(Michael Chamberlain/Nevada Business Coalition) – One thing that most everybody can agree on is that it doesn’t make sense to overpay for something. If you were at a gas station and noticed gasoline at one pump selling for one price and the same grade and type of gasoline in the pump right next to it selling for twice as much, would you buy the higher-priced gas? We would hope not.
Yet the state of Nevada and every municipality within it does precisely that every day. By mandating that contractors pay prevailing wage rates on public works projects they spend additional money needlessly. Since these extra costs are passed on, it is the taxpayers who ultimately end up footing the bill. And the amounts are staggering – more than a billion dollars worth in just two years according to a recent report.
This calculation reveals that taxpayers devoted $1.336 billion in unnecessary labor costs in just 2008 and 2009.
While this over-spending is a windfall to politically connected trade unions, it necessarily means far less money is available to pay for basic government services. This drives union-complicit lawmakers to whine about “insufficient revenue” for the next budget cycle, whereupon they try to impose even higher taxes on Nevada families and businesses. It is a vicious circle in which lawmakers loot the public and funnel the money to unions.
These same lawmakers are now pretending to “create jobs” in the construction industry through a “Nevada Jobs Fund” to funnel new money to trade unions in public works projects paying prevailing wage rates.
As we documented previously, prevailing wage rates provide compensation that is not only far above the wages determined by the free market in construction, in many cases these rates are substantially more than the average Nevadan was making even in the best of times. Many classifications of workers are paid at hourly rates that constitute more than $100,000 on an annual basis, and not just for highly-skilled positions.
These rates are calculated in a manner that often benefits union members, who generally receive compensation that is higher than that of non-union workers. As a result, the wage rates for many classifications continued to increase for years after the onset of the recession even as the pay of most construction workers plummeted. This was due to the lasting impact of collective bargaining agreements negotiated during the height of the building boom.
Still, many lawmakers refuse to consider reform of the laws and methods of calculations that result in such overspending and waste of taxpayer dollars. Is their loyalty to the taxpayers who pay the bills or the unions that benefit from the status quo? If lawmakers are serious about addressing the state’s budget issues, rather than being beholden to the unions, they will take steps to remedy the waste and distortion created by our current prevailing wage laws.
(Michael Chamberlain is Executive Director of Nevada Business Coalition.)
Facebook
Twitter
Pinterest
RSS