Understanding the Prevailing Wage

There's a legal fight going on that may be spilling over to the ballot box. Last month, the Portland Development Commission won a ruling that said that they don't have to pay the prevailing wage on some projects, even if they are partly funded by city dollars.

So, now some labor unions are taking the fight to the political arena. From an Oregonian news story last week:

Frustrated by the agency's opposition to the so-called prevailing wage, union heavyweights have paid visits to three Portland city commissioners. Within a month, the unions plan a poll and focus groups to gauge public opinion on the agency and the prevailing wage.

If the public is as skeptical as he is, union leader Bob Shiprack says, unions may push for an initiative that would give the City Council more direct oversight of the agency. The union push joins rising political unrest from city commissioners that the PDC isn't following the council's lead.

OK, but what is this prevailing wage? And why does it matter?

Oregon AFL-CIO president Tom Chamberlain and Oregon State Building Trades Council executive director Bob Shiprack wrote this in an op-ed on Monday:

The problem is this: The PDC spends a quarter-billion dollars a year on construction projects. Because this is taxpayer money, the commission must comply with several standards that meet the community's priorities -- including fair wages and benefits as determined by the state's prevailing-wage law. This law simply assures that developers who get public contracts pay the community's average market wage for a given trade.

The prevailing-wage law is a common-sense way to create family-wage jobs, keep dollars within a community and ensure that taxpayers get quality work done by skilled workers. It's a fair and reasonable law that results in increased productivity and accountability.

But shouldn't PDC seek to cut costs whenever possible? Again, Chamberlain and Shiprack:

We don't waive the state's minimum wage for businesses that say they can't afford it. We say they need to improve their product, service or business model. In this case, the PDC is saying that it wants to build lots of cool stuff, but since it can't pay for it all, wages should shrink. Rather than improve efficiency, budget accurately (remember the aerial tram?) and prioritize construction spending, the PDC is trying to bankroll its billion-dollar dreams on the backs of working families.

The solution? We suggest that the PDC decide its choices on what, when and how to build, rather than using tax dollars to pay lawyers, cut workers' wages and further reduce Portland's middle class. Since the developer-heavy PDC isn't likely to do this voluntarily, the Portland City Council should make the PDC follow the prevailing-wage law, and show that in Portland, public development should reflect our community's values.

Read the rest of the news story, and the rest of Chamberlain and Shiprack's op-ed. Discuss.

  • Tired of PDC (unverified)

    It's about time someone does something about the PDC. They seem to miss their main point of existence: to benefit the community that butters their bread.

    When Portland taxpayers invest in improving the infrastructure in dumps like the south waterfront and make it desirable real estate, it's only fair that developers return the favor by paying a decent wage to local workers, who will pay local taxes and spend their disposable income in local businesses.

    When big developers are driven to cut costs wherever they can in order to bid low, they will do anything to find cheap labor. ITC, a serious contender for four of the abovementioned south waterfront blocks, has imported Canadian labor to work on Benson Towers near PSU.

  • Tired of PDC (unverified)

    From the abovementioned Canadian contractor's web site:

    CURRENT U.S. PROJECTS ITC Constructors USA Inc. is a registered Oregon contractor and holds Oregon contractors license no. 162858. We are currently underway on The Benson Tower, a 26 storey, $28.5 million dollar project at 11th and Clay in downtown Portland. This project is intended to be a staging ground upon which ITC will build its capability in the Portland market with its local team of superintendents, engineers and managers.

  • Bob Tucker (unverified)

    We all know that PDC is insane, but where in the hell is the City Council on this issue? Why are the labor goons the first to post an op-ed on this? I'm not a union guy, but my dad was, and I get the basics of prevailing wage. Aren't all of our City Hall dwellers "progressive", especially the newly re-elected and "voter-owned" Erik Sten? As an involuntary part-owner/shareholder in Erik Sten's re-election campaign, I want him to take a stand on this. Are wages, community standards, and local hiring remotely interesting to the Council (I presume Leonard is attuned to this, but the public silence is notable). Grampy Potter, anyone home? Does Sam Adams know that this is just as important as screaming about Wal-Mart(though obviously not as politically sexy)? BTW, has anyone noticed that PDC is NO different under Potter? Once any mayor gets PDC under them, it becomes their favored play thing and power tool, community be damned.
    Also, it's an interesting contrast with today's Oregonian puff piece on this developer Joe Weston. As I understand it, he's gone almost entirely with out-of-state labor and contractors, importing them from Canada. Another fantastic job by the Oregonian in overlooking something relevant but not flattering when doing one of there slobbery puff pieces on a Portland elite "leader". I guess we can't bring in the dangerous issue of middle class jobs when they are kissing a developer's butt.

  • Union Label (unverified)

    It is interesting that you bring up Canadian Labour. The union I am affiliated with, IBEW LU 48, brings in Canadian labor on projects when we are running short of labor at the hall. For some reason the people that run our union think it is better to give jobs to people out of the country than let an hour of work be performed by a non-union worker. We had like 200 Canadian electricians come into Oregon a few years ago and my union did all the greasing of the skids. I won't ever trust them on this local worker stuff again.

  • PanchoPdx (unverified)


    The taxpayers already get bent with PDC-driven corporate welfare projects...now we should expect that they'll be even less cost effective.

    It would be funny if it wasn't so sad.

  • Greydog (unverified)

    The true scandal in all this debate about community wage standards is the overlooked reality of what happens when they aren't enforced.

    Many of the projects within urban renewal zones that are enabled by foregoing tax revenue that could be supporting public services are built by criminal contractors who pay cash to workers based on square footage produced in a day. Without regard for how many hours worked that day or whether it is sunday or a holiday.

    Quality and safety come second to footage and taxes that would have been paid local workers under community standards are not paid. When these workers need healthcare they use our emergency rooms, when they need help they use our public services, when they need education for their children they use our schools.

    Many of these abuses are known by Developers and General Contractors but they are all about the bottom line lowest price paid and the most profit in their pocket.

    Joe Weston gets puffed up by the Oregonian, Walsh Constuction gets awards from Contractor Associations yet the reality of their jobsites is abused foreign and local workers paid cash without the protections of workers compensation and labors laws.

    Why do we who fund these projects allow this? Who does the PDC answer to? Why is the PDC allowed to sue other public agencies with our monies?

    PDC = Pretty Damn Cheap

  • Randy Leonard (unverified)

    A majority of the city council has expressed to the Mayor and the PDC that the law suit filed by PDC challenging certain prevailing wage provisions of state law will not stand.

    I asked and the Mayor agreed to have this subject be on the agenda at a work session the entire council is having on the PDC next Tuesday morning at 9:30 am in the City Council Chambers.

    I have invited Dan Gardner, the Oregon State Labor Commissioner, to attend the session and provide his perspective.

    Commissioner Sten, Adams and myself, while communicating our concerns to Mayor Potter, are working on a strategy to reign in what at times appears to be an out of control PDC.

  • (Show?)

    Thanks, Randy.

    Bob wrote: I presume Leonard is attuned to this, but the public silence is notable

    Of course, from a strategic standpoint, sometimes it's better to do things behind-the-scenes and quietly rather than calling the papers everytime there's a concern.

    Don't assume that a lack of press releases means a lack of work.

  • Chris McMullen (unverified)

    Prevailing wage? Whatever. Why not pay workers what the market demands? Why should the public have to pay more then they have too...oh yeah, Unions need to keep their power base.

    Here's a great video giving thanks to union bosses:


  • Tired of PDC (unverified)

    Why not pay workers what the market demands?

    As I understand it, the prevailing wage is set by the market. It's the average of what is being paid to the trades -- not even the high end, just the average. Do you prefer that some fly-by-night operator come in with cheap out-of-state labor and undercut the local market? I'd rather see our local economy strong than undermined by developers who are just trying to boost their profits.

    And blue collar guys aren't the only ones who lose out -- notice above how they bring in their own engineers and managers. Don't we have engineers and managers in Portland who can do the work?

    A big thanks to Randy Leonard and the City Commissioners who are taking notice and doing something about it. Where I come from, we'd say the PDC has become too big for their britches.

  • Sponge (unverified)

    Part of the problem with the prevailing wage issue is its inflexibility. Large public works projects are an appropriate application of a law that was originally envisioned as a way to prevent policitians from getting kick-backs by awarding public contracts to friends who low-balled their estimates. But it also prevents real savings to community projects worthy of exemption. Two examples: 1) A friend of mine lost a public paving contract years ago because he couldn't pencil out the prevailing wage requirements. He was very successful in a small rural county paying his general laborers about $18 an hour. The Portland market required him to pay $26 for the same work (basically pushing a wheelbarrow). His employees were all family men making a reasonable living. They all lost by the unreasonable demands of an urban market. 2) At about the same time, a small town in rural Benton County tried to build a library. They raised private funds, received donated material and secured an army of volunteer labor for the community project. Because the building was to be owned and operated by the city, a union sued them for failing to meet prevailing wage standards. The project never got built and the whole community lost. I am not an advocate of finding ways to stick it to the working man, but I also believe some reasonable flexibility needs to come into play.

  • Curious (unverified)

    I am concerned that the BOLI commissioner's perspective will have negative effects on projects and programs for affordable housing and the elderly. This new interpretation of what constitutes a "public project" is pretty radical and will certainly increase the cost of affordable housing and home improvement programs. While BOLI and the media seem to be focused on big developers and PDC because it makes good copy, in fact most housing is built by smaller developers, non-profits and minority developers. These folks operate on thin margins and prevailing wages increase their costs substantially. In many cases, it will mean that projects simply don't get built, or a larger government subsidy will be needed. And we know that federal, state and local funds for affordable housing are not increasing.

    This is also the case for "market rate" housing being built outside of the central city of Portland. I know a developer who builds apartments and condos in mid and east county and Gresham. He simply cannot use prevailing wages or his units will be too expensive for that market.

    Also, don't tell me that requiring prevailing wages will lessen the need for affordable housing. Folks in the trade industries, whether they get paid prevailing wage or not, are generally not the types who need subsidized units, vouchers, or home weatherization or maintenance assistance.

    I found BOLI's editorial interesting in that they say that public improvements like streets and parks don't use previling wages. But these are built by the city of Portland and are clearly public projects, requiring prevailing wage. So, I think they are just throwing out inaccuracies just to sound outrageous.

  • Jim P (unverified)

    Curious, I am curious which department you work in at PDC?

    Your attempt at misinformation gives you away.

    Your "developer friends" that build condos and apartments only pay prevailing wage IF it's a project being built with taxpayer dollars.

    Otherwise prevailing wages do not apply.

    But you knew that, didn't you.

    PDC needs to be abolished.

  • (Show?)

    Let's see, prevailing, prevailing.........according to Webster that would mean:

    most frequent or common

    We used to love getting occasional Prevailing Wage or as we called them Davis-Bacon jobs, because we knew we'd be getting paid the wages that a tiny elite fraction of the workforce got paid all of the time.

    The actual definition of these jobs is the wages paid by government to union contractors.

    It has absolutely nothing to do with the most frequent or common wage paid in a given market. The terminology is spin.


    That said, gummint's commitment to paying these top-of-the-line wages on jobs paid for by the taxpayers, is what helps to keep blue collar wages in general from declining more rapidly than they would do under the alleged "free market". Which, in it's turn, as another virtually meaningless term.

  • (Show?)

    Pat -- I'm new to this issue. Seems to me that "average" is a clear mathematical concept. How is "prevailing" calculated?

  • howard (unverified)

    "It's only fair that developers return the favor by paying a decent wage to local workers, who will pay local taxes and spend their disposable income in local businesses."

    I can understand requiring prevailing-wage from non-union employers on public projects. For the life of me, I don't see the need or expense of bumping collectively-bargained union-wages up to a bureaucratically-determined prevailing-wage.

  • (Show?)

    Seems to me that "average" is a clear mathematical concept. How is "prevailing" calculated?

    I've never seen a formula.

    In my experience though, prevailing is as howard seems to be saying, the wages that unions bargain for collectively. The rest of us become beneficiaries when union shops work on jobs with partial or full gummint funding.


    In the late '70s you began to see construction firms incorporate new subsidiaries to handle jobs that had no gummint funding, allowing them to dodge payment of "prevailing wage" whenever possible. They could also hire a minority exec to cash in on minority set asides.

    Thus the rock crushing/aggregate company that I worked for in Bend had two distinct crews, one to do driveways, parking lots, etcetera which paid about $7 to $10 per hour, while their "union shop" paid $14 to $18 per hour on city streets and highway projects.

    Around that same time, "Hop Sing construction" was a "minority firm" with a Chinese-American CEO, but was a wholly owned subsidiary of a large multinational working on the Banfield Freeway in Portland.

    And so it goes..........

  • Mike E (unverified)

    Pat R is right. "Prevailing Wage" is just code for Union Work. The government should conduct buisness like the rest of us. If we need some work done we get some proposals and make an evaluations which includes not just cost but history of performance, evaluation of the firms capabilities, etc. Then choose the outfit which provides the best overall value. Chances are, that won't be a union shop. Just ask Delphi, GM, Delta, Northwest, ....

  • bonzo (unverified)

    Hmmm - it appears that most of respondents on this issue have very little actual knowledge about this subject matter, particularly its history or the numerous academic economic studies over the past decade that have proven that prevailing wage laws have had a positive economic impact on communities and do not drive up costs. Costs on jobs have proven to even out do to workforce being better trained, working safer and smarter and being paid a wage, health benefits and retirement that helps motivate them to do a good job. Unions and their contractors pay for their workers training at world class training centers here in the state - non -union low ball contractors rely on corporate welfare (the state) to pay the bulk of the cost to "train" their workers. States that got rid of local prevailing wage have seen costs of public construction rise (due to incompetency of lowest bidders), public health care costs rise, less taxes back to the government, job site accidents rise and workers not saving for retirement. If the government funds a building project it should be done right.

  • Mike E (unverified)

    Bonzo, please! If it were true that prevailing wage laws actually saved money, there wouldn't be any issue. Corporate America is greedy and is always trying to find ways to increase profits. If these studies were actually true, don't you think that companies would exploit those results and put in policies that would mandate prevailing wages? They haven't. Quite the opposite, companies are desperately trying to find ways to get out from under union contracts that are threatening to put them out of business.

    Bottom line: if having a union workforce was good for business, unions would prosper. Instead they are falling more and more into irrelevancy. If unions want to survive this new century, they need to re-invent themselves and become as valuable as they once were.

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