Nevada is searching for a way to balance the budget and one area that I have not heard anything about is in public works construction. Currently, more than 30 states have prevailing wage laws, at their height 41 states had prevailing wage laws. For those of you not familiar with what prevailing wages are, let me briefly explain. In the 1930’s, the Davis-Bacon Act came into existence, mainly to keep non union contractors from winning contracts and to keep the local union workers employed. The claim was to increase the disposable income of unskilled construction laborers, for the area. Nevada adopted it’s prevailing wage law in 1937 and has been costing the state and ultimately the tax payers hundreds of millions of dollars every since.
I have a personal relationship regarding prevailing wage rates in Nevada. I run a small contracting business in Las Vegas and at times we bid and have even been successful on a few. The Nevada Labor Commission claims that the prevailing wage rates are derived from surveys sent to local companies to determine what the wage that is prevalent in the area. In over 10 years of contracting, employing several workers falling under the classifications covered by prevailing wage rates, I have never received one of those surveys, of course, we run a non union shop so why would they want my answers? Last week, I was bidding on a job as a subcontractor for a small portion of a larger contract and I mistakenly was bidding on the project as if it was a prevailing wage project. This project used no federal funding so was not regulated by prevailing wage laws. When I realized my mistake and changed my wage rate to the normal rate I pay my employees the cost of my bid dropped by 20%. The prevailing wage rates are nearly 60% higher than the wage I pay my employees and my employees make a fair wage plus benefits. The additional cost is not strictly limited to an increase in wages, it also adds to the overhead burden of the employer. We just finished a contract where prevailing wages were required by law to be paid; the amount of paperwork required to comply with all the reporting laws associated with prevailing wage laws required us to hire additional people just to keep up with the hours reporting, benefits, Labor Commission reports, payrolls and monitoring classifications. Like in most businesses, these costs are passed on to the consumer, but in this case the consumer is the government, ultimately this burden falls upon the tax payer. Let me ask you this question, does an unskilled laborer who is pushing a broom on a prevailing wage project deserve to make over $40.00 per hour, how is that reflective of the average wage of a broom pusher in Las Vegas? It is not, I bet most janitors would love to be paid that amount. The reason an unskilled laborer (broom pusher) earns that much on a prevailing wage project is because the union has decided that is what a person skilled in the use of a broom is worth because he has been trained in the safe use and proper operation of a broom.
The inflated cost of labor is costing the state hundreds of millions of dollars. Nevada spends billions of dollars in construction and wastes millions. If you do not want to believe my personal experiences I listed above, the good people at the Nevada Policy Institute did an analysis on what the prevailing wages are costing our state. This is just another example of how unions are costing every Nevada tax payer.