A Missouri Senate Committee discussed a handful of bills Wednesday that could overhaul the state's prevailing wage law.
More than a dozen bills in the House and Senate propose to repeal or overhaul the 59-year-old law, which requires construction workers on taxpayer-funded projects to be paid state-set minimum wages. Rural legislators and groups said current law harms rural towns, but a local contractor worried a repeal could lower wages and make it harder to find qualified employees.
Currently, workers on state and local public-works projects are required to be paid a minimum wage set by the state. The law is similar to the Federal Davis-Bacon Act, which requires workers be paid minimum wages on federal construction projects.
Each year, all contractors, both union and non-union, turn in the hours they work to the Missouri Department of Labor and Industrial Relations. Wages differ by occupation and county. Because local unions collectively bargain wages in each county, all union contractors are lumped into the same pool.
To determine the prevailing wage in each county, the state compares the number of hours worked in each county at the collectively bargained rate and the rate non-union contractors pay. The rate with the most hours worked each year prevails and becomes the wage for each occupation in each county.
On Wednesday, the committee considered four bills. Two propose to repealing the current law, while two recommend substantial overhauls. State Sen. Dave Schatz, R-Sullivan, said municipalities, schools and colleges are burdened by the current system.
"We will not go another legislative session without addressing prevailing wage," Schatz said.
Schatz introduced a bill that eliminates the requirement a separate average wage be created for different occupations. Instead, under Schatz's bill, the prevailing wage in each county would be set by average hourly wages for each county calculated by the Missouri Economic and Information Center and the Missouri Department of Economic Development.
Schatz's proposal also does not apply prevailing wage requirements to projects costing less than $500,000. This will eliminate about 86 percent of prevailing wage projects, he said.
Schatz said he wrote the bill to better reflect wages in rural areas. A 10 percent savings on prevailing wage projects would mean a savings of about $123 million, he said.
"The prevailing wage is typically twice as much as the average county wages," Schatz said. "The biggest complaint we have is actually paying a wage that reflects their local areas."
In 2011, the Missouri Supreme Court found the existing prevailing wage law includes routine maintenance work, as well as new construction. Several proponents of a repeal, including legislators, said the court's requirement maintenance projects be covered under the law became the tipping point in their opposition because this unduly burdened small cities.
State Sen. Dave Sater, R-Cassville, introduced a bill that exempts maintenance from the prevailing wage requirement.
"Our small communities in Missouri are struggling to fix their buildings," he said. "My goal is to help small communities not to go after the urban areas where perhaps prevailing wage laws make more sense for them."
Sater said the issue comes down to resources.
"Maintenance is a much more acute problem in the rural areas where there are fewer contractors and fewer resources at the county, municipal and school district."
Schatz and Sater also said many small contractors do not have the resources to report all the hours worked by employees of differing occupations.
Last year, a bill introduced by state Rep. Warren Love, R-Benton, to repeal the prevailing wage law passed the House. It died in the Senate, though, when it failed to pass before the session ended.
On Monday, the House also considered a handful of the dozen House bills that propose to repeal or alter the prevailing wage law. After the bill failed to pass, an interim committee met this summer with construction industry groups and officials from around the state to try to work out a compromise.
Proponents and opponents of a repeal split the hearing room nearly down the middle, with eight people speaking for a repeal and seven speaking against one.
Groups like the Missouri AFL-CIO, United Steelworkers and others spoke out against the bills. The Missouri Municipal League and Missouri School Boards Association were among groups endorsing some or all of the measures.
Ed Twehous, vice president of Jefferson City-based Frank Twehous Excavating, told the committee prevailing wage projects make up about half of his business. Frank Twehous Excavating employs more than 100 people in the Jefferson City area.
Twehous also represented the Associated General Contractors of Missouri at the hearing. AGC was one of several industry groups that worked with state Sen. Gary Romine, R-Farmington, to craft an alternative to the bills discussed Wednesday. Romine's bill exempts public projects costing less than $25,000 from prevailing wage requirements.
Twehous said later that high wages draw people into the construction field right now. If wages decrease because of a repeal of the current law, Twehous said people will simply choose to work at less-demanding low-wage jobs.
"People don't want to do the work; it's not a glamorous profession that we've got," Twehous said. "But right now, it's a good paying profession."
A repeal could also make a tight labor market even tighter if people choose to leave or not-enter the industry Twehous said. In December, Missouri had an unemployment rate of 3.5 percent, according to the Bureau of Labor Statistics.
Jefferson City's unemployment rate increased from 1.8 percent in October to 2.6 percent in November, the last month for which data was available. The Federal Reserve considers full employment as an unemployment rate of 5-5.2 percent.
"When wages go down and people can work indoors for the same wage as what I'm paying, it's impossible to hire people," Twehous said.