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City Council discusses prevailing wage

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Bemidji, 56619
Bemidji Minnesota P.O. Box 455 56619

A group of contractors and union representatives appeared before the Bemidji City Council on Monday and asked city officials to consider enacting a prevailing wage ordinance for city-funded construction projects.

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Prevailing wage policies oblige contractors to pay their workers the average regional wage, calculated by county.

According to supporters, such a policy would prevent contractors from paying their employees lower wages in hopes of submitting a lower bid on a project.

Thus, the contractors who are more efficient, more skilled and more productive will take the bid, explained Jessica Looman, who works with the Laborers Union.

"They can do it better - they're the better contractors," she said.

A prevailing wage policy also would also allow local workers access to health care and other benefits, she said.

Looman, a staff attorney with the Laborers District Council of Minnesota and North Dakota, led the presentation to the City Council, which did not take action during the hour-long work session.

Bemidji already requires prevailing wages in projects that are funded with state or federal dollars.

The U.S. government in 1931 approved the Davis-Bacon Act, a national prevailing wage law that requires construction contractors working on federally funded projects to pay workers based on area standards.

In 1973, Minnesota approved the Prevailing Wage Law after out-of-state workers, earning less than local workers, were hired for a University of Minnesota farm project, according to Looman's presentation.

She said that at least 22 Minnesota communities, including Duluth and Grand Rapids, have since enacted their own prevailing law policies.

Councilor Roger Hellquist said Beltrami County also has a prevailing wage policy in place.

"Many communities within the state have looked at their own construction dollars ... and decided that prevailing wage makes sense for them," Looman said.

Councilor Nancy Erickson said a prevailing wage policy would require taxpayers to pay a worker on a city project more than he or she is making now. But the taxpayer himself is not making any more money, she said.

"That's very difficult for me to support," she said.

But whether a prevailing wage policy would result in a higher project cost was not clear.

Looman and other union representatives cited a January 2007 study from the Minnesota Office of the Legislative Auditor that showed prevailing wages do not result in higher costs and such policies are "cost-neutral."

It is difficult to gauge, she said, but studies have compared school projects in prevailing wage versus non-prevailing wage instances and have found that the costs are about the same.

"It doesn't raise the cost of doing construction," Looman said.

City Engineer Craig Gray said there may be no or very little increase in project costs for large-scale projects, such as the proposed events center, but that the cost of local paving projects would probably rise.

He noted that the City Council does not necessarily need to adopt an ordinance requiring prevailing wage - it could just include the requirement for certain projects.

He also stressed that the engineering department at City Hall sets the specifications of a project and enforces those with the construction companies hired to do the work.

"You don't need prevailing wage to ensure we are getting our roads built (well)," he said.

Looman said he was correct on both points.

"By adopting a policy or ordinance, what City Council members are saying is that the city of Bemidji believes in wages and good-paying jobs for its citizens," she said.

Councilor Jerry Downs noted that everyone who attended the meeting on behalf of the contractors were union members. It felt like a "special interest group," he said.

Steve Inkel, the owner of Diversified Builders, explained his decision to join the union four years ago after having been a contractor for 27 years.

He said he was paying his employees good wages and benefits, but he learned he could pay the same amount of money and not only offer benefits to the employee but that employee's family as well.

"I went to the union just because of the benefits for my guys," he said.

The benefits allow his employees and families to save for the future and develop financial plans for retirement, he explained.

"That's a big part of the quality of life up here," Inkel said.

Erickson asked him whether he would agree that, because of Bemidji's size, she could depend on city staff to hear about which contractors are good, solid contractors who pay their employees well and have excellent work habits.

"Now you're relying on a judgment call," Inkel said.

The contractors and union representatives said it was not a union versus non-union issue but a prevailing wage issue.

The Minnesota Department of Labor says that union wages are the prevailing wage rates for only half of all construction job in the state, according to Looman's presentation. (The prevailing wage determination for Beltrami County is available online at workplace.doli.state.mn.us/prevwage/commercial_data.php?county=04)

Usually, prevailing wage is lower than union wages, Looman noted.

City Attorney Al Felix said the policy questions surrounding prevailing wages should continue to be explored - but he also told the council to consider practical matters, such as who would enforce the policy and how enforcement would be done. Who on city staff would be asked to settle disputes between an employee and the contractor?

Downs said the council will take the information under advisement and continue to consider the issue in the future.

"This is the beginning of the discussion, not the end of the discussion," he said.

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