City might wish to pay prevailing wage.

Before the vote, the city attorney pointed out that the state’s definition of “public works” is ridiculously broad and recommended that the city council ensure flexibility and adopt a policy to “opt-in” to state-mandated construction wage rates. Councilman Michael Henn had the courage to state publicly that “prevailing wage” is a unique “anachronism of the construction industry” and noted that most business in America is done without government-mandated prevailing wage rates.

Study Session: Applicability of Prevailing Wage to City Projects

As a prelude to the agenda item, the Newport Beach City Council convened earlier in the day for what the city attorney described as a “fairly long study session” (Discussion Regarding the Applicability of Prevailing Wage to City Projects) to discuss exercising its right as a charter city to establish its own policy concerning government-mandated construction wage rates (so-called “prevailing wages”) on purely municipal construction projects.

A leader of the Los Angeles/Orange County Building and Construction Trades Council [no web site] led off the public comment by showing a professionally-produced video called “Right the First Time” that promotes state prevailing wage laws through anecdotes and interviews with union-backed politicians. It neglects to mention the state’s absurd methods of calculating prevailing wage and defining public works. In addition, the video claims that prevailing wages are set by the free market, even though California Labor Code Section 1773 directs the state to set prevailing wage rates based on the applicable union collective bargaining agreements.

Other speakers represented union-affiliated groups such as Smart Cities Prevail and unionized construction trade organizations such as the Fire Sprinkler Advisory Board of Southern California, the Western Wall & Ceiling Contractors Association, the National Electrical Contractors Association (NECA) – Orange County Chapter, and the Western Steel Council. A few unionized contractors (locked into multi-year collective bargaining agreements) also spoke in defense of state-mandated construction wage rates.

Evening Meeting: Unanimous Approval of the Resolution

At the evening meeting, a collection of union representatives, unionized construction trade associations, and unionized contractors once again asked the city council to keep state-mandated construction wage rates. They again cited the usual union arguments about cheap, unskilled, out-of-town labor by uninsured and unlicensed contractors.

Notice how this letter from the National Electrical Contractors Association (NECA) says that quality construction requires “living wages and benefits,” as if the alternative to state-mandated construction wage rates is the California minimum wage of $8.00 per hour. Actually, state-mandated prevailing wages are typically four to six times higher than “living wage” rates set by local governments. For example, the “living wage” for the City of Irvine (in Orange County, near Newport Beach) is currently $13.13 per hour including benefits. The median wage (not including benefits) for an electrician in Orange County is $27.15, according to the California Economic Development Department. But the state-mandated total straight time “prevailing wage” for an inside wireman electrician in Newport Beach is $54.83 per hour, including fringe benefit payments and payments to “other” trust funds that do not directly benefit the employee.

A staff representative of Smart Cities Prevail (a union-affiliated labor-management cooperation committee) argued against the resolution, claiming the policy could result in economic “uncertainty and insecurity.” A representative of the unionized Fire Sprinkler Advisory Board of Southern California noted that prevailing wage contractors offer quality. A leader of the Los Angeles/Orange County Building and Construction Trades Council encouraged the city council to continue requiring its contractors to abide by the state-mandated wage rates and warned of cheap labor from out of the area. A representative of the National Electrical Contractors Association (NECA) claimed that construction workers are “part-time workers” that work eight months a year and don’t get vacations or sick days. A union contractor said “we can afford it in Newport Beach” and noted many sections of the California Labor Code would be nullified. Also speaking against the policy was a union-oriented consultant formerly involved with labor relations for the Bay Area Chapter of the Sheet Metal & Air Conditioning Contractors National Association (SMACNA).

All that needs to be said in response: In 2012, the City of Newport Beach entered into a $5,880.00 maintenance contract for “abatement of algae around the Grand Canal beaches of Balboa Island” that included the requirement for the contractor to pay state-mandated construction wage rates (prevailing wage). Is it really the business of the state legislature to impose such a requirement on the City of Newport Beach for $6000 in algae clean-up?

News Coverage of Newport Beach City Council Vote:

Newport Triggers Dock-Fee Increases, Cost-Saving Labor Contracts – Orange County Register – January 23, 2013

City Eschews Prevailing Wages: The City Council voted to exempt Newport Beach from a state requirement that compels cities to pay workers prevailing wages – Newport Beach/Corona Del Mar Patch – January 24, 2013.)

Council Closes Book on Dock Fee Increases (In other business…) – Newport Beach/Costa Mesa Daily Pilot – January 23, 2013

For More Information:

Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions? – 3rd Edition

List of California’s 121 Charter Cities

California Supreme Court Affirms State Prevailing Wage Requirements Do Not Apply to Charter Cities – League of California Cities – July 2, 2012

Kevin Dayton is the President and CEO of Labor Issues Solutions, LLC and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com.