If off-shoring of manufacturing burns you up, so should the elimination of prevailing wages in construction

For years we’ve been hearing about the devastation caused by the off-shoring of manufacturing capacity.  Families that were firmly in the middle class experienced dramatic declines in their standards of living as their jobs were shipped off to a far off location where the work would be done at a fraction of the cost because the CEOs could pay workers a pittance while evading the costs of keeping the air and water clean.  When the left-behind workers found new jobs, the wages and benefits were nowhere near what they had lost.  As families became poorer, communities suffered as their coffers emptied because residents had far less to spend back in town.  Entire industries and the technical know-how of their workforce have disappeared in the United States.

All of this has rightfully made many Americans angry.  But while the most noticeable impacts of off-shoring have been concentrated in a few states in the industrial Midwest, the elimination of prevailing wages in construction has the potential to bring these problems to California.  At first blush the comparison between construction and manufacturing does not seem to fit.  However a deeper look at the construction industry, its hiring practices, its skill base, and the stabilizing role of prevailing wages shows that the comparison is right on target.  

Two defining characteristics of the construction industry are its seasonality and impermanence. Major work is typically scheduled to occur between the spring and autumn to take advantage of the weather, with significant downturns in the winter months.  These are challenges for both contractors and the men and women they employ.

For contractors the stakes are extraordinarily high.  Since the level of work waxes and wanes, a contractor cannot simply carry a large payroll when there’s no work.  Instead, they need to be able to “hire up” to meet their workforce needs when times are good and scale back when they’re not working.  When the time comes to bid on a major public works job they need assurance that they can fill their labor needs with skilled workers who can do the job quickly and do it well.

Construction workers, especially those working in smaller markets, face the flipside of the contractors’ problem.  Since work is irregular they often have to earn enough in those eight months to get them through what are virtually guaranteed lean times.  And because construction projects eventually come to an end with the next job far from guaranteed these workers need an incentive to stick with the industry when the tide is out.  

Prevailing wages serve that stabilizing role for the industry by ensuring that skilled construction workers are able to earn a decent wage that will carry them through a year’s ups and downs and accrue health, retirement, and vacation benefits that give them a measure of security.  Training payments, which are part of most prevailing wage determinations, are invested into programs – both union and non-union – that enable workers to upgrade their skills and also prepare new apprentices for careers in the building trades.  This structure maintains the skill base needed to build public works to exacting specifications and develops a pipeline of skilled workers to replace those aging out of the industry.  And even more important for local communities, it maintains a tax base that supports the general funds that provide much needed public services for our cities.

Eliminating prevailing wages invites out of area contractors that don’t have to compete based on local standards and undoes this web of mutual relationships, thereby undermining the entire construction industry’s long-term stability.  This sets off a chain reaction that mimics the dynamics we’ve seen in the industrial Midwest with one crucial difference.  While new industries can arise to take the place of those that have left, construction must by its very nature remain localized.  Without strong standards the industry becomes caught up in a downward spiral that drives down incomes for local construction workers and pushes skilled craftspeople away in search of a stable livelihood, destroying the industry’s skills base and ultimately dragging our local economy down with it.

California communities don’t have to go down this road.  By maintaining prevailing wage standards Cities will support their local construction industry and their local economies and avoid the disinvestment and devastation that has wrought such damage on the nation’s industrial heartland.