Op-Ed Gets Facts Wrong on Prevailing Wage
Yesterday, an op-ed appeared in the Charleston Daily Mail penned by Bryan Hoylman, the president and CEO of the Associated Builders and Contractors of West Virginia. Mr. Hoylman's op-ed was strongly anti-prevailing wage, going so far as comparing the state's prevailing wage to "larceny." But, while the op-ed was strong on rhetoric, it was weak on the facts, making several claims that were distorted or flat out false about the state's prevailing wage.
First, the op-ed stated the West Virginia's prevailing wage has increased 24% since 2008, outpacing wage growth in every other industry in state. This simply is not the case, and a simple check of the statistics proves it to be false. First, the state doesn't have one prevailing wage rate, it has 2,640, for 48 different occupations in 55 counties, and they have all changed at different rates, some more than others. But for simplicity's sake, we can average the 48 occupations together in one county. So, for Kanawha County, the average prevailing wage rate has increased from $24.81 in 2008 to $29.49 in 2015, an increase of 19%. Why is it not 24%, like in Hoylman's op-ed? Because the op-ed is including fringe benefits. For Kanawha County, including fringe increases the growth rate to 26%, since, as everyone is familiar with, health care costs are growing faster than the overall economy.
Including fringe benefits when comparing the prevailing wage growth to just wage growth in other industries is another misleading apples to oranges comparison, since fringe benefits are only included for prevailing wage and not in industry wage statistics. When comparing the prevailing wage basic wage rates growth (not including fringe benefits), to average wage growth from the BLS Current Employment Statistics (also not including fringe benefits), it's clear that the growth in WV's prevailing wage rates is right along with most other private industries.
Next, the op-ed goes after fringe benefits themselves, arguing that they, too, are inflated compared to the rest of the economy. The op-ed states that under prevailing wage, construction workers are mandated, "to be paid anywhere from 50 to 80 percent of their pay package for benefits," while the Census Bureau shows that under normal circumstances, "employee benefit packages equal roughly 25 percent of their pay."
Either through a misunderstanding or ill intent, the op-ed is twisting the definition of pay to make prevailing wage look inflated. According to the Census, in March 2015, employer costs for employee compensation averaged $33.49 per hour, which included $22.88 in wages and salaries, and $10.61 for benefits. So, of total compensation, wages were 68% and benefits were 32%.
Let's look back at Kanawha County's prevailing wage. Under prevailing wage in 2015, total compensation averaged $47.86, which included $29.49 in salaries and $18.37 in benefits. So, for prevailing wage, of total compensation, wages were 62%, and benefits were 38%, pretty close to the average from the Census, but nowhere near 50-80%.
So where does the 50-80% claim come from? It appears for prevailing wage, the op-ed is calculating benefits as percent of wages, which is in that range for most occupations, rather than calculating benefits as a percent of total compensation, as the Census does. Comparing benefits as a percent of wages to benefits as a percent of total compensation isn't a comparison at all, they are two entirely different figures. The statements in the op-ed are completely wrong.
The op-ed also gives an example of a flag-waver earning $42/hour (including benefits, if the op-ed didn't make that clear), when in the "market" unskilled labor earns around $10/hour, as an example of the prevailing wage gone wild. First off, flag wavers are generally found on road construction projects, which, since they are largely federally funded, are subject to the federal prevailing wage law. West Virginia's law has no relevance there. But the author may be surprised to learn that in the "market," according to BLS statistics, only 10% of "construction laborers" earn $10/hour or less.
Regarding the recently passed law, and the controversy over its implementation, the op-ed states that the law specifically cites how to calculate the new wage, when in fact, the law simply states that Workforce WV shall determine a new methodology "as evidenced by all appropriate economic data, including, but not limited to, the average rate of wages published by the U. S. Bureau of Labor Statistics," with no specifics at all.
Finally, the op-ed states that the temporary repeal of the prevailing wage, "may ultimately save taxpayers millions of dollars in just a few months." This flies in the face of all the available evidence. Not only is there no evidence that West Virginia's prevailing wage law has added to the state's construction costs, there's no evidence that repeals of prevailing wage laws save any money, as Kentucky, Ohio, Michigan, and Kansas have all learned.
Contrary to the rhetoric, the facts make it clear that West Virginia's prevailing wage law is a good deal for the state, and helps create a more productive and efficient construction industry. The savings and benefits promised to states that repeal or weaken their prevailing wage laws have always failed to materialize. Doing so in West Virginia would hurt local workers, send tax dollars out of state, and provide the public with a poorer return on its investment.
Correction: The op-ed author is Hoylman, not Holyman.