Legislature(2011 - 2012)BARNES 124
03/11/2011 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB118 | |
| HB122 | |
| HB155 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 155 | TELECONFERENCED | |
| += | HB 122 | TELECONFERENCED | |
| += | HB 118 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 155-PUBLIC CONSTRUCTION CONTRACTS
4:15:52 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 155, "An Act relating to public construction
contracts."
4:16:13 PM
DON ETHERIDGE, Lobbyist, Alaska State AFL-CIO, stated that the
AFL-CIO is opposed to HB 155 in its current form. He related
that he has been working with the sponsor's office for
solutions. The topic of the threshold has been "hammered on" so
he will cover another aspect. He also related that the AFL-
CIO's major concern is the definition of "maintenance" since it
could be expanded to cover from Fairbanks to anywhere in the
country. The rate could be zero but could circumvent the Little
Davis-Bacon rates by defining the work as "maintenance."
4:18:10 PM
MR. ETHERIDGE recalled Representative Tammie Wilson's testimony
with respect to the road service areas (RSAs). He explained he
serves on the Juneau Docks and Harbor Board and the process they
use to issue a "time and materials" contract is a similar to the
ones the RSAs use since the contractor may perform some
electrical work today and need plumbing tomorrow. He offered
his belief that the issue that has caused the RSA's concern is
that the project costs are added together and put it under one
contract instead of issuing separate contracts.
4:18:55 PM
MR. ETHERIDGE related that he has held conversations with many
nonunion contractor friends who are not testifying today because
they don't want to lose their jobs. He indicated his friends
have related that they are able to work due to the small
residential remodels between construction seasons but nonunion
workers also count on Little Davis-Bacon (LDB) wages to keep
"their heads above water." He also recalled earlier testimony
on prevailing wages. He reported the first prevailing wages in
Alaska were established in 1960 based on the 1959 changes to law
and at the time the average wage was $5 per hour. Currently the
prevailing wages average $50 per hour, which is a ten-fold jump.
Using those figures, he extrapolated the threshold would be
$20,000, based solely on the wage changes.
4:20:40 PM
CHAIR OLSON recalled reviewing research on the prevailing wages
for 1935 which indicated a range for the prevailing wages from
$.50-$1.50 per hour. He reiterated the last time the threshold
was changed was in 1935.
MR. ETHERIDGE pointed out 1960 was the year when the Alaska
prevailing wage went into effect.
CHAIR OLSON agreed that his office has been working with a
number of the stakeholders, including unions, municipal
organization, and sever municipalities. He reported progress is
being made. He agreed the crux of the issue is the definition
of maintenance.
MR. ETHERIDGE agreed. He hoped for a reasonable solution that
would work for everyone.
4:22:35 PM
REPRESENTATIVE SADDLER inquired as to whether he could give him
a rough idea, a "gut feeling" of the amount of construction in
Alaska is subject to the LDBA and for the amount performed
outside the act.
MR. ETHERIDGE offered his belief that the LDBA projects would
include a minimum of 65-70 percent of the public construction
contracts, but the figure would not include homebuilding or home
remodels.
4:23:39 PM
REPRESENTATIVE MILLER recalled working construction year round
on the East Coast. He asked for an estimate of a long
construction season in Alaska.
MR. ETHERIDGE pointed out that he worked as the business agent
for the laborers union. He indicated the construction period
ran from mid-April to the beginning of September. He offered
that some work such as high-rise construction could be done year
round. He offered his belief that most of the crews were back
in the hall by the mid to the end of September and by end of
April.
REPRESENTATIVE MILLER related his understanding that the
construction season lasts about seven months and workers are
working to make a year's worth of wages during that time.
MR. ETHERIDGE answered yes.
4:25:16 PM
BRETT ALLIO, Manager, International Brotherhood of Electrical
Workers (IBEW) 1547, agreed it is not a union versus nonunion
issue but the issue relates to all of Alaska's workers. He did
not think the issue of contractors coming in from Lower 48 would
be based on a set dollar amount. He pointed out that
contractors come to Alaska to work on big chain stores and since
they are already mobilized would be more likely to bid on other
jobs. He indicated that the cities, state, and municipalities
currently employ maintenance people to perform snow removal,
brushing, and street cleaning. He recalled that in Juneau the
docks & harbors maintenance work is contracted out. He
suggested that the definition of construction includes
maintenance it may not be necessary to have a separate
definition for maintenance.
4:29:07 PM
BENJAMIN STEWART stated that as a retired union employee he
feels like he is in the shadow of death among friends. He said
that he has been a Teamster, an operator, a laborer, but
currently is a road service area (RSA) chairman. He pointed out
that his RCA has 92 lots in his service area which collect
$24,000 in taxes. The road service area (RSA) saved money to
get the road paved, but only one contractor bid under LDBA
wages. He would like to see the threshold raised. He did not
see many larger local construction companies bidding on the
borough service area jobs. He recalled that approximately 107
different service areas exist in Fairbanks. He pointed out that
not all are taxed as high as his service area. He offered that
he cannot obtain a bid for asphalt or diesel since prices have
substantially increased in the past three or four weeks. He
recalled that a load of gravel used to run $150 for D-1 gravel,
but under LDBA provisions it is costing nearly $500 per load so
many service areas do not tax themselves enough to cover
maintenance. He said, "We're one of the luckier service areas.
At the same time, I don't like to see my brothers here out of
work, but when you've got a service area and you need service
work done it's not always some new construction, it's
maintenance. I think that's where a lot of the problems come in
hand." He added he plans to travel to Juneau to personally
discuss this issue.
4:32:30 PM
SHAWN TUFFORD stated that he is an Alaskan resident and
construction worker. He related he researched what happens when
LDBA laws are basically "repealed." He cited his source for
prevailing wages and government contracting costs from the
Institute of Social and Economic Research (ISER) 2008. The
report concluded that an overwhelming preponderance of the
literature shows that prevailing wage regulations have no effect
on the cost to government on contracted public works projects.
Workers on prevailing wage contracts tend to be higher skilled,
better trained, and are less prone to serious and fatal injuries
on the job site. Prevailing wage regulations contribute to
enhanced tax revenues and higher wages support consumer
spending. Prevailing wage regulations discourage unscrupulous
contractors who typically cheat on payroll taxes, employ a low-
skilled workers and skirt health and safety requirements on the
job site. Prevailing wage regulations also help expand
apprenticeship training programs which enrich the community by
offering avenues for residents to secure good paying middle
class jobs. Removing prevailing regulations and thereby
lowering wage and benefit standards shifts substantial costs
onto taxpayers by pushing workers into requiring more subsidies
in health care, housing, and other social services. It also
displaces or diminishes middle class jobs that have
traditionally supported local consumer spending which hurts
local business. In response to Chair Olson, he stated he would
forward copies of the reports to the committee.
4:36:02 PM
LINDSEY HILL, Member, Carpenters Local 1243, testified in
opposition.
4:36:56 PM
ROBIN KELLY, Member, International Brotherhood of Electrical
Workers (IBEW) 1547, stated that he is representing himself, his
family, and his future. He joined the construction industry
since he saw a future in it but that future is unclear with the
proposed adjustment to the LDBA's threshold. He thought the
effect would be to allow the lowest bidding contractor to bring
a labor force from the Lower 48 and pay them a non-competitive
wage. He thought to do so would jeopardize not only his future
but the future of every hard-working Alaskan.
4:37:35 PM
PHILIP ROBERTSON stated he has been employed in the construction
industry for over twenty years as a project supervisor. Many of
the projects he has overseen under $75,000 have been under LDBA
wages. He predicted that lowering the threshold would have the
effect of lowering the standard of living, and reducing workers
wages would also reduce the amount of taxes they pay. He
pointed out that with the short construction season in Alaska
that workers need to make as much money in Alaska during the
summer. He asked the committee who would benefit from the bill.
CHAIR OLSON answered that the municipalities and boroughs have
requested the bill. He pointed out that the threshold has been
amended down to $50,000, which has not been changed since 1935.
The prevailing wage in 1935 was $.50 to $1.50 and the threshold
has not been reviewed in 71 years.
4:39:31 PM
MR. ROBERTSON was still unsure who would benefit. He asked
whether committee members are willing to take a pay cut of 30-40
percent if he is going to be expected to do so if he cannot earn
prevailing wages.
CHAIR OLSON related that the committee is not in the position to
debate but most members took a pay cut when they decided to run
for office.
4:40:08 PM
DAVID RUIZ related that he has been a construction worker for 29
years. He stated he is here to testify in opposition to HB 155
and the effect it will have on Alaska Statutes, Title 36. He
asked members to leave this law alone and do not amend it.
4:41:01 PM
DIANA RUHL, Member, International Brotherhood of Electrical
Workers (IBEW) 1547, stated that she believes this bill will
have a negative effect on working families in Alaska whether
they are union or nonunion. She offered her belief that this
would have a negative effect in communities. She indicated with
a lower threshold on the LDBA wages, the state will lose the
mechanism that encourages and enforces local hire. She
predicted Alaskans will see more money leaving the state for out
of state workers. The residents of Alaska would also have less
ability to provide for families. This proposed change to the
threshold could potentially cost more if lower skilled workers
are used to perform the work and the work ends up needing to be
redone. She expressed her concern about public safety with the
maintenance language changes as part of this bill.
4:42:20 PM
LARRY TALBERT, Member, Plumbers & Pipefitters, urged members to
oppose this bill. He expressed concerns that this house bill as
currently written would have a drastic effect on Alaska's
workers. He related a scenario in which the Atwood Building in
Anchorage had to undergo a domestic water replacement project.
The project would be exempt from the LDBA requirements under the
definition of maintenance even though the overall estimate would
be in excess of $1 million since it would be considered to bring
the structure up to its original condition. He also thought
this bill would open the floodgates for out of state contractors
to the detriment of Alaskan contractors and workers. He
concluded by urging members to oppose the bill.
4:43:59 PM
PAT FALON, Member, Laborers Local 341, stated that he is a
concerned citizen who has worked in the construction industry
for 21 years. He said he has raised his family in Alaska by
working in construction. He also felt blessed that wage and
safety was important to his employers. He urged members to vote
against this bill. He offered his belief that this bill would
only invite out of state more out of state contractors who are
not familiar with Alaska's construction environment. He
suggested that the out of state contractors would have unskilled
work force working on projects which could endanger the public,
including school children. He urged members not to change the
threshold. He stated that this is not a union or nonunion
issue. There is not any reason to "reinvent the wheel." He
concluded by asking members to leave the bill alone.
4:45:16 PM
DAVID MCALLEN Member, International Brotherhood of Electrical
Workers (IBEW) 1547; Statewide Training Coordinator; Alaska
Joint Electrical Apprenticeship & Training Trust (AJEATT),
stated that he is testifying first and foremost as a lifelong
Alaskan. He offered that he is the statewide training director
for the AJEATT, which is the largest apprenticeship in Alaska.
He said, "We hear a lot about fiscal responsibility and we hear
about wise use of state resources." He offered his belief that
paying a fair prevailed wage is a good use of our resource. He
related the 125 employers he represents provide their workers
with a decent wage. He pointed out that these employers
dedicate $.65 of their prevailing wage rates to training and
safety training. In Alaska he represents 400 workers in the
electrical trades who receive an education from a self-funded
self-reliant program. He indicated his bargaining unit has
decided providing this training is an appropriate use of the
money. Collectively journeymen and apprenticeship employees
have elected to pay for cross training and safety training. He
said he thought this was a wise use of our human resources. He
summarized testimony earlier in the week from small communities
concerned about paying $22 per hour of their finite resources.
He emphasized his belief that $22 per hour does not represent a
livable wage and workers are also consumers who buy cars and
groceries in communities. He highlighted that cheaper is not
always better. He did not think the state would be doing the
right thing to seek cheaper labor when it is the public entities
that should pay a livable wage and reinvest in our communities.
He spoke in opposition to HB 155.
4:48:28 PM
JOHN SWORTFIGUER, Member, Laborers Local 942, stated his adamant
opposition to HB 155. He related the LDBA is a Depression Era
piece of legislation, which provided a tool to ensure that
workers a fair wage and provide contractors an opportunity to
bid competitively on local government projects. He did not
understand the motivation to strip wages worker's wages are
barely keeping up. He thought that to "tinker" with this in the
surplus economy is an affront to workers in Alaska. In response
to Representative Miller, he acknowledged the bill originated in
the 1930s to prevent outside workers from taking opportunities
away from local workers. In further response to Representative
Miller, he agreed the current economy does feel depressed. He
pointed out the numerous foreclosures. He characterized the
times as fairly perilous. Worker invests in their communities
and the social integrity of communities should not be toyed with
nor should the livelihood of workers.
4:51:01 PM
ERIC SLAY stated that he is a second generation Alaska Native.
His parents moved to Fairbanks in 1955. He predicted that if
this bill passes wages will plummet for union and nonunion
workers and he may not be able to afford the high cost of living
in this state. He did not think nonunion bids would drop
significantly, just enough to win the bid. He offered his
belief that workers will receive half the pay. The extra money
would be kept by the contractor. He thought out of state
contractors would win bids. He questioned whether some would
even be American citizens. He emphasized that the funds should
stay in Alaska, noting Alaska has resisted the effects of the
recession since the money stays in the state. He said, "Our
state is strong because of our labor and our state is strong
because we keep our money in our state." He asked if anyone in
the legislature is against hiring Alaskan workers or having a
strong economy and if so voiced that if anyone does they do not
belong in this position.
4:52:45 PM
JUSTIN JACKSON, Member, Carpenters Local 1281, spoke in
opposition to HB 155. He stated that opponents have developed
many arguments against the Davis-Bacon Act including increasing
the dollar threshold claiming it is harder to administer,
expensive, and unnecessary. He offered his belief that these
arguments are false. He said that paying workers a prevailing
wage is not expensive but paying workers a low wage is
expensive. He stated that low-wage low-skilled workers often
take longer to perform work and are not as skilled because they
usually have not been trained as well as higher paid workers
whose work often may need to be redone. Low-wage workers must
sometimes rely on government assistance to provide for their
families. They also contribute less to the economy since they
purchase less and pay less in taxes to local and state
government. He asked how a law could be unnecessary when it
requires contractors to pay their workers that are prevailing in
the local area. He quoted U.S. Senator Robert L. Bacon,
Republican, New York, when he proposed his first prevailing wage
bill in 1927 as saying: "It is highly desirable, of course,
that the federal and state building program should not tend to
have the effect of upsetting labor wages and labor conditions in
any community." He related his understanding that this is what
HB 155 would do. The LDBA fulfills the intent to protect local
labor standards by helping to ensure the preservation of a
community's general welfare. He related these are the reasons
for his opposition to HB 155. In response to Representative
Saddler, he answered that he researched U.S. Senator Bacon on
the Internet.
4:55:09 PM
RAYMOND DELL, Member, Carpenters Local 2247, stated that the
effects of HB 155 would adversely affect the quality of life for
all Alaskans and their families actively involved in the
construction trade. He predicted that this bill would allow
cheap outsourced labor to be earned in Alaska and spent
elsewhere. He offered his belief that Alaskan carpenters are
skilled whether they are union or nonunion workers and demand a
high wage to offset the higher cost of living in Alaska. It
also provides the basis for providing the wage scale for
nonunion workers. The prevailing wage laws are a testament to
those who provide the knowledge and skill that built the state's
infrastructure, including schools, government, and highways.
Additionally, the LDBA wages offset the lack of insurance and
retirement for nonunion workers. He also stated that the LDBA
encourages hiring skilled laborers and encourages youth to
become skilled-trades workers. He further stated that
construction workers average wages are $578 week, $30,058 per
year. He pointed out that people claim the Davis-Bacon results
in discriminatory hiring practices and lower wages. The
University of Utah studied nine states that repealed its LDBA
laws, which showed a major decrease in minority enrollment for
apprenticeship programs from 20 to 12.5 percent. The same study
showed a 15 percent increase in serious injuries after the LDBA
was repealed. Additionally, the study showed a 12 percent
increase in "lost work" days which is magnified in Alaska due to
its shorter construction season. Higher wages translates to
higher production and lower costs. He concluded by saying that
higher wage states with LDBA built highways for 18 percent less
than low-wage states.
4:58:48 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 155.
[HB 155 was held over.]