Key senator unsure about prevailing wage amendment (UPDATE)

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Even as state lawmakers listened to testimony Tuesday on a bill that would repeal the state’s prevailing wage laws, one of the main supporters of the proposal was calling for a change that would keep the government-set compensation rates in place for state projects.

Still, a state senator with a crucial vote on Senate Bill 49 — which would eliminate the requirement that prevailing wages be paid on most public projects — said he needed more time to decide if he could support the proposed amendment, which would exempt cities, villages, towns and counties from having to pay the government-set compensation rates. State Sen. Howard Marklein, R-Spring Green, said he continues to work with other lawmakers on a range of possible reforms that would stop short of repealing the state’s prevailing wage requirements.

Marklein is one of five lawmakers who have a seat on the state Senate’s Committee on Labor and Government Reform, which held a public hearing on SB 49 on Tuesday. Of the three Republicans on the panel, Marklein is the only who has said he does not support the legislation.

Still, because the two Democrats on the committee — Sens. Chris Larson of Milwaukee and Bob Wirch of Kenosha — are almost certain to be against SB49, Marklein’s opposition makes it unlikely the bill would leave committee with a favorable recommendation. The Senate’s labor committee is scheduled to vote on SB 49 at a meeting starting at 9 a.m. on Thursday in Room 411 South of the state Capitol.

Marklein declined to say Tuesday what sort of reforms to the state’s prevailing wage laws he could support. Other lawmakers have said they are considering putting possible changes in the proposed 2015-17 state budget that is now making its way through the Legislature.

Although chances appeared slim Tuesday that SB49 would be adopted — at least without changes — dozens of representatives of the construction industry appeared at the public hearing to speak against the legislation. Many of their arguments centered on the idea that prevailing wages act as an important counterbalance to governments’ obligation to let contracts to the lowest responsible bidder.

Without the government-set rates, opponents of SB49 argued, contractors would find that they cannot win bids without greatly reducing what they pay their employees and cutting benefits. The resulting drop in compensation would cause people to leave the industry in droves, only to be replaced by workers with less training and experience.

Paul Christensen, chief executive and owner of H&H Industries Inc., of Madison, said it’s a misconception that the construction industry can make do with workers who have little in the way of schooling or training.

“I don’t need high school dropouts when we do trigonometry and math all day at our job sites,” Christensen said.

Peter James, president of H. James & Sons Construction, Inc., of Fennimore, said prevailing wage repeal would disrupt a system that ensures workers make enough money to pay for the training of the next generation of construction workers.

“(The bill) would destroy the stability of our industry … and create a vicious race to the bottom,” James said.

Other contractors countered by arguing that prevailing wage laws give rise to unnecessary regulatory burdens and absurd compensation arrangements. Steve Mueller, an owner of Osceola-based J&S General Contracting, said the government-set rates lead to an unfortunate division in the wages paid by his company.

On private jobs, which constitute 70 percent of the company’s projects, the rate typically ranges from $25 to $30 an hour. When doing public work, though, J&S General Contracting can be required by the state’s prevailing wage law to pay workers more than $50 an hour, a number that includes money for fringe benefits.

Mueller said the difference makes employment on public projects much more desirable. The resulting need to choose who gets the plum jobs, he said, can give rise to hard feelings among those who are left doing private work.

“They feel they are being penalized,” Mueller said. “They are asking, ‘Why did they not get that project?’ But, unfortunately, not everyone gets to go to that job.”

Also at the meeting Tuesday, various representatives of school districts, local governments and municipally owned utilities argued that repealing the state’s prevailing wage laws would prevent them from paying artificially inflated wages and thus would allow tax dollars to be stretched further.

In response, Peter Philips, a labor economist and professor at the University of Utah, noted that public officials by and large are allowed to consider only one thing when awarding projects: price.

“But that’s not the way it’s done in the private sector much of the time,” Philips said. “In the private sector you can compete based on quality, based on reputation, past performance, based on a whole range of connections. All of which means you might win the job without being the lowest bidder.”

Most of the seats set out for Tuesday’s hearing were occupied early in the morning, although the room cleared out as the day went on. Employees at the state Capitol also accommodated additional members of the public by opening two “overflow” rooms, one of which had about 30 people inside around 9:30 a.m.

Still, the crowd was not nearly as large as it was in February, when lawmakers debated the so-called right-to-work legislation that Gov. Scott Walker eventually signed the following month.

The Associated Press also contributed to this report. Follow @TDR_WLJDan