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April 22, 2020
During its annual reconvene/veto session April 22, the Virginia General Assembly agreed with Gov. Ralph Northam (D) and delayed the effective date of two laws permitting prevailing wage and project labor agreement requirements on taxpayer-funded public works projects.
The General Assembly originally sent these bills, passed via party line votes, to the desk of Gov. Northam with an effective date of July 1, 2020.
However, in the face of uncertain economic conditions caused by COVID-19, on April 11 Gov. Northam recommended delaying the effective date of these measures to May 1, 2021.
ABC Virginia has led a coalition of construction industry associations and business organizations against the prevailing wage and PLA mandate bills, which were two of many measures opposed by the business community the General Assembly passed after Democrats won the majority for the first time since 1993.
As part of ABC’s campaign in opposition to these measures and in support of Virginia’s existing fair and open competition statute, last week, The Washington Post published an op-ed by ABC Virginia member Amber Peebles of Athena Construction, a small, women-, minority- and veteran-owned business. In addition, The Richmond Times-Dispatch published a letter to the editor by ABC Virginia Chapter President Pat Dean, and WRVA interviewed ABC’s Ben Brubeck.
“The prevailing wage and PLA bills were passed by the General Assembly prior to the economic crisis caused by the COVID-19 pandemic, which is in part why Gov. Northam recommended a delay,” said Brubeck. “While a delay to 2021 is a modest victory for Virginia’s construction industry and small businesses already struggling to stay in business in the uncertain COVID-19 economy, these measures will have a negative impact on Virginia’s state and local budgets and small businesses and employees. Taxpayers will end up paying an estimated 12% to 20% more for construction of Commonwealth schools, roads, bridges and affordable housing procured after July 1, 2020.
“As always, ABC stands ready to oppose anti-competitive and costly prevailing wage and PLA requirements on future local and state public works projects,” said Brubeck. “When Virginia’s construction industry loses public works contracting opportunities to expensive out-of-state contractors and labor, voters must remember these fiscally irresponsible laws slowed the Commonwealth’s eventual economic recovery and needlessly increased costs to taxpayers.”
Prevailing Wage and PLA Legislation Of Concern
Introduced by Sen. Dick Saslaw (SB 182) and Del. Alfonso Lopez (HB 358), legislation that eliminates Virginia’s Fair and Open Competition statute restricting government-mandated project labor agreements will allow state and local governments to mandate PLAs on public works construction projects. Other bills already signed into law that were introduced by Sen. Scott Surovell (SB 995) and Del. Lopez (HB 1635) eliminate fair and open competition protections on Metrorail construction projects procured by the Washington Metropolitan Area Transit Authority, which would permit future PLA mandates on metro construction projects, similar to the controversial failed attempt to mandate a PLA on Phase 2 of the Silver Line.
When mandated by governments, PLAs discourage nonunion contractors and subcontractors—which employ 97.8% of Virginia’s construction workforce—from competing to build and work on projects funded by taxpayer dollars. As a result, taxpayers can expect to pay 12% to 20% more on all government-mandated PLA projects.
In addition, legislation introduced by Sen. Saslaw (SB 8) and Del. Jennifer Carroll Foy (HB 833) will result in prevailing wage requirements on construction projects at nonmarket rates set by the U.S. Department of Labor, via the archaic 1931 Davis-Bacon Act. These bills require government-determined prevailing wages to be paid to construction workers on all state construction projects exceeding $250,000 and allow localities to pass an ordinance requiring prevailing wages on specific or multiple locally procured public works construction projects.
Research suggests prevailing wage regulations increase compliance and regulatory burdens on small businesses and raise construction costs by 10% to 25%.
Because of the anti-competitive and inflationary impact of prevailing wage requirements, 23 states—including neighboring West Virginia, Kentucky and North Carolina—have no prevailing wage laws, and a total of nine states have repealed or significantly reformed their laws since 2015, resulting in savings, increased contractor competition and additional investment in infrastructure. In fact, the last state to implement a new prevailing wage law was 47 years ago when Minnesota passed a prevailing wage law in 1973.
“The net impact of the prevailing wage and PLA mandate bills is that it is a lose-lose for Virginia’s economy,” said Brubeck. “This will lead to tax hikes and/or fewer public works construction projects procured by the Commonwealth’s state and local governments, and it will needlessly increase construction costs and steer contracts to out-of-state businesses and workers at the expense of Virginia’s construction industry and small, women- and minority-owned businesses.”
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