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What Would Killing The Prevailing Wage Mean For Louisville?


Kentucky lawmakers in the coming days will likely approve a measure to repeal the state's prevailing wage law.

The state House approved the bill Thursday in a 57-40 vote. It now moves to the Senate.

Paired with so-called right-to-work legislation, the two proposals serve as the cornerstone of a Republican upheaval of longstanding labor policies in Kentucky.

The state is among 30 that currently have a prevailing wage law on the books.

The law sets a base hourly rate for workers on public works jobs in the state that cost more than $250,000. Rates are based on wages of similar jobs in a region and determined by a state labor cabinet hearing or through adoption of federal prevailing wage rates.

For instance, bricklayers working on building projects in Jefferson County were guaranteed at least $24.03 an hour under the law, according to an August 2016 determination by the state's labor cabinet. Carpenters were promised at least $27.50 — and the list goes on to include nearly every element of large-scale construction: boilermakers, laborers, operators.

In Jefferson County, there are more than 600 public works jobs scheduled or in progress, according to the state's project database. Many of those fall under the prevailing wage law.

It's difficult to get an idea of just how a repeal of the law would impact Louisville and the city's development aspirations.

Mayor Greg Fischer's office, the city's economic development department and Jefferson County Public Schools all declined to speculate on the effect a repeal could have on the state's largest city.

'It's not the American way'

Experts in the fields of labor and development, however, are happy to discuss the proposal and the effects that may come.

Jeff Hudepohl is president of Valley Interior Systems. His company got a $9.4 million contract to hang drywall and metal studs on nine floors of the luxury Omni Hotel and Residences under construction in downtown Louisville. That project falls under prevailing wage law.

He calls prevailing wage a "good, fair wage" and praises the law for its requirement to provide benefits to workers, like health insurance. He especially likes the incentive it gives to workers to pursue a career in the trades.

Repealing the law, Hudepohl said, would undercut productivity and quality on projects in Louisville. He said nixing prevailing wage requirements opens the door for scrappy, shoddy craftsmanship.

"It's not the American way," he said.

Tom Carrier, a spokesman for the local ironworkers union, said repealing the prevailing wage law would be an insult to skilled workers because it'd likely lead to lower pay. He chastised lawmakers ushering in the repeal for sending a message that skilled workers aren't worth the paychecks they're currently earning.

Those in favor of the bill, like Greater Louisville Inc., the city's chamber of commerce, praise the repeal for its potential to lead to vast cost savings on construction projects.

Carrier dismissed that notion. He said while workers' wages may decline, the costs of materials and overhead would remain the same.

"No one is taking a cut except the guy at the end of the tool," he said.

Sarah Davasher-Wisdom is chief operating officer at GLI. She said the group has long been pushing for prevailing wage repeal and is looking forward to the measure passing.

She said the cost savings to come from a repeal would allow for more investment in other projects and boost competition on public works projects. Smaller companies sometimes can't pay what prevailing wages require and, therefore, can't bid on jobs, she said.

"We do not think it levels the playing field," she said of current prevailing wage law.

And, she said, there's no guarantee workers would get less pay with no prevailing wage.

"The free market determines these things," she said, adding that contractors may pay workers higher wages to get quality work.

Tim Lucas, an architect and consultant, testified before a state House committee this week. He presented data from a 2001 study by the Legislative Research Commission that says a repeal of Kentucky's prevailing wage law would save about 12 percent of the overall construction cost on public works projects.

But another study, authored by two economists and presented to the Kentucky State Construction and Trades Council in 2016, found the overall burden to taxpayers would increase with a prevailing wage repeal.

That study says incomes for construction workers would fall 10 percent, which would result in less spending and more dependence on public assistance. In addition, the study found some 3,000 jobs would be lost and the state would miss out on some $400 million in economic activity.

Jacob Ryan is an award-winning investigative reporter who joined LPM in 2014. Email Jacob at jryan@lpm.org.