5/25 More Prevailing Wage May 20, 2012

Tom’s note: it occurred to me that it would be of some benefit if I posted my “weakly” newsletter each week so that it would be avaialable to all for searching on this site. Here’s the May 20, 2012 edition to get started. I will post others from time to time in order to “ketchup.” BTW, sign up for the “Single-Delegate” newsletter on this site and it will be delivered to your inbox every week. Won’t have to wait until I get around to posting it …
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Here we go again.

The Charleston Daily Mail reported that the Sissonville Volunteer Fire Department is now able to break ground on a scaled-back replacement fire station made necessary in order to pay West Virginia prevailing wages. The project was trimmed by the department from $1.9 million to $1.1 million and construction is expected to begin by May 29th. However, in the process, Kanawha County Commission President W. Kent Carper flew in the face of reason in defending the de facto requirement for the volunteer organization to pay prevailing wage.The article reported, Carper said it was good to use local contractors to do work paid with by local tax dollars. ‘The line of logic here is that prevailing wages means you’ll have a reputable contractor with reputable skills and workers,’ Carper said. ‘The belief was that prevailing wages would jack up the cost, but that’s not the case. Local workers are local taxpayers.'”

+ “…prevailing wages means you’ll have a reputable contractor with reputable skills and workers” I have not yet found any empirical data that says paying the “prevailing wage” guarantees a reputable contractor with reputable skills and workers. True, many additional requirements have been imposed or have tried to be imposed on contractors wishing to bid on “prevailing wage” contracts such as additional OSHA training. Is the Commissioner saying that the hundreds of non-union construction workers in the Kanawha Valley are somehow less qualified?

+ “Prevailing wage” really means that bidders for projects are reduced to union shops. These companies pay those wages anyway and there are numerous reasons why non-union shops do not participate. That reduces the pool of bidders to union contractors who benefit the most from the “prevailing wage” requirements. See my article on Prevailing Wage Benefits Union Contractors Most

“Carper said it was good to use local contractors to do work paid with by local tax dollars.” The West Virginia Jobs Act already requires contractors to employ 75% local workers on all state projects costing more than a half-million dollars. So whether or not “prevailing wage” provisions are in force; the preponderance of government construction jobs will go to West Virginia workers by law whether the firm is located in-state or out-of-state.

+ “The belief was that prevailing wages would jack up the cost, but that’s not the case.” “Prevailing wages,” as calculated by the Tomblin administration’s Department of Labor sample survey, is 41% more than what is reported by the same Tomblin administration’s WorkForce West Virginia’s comprehensive database of wages paid. That means 30% of every labor dollar spent on a project is unnecessary which “jacks up the cost.” Details: State’s Miscalculation Costs Us Millions

If you haven’t been keeping up with the Sissonville Volunteer Fire Department’s effort to reconstruct their station, then ketchup by reading Charleston Daily Mail: Do prevailing wages inflate building costs? A great background and time line of this issue.

Interstate Commerce Issue with Regards to Prevailing Wage

Years ago I did some volunteer work on behalf of the printing industry to obtain protection for West Virginia printers (I was one) from what we saw as unfair out-of-state competition. The upshot was that a 2% preference was given to West Virginia vendors. Why not 30% as the “prevailing wage” tends to imply? I was told and believe that such a high preference would violate the Interstate Commerce Clause of the US Constitution as well as the Interstate Commerce Act. Quoting from the source cited, “Interstate commerce refers to the purchase, sale or exchange of commodities, transportation of people, money or goods, and navigation of waters between different states. Interstate commerce is regulated by the federal government as authorized under Article I of the U.S. Constitution.”

Additionally, it was reasoned by wiser heads that the citizens of West Virginia are consumers of services the state purchases. So, should the state unfairly impose a tariff on out-of-state goods, then the cost would be borne by West Virginians with no significant benefit other than to subsidize one in-state industry. What then is the difference in unfairly establishing a “prevailing wage” that is 41% higher than the predominate rate paid by employers in West Virginia?

New State Magazine Printed Elsewhere

George Hohmann writing in the Charleston Daily Mail reported “The Edge magazine printing was done by Creasey Printing Services, Springfield, Ill.,” said Kim Harbour, the state Department of Commerce’s director of marketing and communications. Further the article noted, “Chapman was the only in-state vendor to bid,” she said. “And even with its in-state vendor preference of five percent, it was not the lowest bid.” See full article

Ergo, does this not mean every other business in every other industry in West Virginia may obtain only a 5% in-state vendor preference while the construction trades, due to the “prevailing wage” calculation, obtains a 30% preference for West Virginia’s union contractors on a 10% increase in costs? Aren’t West Virginia taxpayers therefore being unfairly bound to subsidize the unionized construction industry? Logic of 30% argument may be found in this article.

Another Practical Application of “Prevailing Wage”

Megan Workman writing in today’s Sunday Gazette-Mail reports that the FamilyCare HealthCenter in Madison is using a $500,000 grant from the Affordable Care Act to modernize their facility. I’m all for that, but I deduce if it weren’t for the “prevailing wage” that the same work could have been done for $384,615.40 ($500,000 / 130 x 100). That’s $115,000 premium going to the union contractors with only an estimated $50,000 premium going into the pocket of the construction workers (10% of $500,000). See full story.

Back to the $22,000 Routers

“The state of West Virginia is using $24 million in federal economic stimulus money to put high-powered Internet computer routers in small libraries, elementary schools and health clinics, even though the pricey equipment is designed to serve major research universities, medical centers and large corporations, a Gazette-Mail investigation has found.” That was reported in a Saturday Gazette-Mail article by Eric Eyre.

In a follow up article, Eyre reported that 366 of the $24,000 routers have sat unused for two years.

Again I ask, where’s Governor Earl Ray Tomblin’s response? If he has issued a statement on the debacle, I have missed it. He prides himself on conducting a fiscally-conservative administration. But this doesn’t sound like fiscal-conservatism to me. He needs to get in the middle of it. If not, I sure hope his opponent in this year’s gubernatorial election, Bill Maloney, does.

Also see the Charleston Daily Mail’s editorial, People just hate government waste on the subject.

Homeowner wants computer data on tax assessments

In what could become a major issue, a Monongalia County homeowner is suing the Kanawha County assessor’s office to get computerized data used for determining tax assessments reports the Sunday Gazette-Mail. Betcha a lot of county officials are watching this one closely. Homeowner David McKain also runs the website www.monfairassessments.org which is a must visit for those interested in property tax assessment issues throughout the state.

Final Note

USA Today reported that 62% of young adults get assistance with expenses from their parents. Additionally it notes that those described as “having more agreeable personalities as children get more money than others….” Told you boys to be nicer to me ….

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As always, I invite your comments, criticisms and concerns. You may reach me by responding to this email or by calling my cell phone at (304) 541-3714. Finally, one thing that I will definitely promise is my opinions won’t be rehashes of anyone’s talking points. My goal is to express an independent view that will help all of us in West Virginia move forward.


Tom Crouser
235 Dutch Road
Charleston, WV 25302
Cell (304) 541-3714
email: tom@crouser.com