Friday, May 15, 2009

Metro Council Votes to Waste More $

The Metro Counsel voted at 1:30 this morning to require that contractors on its projects that cost more than $500,000 pay the prevailing wage. This was a Democratic initiative, and the Republicans argued strenuously against it but did not have enough votes.

The Courier-Journal has done a good job covering the issue. The prevailing wage,

is defined by state statutes as the “predominant” wage paid to trades in a locality, in this case Jefferson County. It is calculated by taking the average of wages paid on all public projects, similar private projects and union wages.

The problem with it is that by forcing the city to pay union wages, it distorts the market -- it artificially inflates the cost of public construction by preventing anyone from undercutting the unions (and thereby saving taxpayers money).

Earlier this week, the C-J noted that the Chamber of Commerce and Greater Louisville, Inc. fear that the prevailing wage ordinance could put Louisville at a disadvantage when recruiting new businesses to move here. Why? Because the ordinance will apply even if the city is involved a small percent of a project that is primarily paid for with private dollars.

Billy Parson, president and CEO of the Associated Builders & Contractors of Kentuckiana, Inc., said the big difference between union and non-union wages is the amount paid for benefits.

Parson said union carpenters can expect to earn just over $32 an hour, including about $11 in benefits. Nonunion carpenters earn more like $23 an hour, with about $5 an hour going to benefits, he said.

"This is just government interference in the free market and will add unnecessary costs to projects," Parson said, adding that under prevailing wage, a carpenter with one year of experience could earn the same as a carpenter with 20 years of experience.

Those who support the bill say that it somehow levels the playing field.

Democratic council members Jim King (10th District) and Rick Blackwell (12th) are sponsoring the ordinance, saying it's necessary to ensure that local workers see a proper return on city tax dollars invested in big projects.

"It's important to make sure, as much as we can, that jobs produced by local tax dollars keep our local people working," Blackwell said. "For me, it's about local jobs for local workers."

But the ordinance discriminates against anyone -- including local workers -- who would underbid the going rate that the union charges. So this is not just about "local jobs for local workers" but rather government-subsidized jobs for local union workers.

The Kentucky Opportunity Coalition has been all over the prevailing wage issue as it relates to artificially inflating the cost of school construction. Check out their blog as this issue heats up.

Now that our federal government is the majority shareholder in GM ("Government Motors"), it seems our Metro government has decided to enter the construction business -- unless Mayor Jerry understands that this is not the time to inflate the cost of anything the city does and vetoes this ordinance.

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