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April 15, 2020
This weekend, Virginia Gov. Ralph Northam (D) signed into law and issued amendment recommendations for legislation impacting Virginia’s construction industry, including two bills permitting prevailing wage and project labor agreement requirements on taxpayer-funded public works projects.
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 General Assembly is scheduled to reconvene on April 22 for the purpose of considering bills that have been returned by the governor with a veto or recommendations for their amendment where lawmakers will determine if these bills will take effect July 1, 2020, or May 1, 2021, as recommended by Gov. Northam.
“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 is a modest victory for Virginia’s construction industry and small businesses already struggling to stay in business in the uncertain COVID-19 economy, taxpayers will end up paying an estimated 12% to 20% more for construction of Commonwealth schools, roads, bridges and affordable housing whenever these laws take effect.
“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 Project Labor Agreement 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) would result in prevailing wage requirements on construction projects at non-market 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 from 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 “It 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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