Editor's Note: Senate Bill 7 is co-authored by Sen. Anthony Cannella, R-Ceres, but opposed by leaders of the charter cities in his district, including Modesto and Merced. It was passed by the Senate 28-10 in late May. Last week it was approved by the Assembly Labor and Employment Committee and now it is now in the Assembly Appropriations Committee.
As the CEO of United Contractors, I represent hundreds of bottom line, hard-nosed, results-oriented, and fiscally conservative business leaders and CEOs. We support paying prevailing wages because we know what we are getting for our money. Specifically, we know that we are getting highly talented professionals who will get the job done on time and on budget.
At the same time, we are proud that we are creating local jobs all while modernizing and expanding California's infrastructure.
Bipartisan legislation known as SB7 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 its municipal projects to comply with the State's prevailing wage law. This bill would prevent public works construction in some cities from becoming a race to the bottom ignoring the value of quality, schedule, and talent. Low compensation and no benefits translates to low quality outcomes and fewer projects being completed on time.
Prevailing wage laws were first passed in California decades ago in order to ensure a fair platform for compensation, competition, quality, and development of skilled workforces. Though most Charter Cities and all General Law Cities in California pay prevailing wages on local construction projects, some Charter Cities have exempted prevailing wages in a shortsighted effort to save money, but the true costs outweigh any perceived benefit.
Further, out-of-state lobby groups have recently mounted an effort city by city to encourage local leaders and politicians to place charters on the ballot in order to eliminate prevailing wage. They promise savings of as much as 30 percent on projects. The lobbyists making these arguments either don't know what they are talking about, or they are being deliberately misleading.
According to the 2007 Census of Construction, labor costs on public works projects in California only amount to about 22 percent of total costs. Their claims lose all credibility in light of the fact that you would have to eliminate all workers on a project to save the amount they propose. Wishful thinking and empty promises won't get the job completed on time.
Cities that eliminate these good jobs and replace them with low paying jobs with no benefits may incur other costs that might not be obvious at first. Research shows that lower wage standards on local projects are likely to shift costs to the public by shifting the burden of healthcare from the employer to the taxpayer.
The idea for SB7 didn't appear out of the blue. It was a logical response to lobby groups trying to convince more cities to make the mistake of eliminating prevailing wage, and Sen. Darrell Steinberg and Sen. Anthony Cannella rightly acted to protect the taxpayer.
California has long been a state where our infrastructure has been built by workers who are highly skilled, well trained, and paid a wage that can keep their families in the middle class. In our industry, like many others, we have to balance the quality of the work versus what it costs to get the job done. SB7 is an important step towards that balanced approach, and it is being done in such a way that even some of the toughest CEOs and business leaders in the community can, and should support.