(Sean Whaley/Nevada News Bureau) – Members of the Republican Assembly Caucus today called on state Labor Commissioner Michael Tanchek to delay implementation of a new prevailing wage rate in Nevada until the Legislature has an opportunity to review the methodology.
The caucus is concerned a flawed process resulted in the new prevailing wage rate that took effect Oct. 1. There is a 30-day period to file an objection.
In a letter sent to the commissioner, the caucus is challenging the legitimacy of increases to the wage on public construction when the wage rates on private construction have decreased with current market conditions.
“When the wage rates being paid on public works projects are 43 percent higher on average than wage rates being paid in the private sector, something is wrong with the formula,” said Assembly Minority Leader Pete Goicoechea, R-Eureka. “All of us support a fair wage for those who do public construction but in these economic times we cannot afford a more than fair wage.”
According to an analysis done by the caucus, the average prevailing wage has gone up about 3 percent statewide with gains in some counties being offset by decreases in the rural counties. However, in Carson City where much of the construction for state government is performed, the proposed rate increase is nearly 8.5 percent.
“No one will dispute that the wage rate being paid by the private sector has gone down based on current economic conditions,” said Assemblyman James Settelmeyer, R-Gardnerville. “And Nevada’s own Department of Employment, Training and Rehabilitation’s reported wage rate confirms that, so how in the world can we have an increase in the cost of public construction labor? A flawed methodology for determining the rate, that’s how.”
The letter to Tanchek is a formal protest to the rates recently released by his office.
Tanchek was not immediately available for comment on the letter.
The letter says: “Frankly, we are stunned that in this economic environment where private sector construction has, for all intents and purposes, come to a complete halt, the average prevailing wage rate for public construction in Nevada could be increased.”
“We recognize that your office simply collects and reports this information based on a formula prescribed in state law,” the letter says. “However, given the unprecedented economic crisis we find ourselves in, the record unemployment we face and the staggering budget shortfall that will confront us in the next session, we felt compelled to submit this protest as a way to begin a public dialogue on this outrageous situation.”
State law requires the commissioner to survey contractors who have performed construction work during the past year in order to determine the prevailing wage rates. Prevailing wage rates are required to be paid on all Nevada public works construction projects such as schools, libraries, roads and government buildings costing more than $100,000.
The information obtained from the surveys is loaded into a computer program which calculates the prevailing wage rates on a county-by-county, job classification basis.
If no rates are reported for a craft in a county, the commissioner must rely on wage rates as reported for the nearest county that has a rate. Many times a low-population county can end up with the same rate as established in Clark County for a particular craft because no rural numbers were reported.
Goicoechea said: “We are faced with unprecedented economic challenges in this state. We have record high unemployment, we have implemented state worker furloughs, and we have asked our state agency heads to renegotiate contracts where possible; how can we, in good conscience, allow the cost of public construction to increase?”
“We all want to create new jobs, especially in construction, but simple economics dictates that if you overpay those currently working, the result is fewer new jobs,” Settelmeyer said.