Construction bids for state-funded capital construction projects could soon be subject to wage requirements that alter the way in which companies compete for the jobs.
Labor Commissioner Annie Noonan told lawmakers Wednesday that Gov. Peter Shumlin's administration is advocating a switch to the federal prevailing wage as the basis for contract requirements on state capital construction projects. The administration also suggests requiring a prevailing wage for construction workers for all state-funded capital construction projects, regardless of how much they cost.
Maintenance and construction carried out by the Agency of Transportation or the Department of Forest, Parks and Recreation would remain exempt from the regulation, as would construction projects paid for by the Education Fund. State capital construction funded by both federal and state monies already are subject to federal prevailing wage laws.
Deb Damore, purchasing and contracting director for Buildings and General Services, said Wednesday her department had not yet calculated the potential financial impact of the change, but that BGS supports the move "in principle."
Currently, state-funded capital contracts worth more than $100,000 require that construction workers be paid the state's prevailing wage, which in many cases is a lower hourly rate that does not factor fringe benefits into its calculations. The federal rate does calculate compensation such as health and dental insurance into its prevailing wage.
The issue is a point of contention between companies in the highly competitive construction industry because many unionized employees negotiate for fringe benefits as part of their overall compensation packages.
The issue was explored in a 2013 study of the state's prevailing wage laws. Noonan and Damore briefed a joint hearing of the House General, Housing and Military Affairs and Corrections and Institutions committees on the report Wednesday afternoon.
Labor and business representatives were involved in the study, along with staff from the Department of Labor and Buildings and General Services. According to the report, authored by Noonan, labor representatives had pushed for the change, while business representatives resisted it.
The labor constituency says the state prevailing wage puts unionized shops at a competitive disadvantage for large state jobs. To be eligible to bid, they have to pay the prevailing rate on top of benefits, which adds to their operating costs.
Business representatives say the state prevailing wage works fine as it is, and that collective bargaining considerations are largely irrelevant in Vermont, where only about 10 percent of contractors are unionized.
Neither side minds the suggestion to eliminate the price threshold that triggers a prevailing wage requirement, Noonan said. The administration is proposing to apply the requirement to all state-funded capital construction projects.
A related bill is under consideration in the House General, Housing and Military Affairs Committee. Lawmakers hope to finalize any proposed changes before completing the capital spending bill later this month.