State may close prevailing wage gap for charter cities
February 19, 2013
• Designed to make sure contracts aren’t awarded based on paying lower wages competitors
• “It is important that we close this loophole that allows certain firms to game the system”
California’s prevailing wage regulations would be extended to charter cities under bi-partisan legislation now in the state Senate.
Senate Bill 7, by state Sen. Anthony Cannella, R-Ceres, and Senate President pro Tempore Darrell Steinberg, D-Sacramento, would make charter cities eligible to receive or use state funds for a public works project only if the city has a policy of requiring contractors on all its municipal projects to comply with California’s prevailing wage law.
The law requires bidding contractors to use the same wage rates when bidding on a public works project, ensuring a contract is not awarded based on paying lower wage rates than a competitor.
“As a civil engineer and former mayor, I am proud to co-author SB 7. It is important that we close this loophole that allows certain firms to game the system,” says Mr. Cannella. “Those firms know that they can marginally undercut prevailing wage to win a contract.”
Mr. Steinberg says low wage contractors cut costs by cutting corners, “but the data shows that they’re not saving public money.”
California's prevailing wage law was enacted more than 50 years ago, by Gov. Goodwin Knight, a Republican. It was modeled after the federal prevailing wage act, which was signed into law by President Herbert Hoover in 1931.
All state and local government agencies in California, except charter cities, require contractors to pay prevailing wage on taxpayer-funded projects.
There are 121 charter cities in California, of which only 70 currently require compliance with the prevailing wage law on municipal projects or allow the city council to require compliance with the prevailing wage law on municipal projects.
SB 7 would not apply to contracts under $25,000 for construction or under $15,000 for maintenance, installation, alteration and repair work, so a city would not have to require prevailing wages for such contracts to be eligible to use state funding or construction.
A 2001 study by the University of Utah found that non-prevailing wage contractors are more dependent on imported labor, resulting in a greater percentage of those lower wages being spent outside the community where the original investment was made.