Tuesday, February 3, 2009

Prevailing wages on state jobs

Count me as a big supporter of the new bill by House Democrat John Soper,

House Bill 1208, by Rep. John Soper, D-Thornton, would require contractors to pay "prevailing wages," set by the U.S. Department of Labor.

Prevailing wages are routinely paid by union shops but not by independent contractors.

Opponents say the bill would greatly increase the cost of projects.

But union backers argue that the state needs to step in and demand that employees get paid decent salaries and have health care covered by their employers.

With Colorado expecting hundreds of millions of dollars for public-works projects as part of a federal stimulus package, the proposal is likely to kick up a huge debate.

The act of construction alone is not in and of itself stimulus. The economic stimulus occurs when the companies that engage in the construction hire workers and pay them wages. The workers in turn will spend those wages on goods and services and thus the stimulus money circulates through the economy.

Job creation is often touted as the end goal of the economic stimulus but really the end goal is the circulation of the stimulus dollars throughout our economy. Putting people to work is great but they need to be paid well enough that they're not just saving or paying off bills but actively spending. During the Depression the workers employed by the Civilian Conservation Corps lived in tent cities on their job sites, many in remote places. In order to ensure that their earnings circulated back into the general economy workers were required to send $25 of their $30 monthly earnings home. That amounts to 83% of their total wages that they were required to remit in order to stimulate the economy.

Prevailing wages are calculated for each country. In Denver prevailing wages for a brick layer are $22.55/hr, that works out to $46,000 a year. That's right between the median income for Denver County and the median income for the state of Colorado. In other words, that's a fair and equitable wage.

I understand that this will be a bloody partisan battle but Representative Soper is working from a sound base both economically and historically. Republicans like Cory Gardner are free to take their shots but the fact of the matter is the end game here is consumer spending and without increased consumer spending we're all sunk.

No comments: