According to The Associated General Contractors of America, West Virginia’s construction sector dropped by 4,400 jobs, a 13.1 percent loss, over the past year. Right-to-work laws, the prevailing wage rate and work force training are all being explored as possible solutions to increase the number of jobs in the state.
By Bobbie Spry
During the 2015 legislative session, a bill was introduced that would have established a right-to-work law in West Virginia, guaranteeing that no person can be forced, as a condition of employment, to join or be kept out of a labor union. Although legislators rejected the idea, Republican legislative leaders announced the commissioning of a new study by the West Virginia University Bureau of Business and Economic Research on the economic impact such a law would have.
The House of Delegates did, however, pass Senate Bill (SB) 361, which would require a new calculation of the existing prevailing wage formula. The prevailing wage rate ensures no less than the average hourly rate be paid to workers, and while many labor organizations and union construction workers rallied in support of retaining the existing rate, SB 361 still passed.
To gain additional insight into the debate over right-to-work laws, prevailing wage rate recalculation and work force training, West Virginia Executive sat down with Bryan Hoylman, president and CEO of Associated Builders and Contractors of West Virginia (ABCWV), and Steve White, director of Affiliated Construction Trades Foundation. Coming from opposite sides of the debate, both men discuss the ins and outs of these important issues and the impact they can have on an economy.
Bryan Hoylman, President and CEO
Associated Builders and Contractors of West Virginia
WVE: Tell us about the methodology for determining the new prevailing wage rate and how it will affect West Virginia.
BH: The new methodology for calculating the prevailing wage rate is a long-welcomed reform here in West Virginia. Shy of repealing this government mandate altogether, it is a significant step in the right direction. However, the implementation process has yielded some unsettling results, and we have serious concerns about the methodology not falling in line with the spirit and intent of the law as it was written. With significant amounts of data already in place to incorporate, along with the removal of a government-mandated fringe benefit, I was confident we would see a true reflection of fair market rates for construction in West Virginia. Inexplicably, when the new methodology was created, it formed an entirely new survey process along with a mandated fringe benefit and somehow omitted the inclusion of the U.S. Bureau of Labor Statistics (BLS) data that the bill requires.
If West Virginia’s prevailing wage rates continue to reflect the upper echelon of union construction workers’ collective bargaining agreements rather than an objective incorporation of available economic data that reflects true market rates, this new methodology will provide very little benefit for the overwhelming number of taxpayers who supported it.
WVE: Will the revamping of the prevailing wage rate contribute to the development of jobs?
BH: If it is truly reflective of market rates, then yes, it will have a significant impact on job creation. Of course, the most positive impact on job development with regard to prevailing wage would be to remove the government mandate altogether, thus allowing the market to establish the going rate for construction in West Virginia. This type of market-based competition—along with the standards required for safety and quality already in place through the existing state law—would maximize the state’s potential to expand its already diminishing revenue even further. By freeing up this additional revenue through the reduction of artificially inflated labor costs, we allow for the state to build additional roads and schools and pursue more public improvements. With a substantial increase in the number of new improvements becoming available to West Virginia’s contractors, we will find ourselves in a position of having to hire and train more workers to meet those demands.
WVE: Work force training is an important component of a strong job market. What is being done in the construction industry to train the future work force, and are we on the right track?
BH: This is something our membership at ABCWV takes significant pride in. The development of our state’s construction work force through both company-level training programs and state-sponsored technical programs is getting better as we’ve noticed a generalized effort to place more time, energy and investment toward it. One issue the industry is currently facing is finding skilled workers to meet the demands in the field. However, West Virginia is one of the only states losing construction jobs. In recent years, a sizeable portion of the state’s construction work force has left for opportunities in the oil and gas industry, retired or nearing retirement or is leaving the state altogether.
WVE: What kind of impact can a right-to-work law have on a state’s economy?
BH: It’s no secret states that have enacted right-to-work laws around the country are dominating their counterparts in areas of economic development and job creation. Study after study shows the positive effects this type of law has on local economies. The reason for this positive trend is twofold. First, right-to-work laws ultimately pacify what are historically viewed as aggressive organizing tactics from labor unions. Secondly, Right-to-work laws let businesses know there is a concerted effort to create environments that are friendly to those who seek to expand and invest. Quite simply, if we want substantial economic development in West Virginia, we need to pass a right-to-work law.
Steve White, Director
Affiliated Construction Trades Foundation
WVE: Tell us about the methodology for determining the new prevailing wage rate and how it will affect West Virginia.
SW: Overall, I think WorkForce West Virginia and the universities in the state have done a good job trying to develop a method that can accurately reflect the wages paid in our region.
The purpose of the prevailing wage law is to allow fair competition based on market rates. However, the construction industry is complex, and any quick and easy approach would have fallen short. The key to WorkForce West Virginia’s approach is using a survey to ask contractors what they are paying for various occupations. Of the 32 states that have prevailing wage laws, 31 use some sort of survey.
Critics argue a database from the BLS should have been the only source for this data, but they ignore the fact that BLS data does not contain any pension or health care information and includes data from the residential sector, which is very different from commercial and industrial work.
There are details in the survey method that may lower wages for many workers and create problems for contractors who want to bid using the wages established in the area, but we will just have to wait and see before judging how accurate the survey is.
WVE: Will the revamping of the prevailing wage rate contribute to the development of jobs?
SW: No. In some areas of the state, we believe wages will drop significantly. Recruiting new workers will become difficult, and training programs will be hard to support. The new large threshold—requiring prevailing wage only for projects more than $500,000—will open the door to contractors from out of the area who will use imported, low-wage labor. This will hurt local contractors and workers.
Taxpayers expect their money to help the local economy grow, and they certainly don’t want their money to pay for contractors and workers from outside the region. A major report that studied school construction in surrounding states concluded that West Virginia schools are already built cheaper on a per-square-foot basis than schools in the non-prevailing wage rate states of Virginia and North Carolina. Simply put, cutting wages does not bring great savings to taxpayers.
WVE: Work force training is an important component of a strong job market. What is being done in the construction industry to train the future work force, and are we on the right track?
SW: In May, Governor Tomblin held the state’s first Workforce Summit, during which he emphasized that a skilled, productive work force is key to our competitive stance regionally and globally. I couldn’t agree more. The apprenticeship method of training is used extensively in the unionized sector of the construction industry and is a great success. Consequently, our work force is among the most highly skilled and productive in the world.
The combination of on-the-job and classroom training has a proven track record. Funded by both labor and contractors, the craft programs range from two to five years in duration and accept around 500 new apprentices annually.
WVE: What kind of impact can a right-to-work law have on a state’s economy?
SW: Right-to-work clearly lowers wages. The median household income of West Virginians would go down by what some estimate to be $1,272 per family if the law passed. In West Virginia, which already has a low median income, the right-to-work law will only push wages down further.
While the name of the law has some appeal, there are no rights that are enhanced or jobs that are gained with passage. In the end, this is about politics, not economic development.
