Eliminating Middle Class Jobs in the Shadow of the Election

Worker standards help economic growth. As the country builds back from the recession, middle class careers are key to economic prosperity and growth. It's something we seem to agree upon across party lines -- yet the very existence of these jobs is at risk.
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Under the cover of the presidential and state ballot races, a construction lobby group is quietly working to change the governance of California cities -- just to pay workers unfairly.

On next Tuesday's ballot, in addition to voting on larger, more familiar statewide initiatives, smaller cities such as Costa Mesa, Escondido and Grover Beach will also decide whether to become charter cities. This is one step in a campaign with the conservative construction lobby group Associated Builders and Contractors (ABC) at the helm, to convert California cities to charter cities. This small step could have wide reaching consequences, with middle class families in the balance.

Why would a construction lobby group care about something as obscure as the structure of a city's governance, anyway? Well, it turns out it makes a handful of companies a lot of money.

State law requires construction employers to pay construction workers a standard wage on any municipal project. The federal Davis-Bacon Act, passed in 1931 by a Republican president and congress, established these wage standards to keep the government from using its buying power to drive down wages. These "prevailing wages" call for workers on a government contract to earn a wage rate comparable to their private sector counterparts in a given geographic area.

However, after a California Supreme Court decision this past July, a city that votes to become a charter city doesn't have to pay prevailing wages on locally funded projects. Since this announcement, an aggressive campaign launched to convert local cities to charter cities. In cities that are already charter cities, groups have taken steps to eliminate prevailing wages. Just a couple of weeks ago, Bakersfield's city council voted to pass an ordinance to downgrade wages on city construction projects. They made the decision before a packed house of 250 workers, family members and community members who were devastated to hear the results.

It is a pretty extreme move to change city governance just to pay workers less. The architects behind this campaign claim that eliminating prevailing wage will save cities money. Many studies contest this, yet because construction labor costs are typically 20-30 percent of a project's costs, even if prevailing wages do increase project costs, it is likely to be small. For example, if labor costs are 25 percent of total project costs and prevailing wage rules raise wages by 10 percent, the impact on contract costs would be no more than 2.5 percent. In Bakersfield, the city council made the decision to cut prevailing wage when they knew they would save just a fraction of a percent (0.14 percent) on the upcoming city budget. (From Bakersfield City Council Meeting, October 17 2012)

What is really at stake in this decision is the cornerstone of our economy -- working class and middle class families. Both Democrats and Republicans discuss their plans to the support middle class, yet few industries remain in this country that provide middle class careers. Many of the jobs returning after the recession have been short-term and low-wage.

Construction is one of these last few industries that offers middle class careers. State-of-the-art apprenticeship programs in electrical work, sheet metal, plumbing and any of the over 14 trades that encompass the construction trades can provide pathways to a better life. In particular, construction apprenticeships provide much-needed opportunities for people returning home from the military, those who were formerly homeless, and those seeking work after serving their time in prison.

Yet, the construction industry has two faces. On projects that skirt regulations, construction can also generate temporary, short-term and dangerous jobs. For example, residential construction provides a snapshot of an industry without a real wage floor. With a lack of regulation, many accidents occur on the job and it is not uncommon for workers to not receive a day's pay for a day's work. Without access to healthcare or other basic services, workers are often forced to rely on public services.

In the research we have compiled at the California Construction Academy, a project of the UCLA Labor Center, we see that worker standards help economic growth. For example, skilled construction workers on prevailing wage projects are 20 percent more productive than less skilled workers on non-prevailing wage projects. A recent study in San Jose found that municipal projects covered by a prevailing wage policy employ more local workers. Fair wages also have local economic benefit. Each dollar paid in prevailing wages produces $1.50 in economic activity. Losing these standards would be a huge economic loss for the state. Bakersfield has already lost these benefits.

ABC's city-to-city charter push reflects a new political strategy, as dangerously far-reaching as it is stealthy. It moves these policy conversations down to a very localized level, circumventing state and federal law designed to protect a standard of living for all Californians. Other sectors will see the impact. If more and more cities convert to charter cities, other state laws also go up for grabs.

It is a poor precedent, and in fact, this California campaign to eliminate prevailing wage is not isolated. Associated Builders and Contractors is a member of the American Legislative Exchange Council (ALEC) and eliminating prevailing wage is part of ALEC's playbook of model legislation. Similar campaigns are now rolling out in different states across the country.

As the country builds back from the recession, middle class careers are key to economic prosperity and growth. It's something we seem to agree upon across party lines -- yet the very existence of these jobs is at risk.

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