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Tuesday, Oct 16 2012 06:12 PM

Contractors, unions object to city prevailing wage proposal

BY ANTONIE BOESSENKOOL Californian staff writer aboessenkool@bakersfield.com

Construction contractors and union representatives said Tuesday that the city's proposal to do away with the prevailing wage requirement for city projects will depress construction wages locally and put local contractors at a disadvantage.

The Bakersfield City Council will take up a resolution Wednesday exempting the city from having to pay prevailing wages for projects funded exclusively with city dollars. Prevailing wages are based on the pay and benefits paid to a majority of workers in an area for public works projects.

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The Bakersfield City Council meets at 5:15 p.m. Wednesday at City Hall council chambers, 1501 Truxtun Ave.

The California Supreme Court ruled last summer that charter cities, like Bakersfield, could be exempt from having to pay prevailing wages on public works projects that are city-funded. Under the Bakersfield resolution, there are some exceptions, such as if a city has to pay prevailing wages under the terms of a federal or state grant. Projects paid for with state and federal money, such as the Thomas Roads Improvement Program road construction, wouldn't qualify.

"When the city tries to do away with (prevailing wages), it won't just affect them, the member, but their families who rely on these wages to make a decent living," said Hertz Ramirez of the Laborers International Union of North America -- Local 220. The members of Local 220 do asphalt and concrete work, drilling and oil and water pipeline projects, for example.

Ramirez estimated that wages for that work by Local 220 members are about $28 an hour, plus benefits. That could fall to $8 to $10 an hour, he said, were the city to step away from prevailing wages for those projects.

"(If) they're only required to pay minimum wage, that's what they'll pay," he said.

The savings to the city would vary depending on the proportion of labor costs of a project, which can vary widely, according to documents from the city manager's office. City staff informally surveyed several local contractors that work on city projects and found that labor costs can make up 14 percent to 60 percent of the total cost of a project.

Without the prevailing wage requirement, project costs could be cut by 3.5 percent to 30 percent, according to the survey. City staff said that, on average, the city could see savings of 20 to 30 percent for locally funded projects.

But John Spaulding, executive secretary of the Kern, Inyo, Mono Counties Building Trades Council, said that figure isn't realistic.

"It can't be done," he said. Twenty percent to 25 percent of a project's costs are labor. The rest are fixed costs, for profit, materials and equipment, for example. So an estimated savings of 20 percent to 30 percent would mean laborers would work for free, he said.

Without a prevailing wage requirement for local projects, wages for skilled construction work would fall to $8 an hour, the state minimum wage, he said. And skilled workers, who've spent years learning their trades through apprenticeships, won't work for that pay, he said.

"They'll work for and work where the market is," he said.

The resolution also could cut the pool of bidders for city projects, he said, if contractors have agreed with unions or other workers to pay prevailing wages and decide not to bid for city projects.

Luke Walker, regional manager for Griffith Co., said the resolution would hurt competition. Griffith Co. has worked on street repaving and bridge projects for the city.

"It would make us uncompetitive on city work and would give other contractors who are not union an unfair advantage."

Griffith Co. said labor costs are, on average, 22 percent of the total costs for road projects, according to the city's informal survey. The potential savings to the city from the resolution are difficult to estimate, Walker said.

"If we're paving a road, the material is a very large part of the contract price, but building a bridge, the labor is a very large part. So it depends on the project."

John Zimmerer is the general manager for Bakersfield Well and Pump, which works on the municipal water system. Labor costs for those projects can be more than 50 percent of the total cost of the project, he said.

"The big advantage is it's going to save the city money. The big disadvantage is it's going to take money out of the workforce," Zimmerer said.

Zimmerer said his company pays prevailing wages for its city work. That wage helps workers for his company subsidize their income from other jobs.

"It's kind of a perk for our guys to get a prevailing wage job now and again because it helps subsidize their income," he said.

City Manager Alan Tandy said savings for the city means more work can be done.

Taking an example of 20 percent savings, he said, "If we save 20 percent on resurfacing a street, we can resurface 20 percent more streets. We have more that need resurfacing than we have money to resurface."

Councilman Ken Weir successfully asked for the proposal to be placed on tonight's city council agenda.

As to concerns the resolution would lead to depressed construction wages in the city, Tandy pointed out that larger projects like TRIP's wouldn't be affected.

"The remaining work that is eligible for the exemption (from the prevailing wage requirement) is small in total dollar amount. It is hard to see how that changes the broader wage economy."

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