The Honorable Thomas P. Conroy, House Chair
The Honorable Daniel A. Wolf, Senate Chair
Joint Committee on Workforce and Labor Development
State House, Boston
 
Dear Chairman Conroy, Chairman Wolf and Members of the Committee:
 
On behalf of the cities and towns of the Commonwealth, the Massachusetts Municipal Association urges the Committee to report favorably on S. 893, An Act to Relative to Setting the Prevailing Wage Rate, filed by Senator Bruce Tarr.
 
Currently, the Director of the Department of Labor and Workforce Development has no role or responsibility in setting the prevailing wage rates. Collective bargaining contract rates serve as the minimum amount and the standard for determining these rates. This bill would amend the statute governing how prevailing wage rates are set. It would require the Director of the Department of Labor and Workforce Development to determine a prevailing wage rate after taking into consideration rates paid through a wider sample of collective bargaining contracts.
 
This legislation is critical for transparency and accountability when setting prevailing wage rates. For instance, the U.S. Department of Labor sets federal prevailing wage based on the average cost for job categories in a region. It is not limited to union costs. It includes all of the work being done in a category. The Department sets the wage, not the private owners and unions.
 
Many of the Commonwealth’s smaller communities are required to pay the prevailing wage rate for projects using the rate that is based on the labor market areas for larger communities (Boston, Springfield, Worcester) or arbitrary sub-regions. The statute’s original intent was to create a level playing field for the construction industry, giving local trades an equal chance to compete on public works projects. However, outside parties, primarily the construction unions and union contractors, now set wages that cities and towns must pay on construction projects, even though a majority of construction in the state is nonunion (“open shop”). In many smaller communities this mandates a pay scale based on the highest labor market rate in other regions, not on the local market.
 
The most significant problem is that the prevailing wage rates for construction or certain other projects such as school busing or trash collection are determined by the contracts negotiated between labor unions and union contractors without input from those cities and towns that actually pay prevailing wages. Obviously, the labor unions negotiate the highest rates possible for their workers. In addition, construction companies directly involved in negotiations sometimes receive a discount on the prevailing wage rate when bidding public work, undermining any incentive to moderate rates and further highlighting the arbitrary nature of the rates used in the present calculations.
 
Many communities, especially those with smaller populations or located in less urban settings would achieve significant savings if they could use local wages in the region, not the prevailing wage determined by actions outside the region. The prevailing wage law imposes a wage scale that does not compare with actual wages in many smaller communities. In some cases, the contractors hired by a municipality under prevailing wage receive much higher pay than municipal employees doing the same work. Furthermore, many projects do not go forward because they become unaffordable. The wage rates are a pass-through cost from the construction companies to the cities and towns, leaving no incentive for a moderation of the wage rates when negotiating a contract or when the bids are due at city or town hall.
 
We appreciate your consideration and strongly urge you to give S. 893 a favorable report. This legislation would give the Director of the Department of Labor and Workforce Development the authority to establish strong, fair and equitable wage rates across the Commonwealth. If you have any questions, please feel free to contact Tom Philbin of the MMA staff at 617-426-7272 at any time.
 
Sincerely,
 
Geoffrey C. Beckwith
Executive Director, MMA

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