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http://www.lvrj.com/lvrj_home/2000/Mar-24-Fri-2000/news/13194354.html

Friday, March 24, 2000

Copyright ) Las Vegas Review-Journal

Title: Mistakes causing state to overpay

Errors in the calculation of the `prevailing wage' for public works projects may cost taxpayers millions.

By A.D. Hopkins

Errors in calculating the "prevailing wage" for state and local public works projects may be costing taxpayers millions of dollars this year, the Review-Journal has discovered.

Prevailing wage rates published by the Nevada State Labor Commission are as much as $13.69 an hour higher than can be justified by survey data on which the wages are supposed to be based.

State law dictates that the published prevailing wage rate, or higher, must be paid to all construction workers on all public works projects in the state. Nevada State Labor Commissioner Terry Johnson said he will continue to enforce the prevailing wage law despite apparent errors.

"We don't have a position as to whether prevailing wages should be enforced," he said. "The Legislature has provided for the enforcement."

He was unable to explain why the published prevailing wage rates cannot be justified by his agency's data. "If you are asking if I knowingly published false information, the answer is no," Johnson said.

He published the rates in October as required by law, but he told the Review-Journal that most of the process of setting them had already been completed by the commission interim staff before he was appointed in August. Johnson replaced David Dahn, who resigned in 1998.

Johnson added that he is revising procedures to assure more accurate rates in the future.

Most states have prevailing wage laws, sometimes called "Little Davis-Bacon Acts" because they are modeled on the federal Davis-Bacon Act. Such laws require contractors to pay prevailing wages on public construction projects. Nevada's law covers all public agencies in the state. It also says the prevailing wages must be based on a formula applied to data gathered in an annual survey of wages in each of Nevada's counties. The Review-Journal requested a copy of the database used to calculate the prevailing wages and ran the same calculations the Labor Commission is supposed to perform. In Clark County rates alone, the Review-Journal found 36 instances of published prevailing wages that differed from those the formula should produce.

A few of the announced wages were a little lower than the formula would produce but most were higher. To be deemed a "prevailing" wage, the wage (including fringe benefits) is supposed to be paid to at least 30 percent of workers listed in the survey. (Johnson said calculations are based on the number of hours paid rather than number of workers.) If no particular wage was paid at least 30 percent of the time, the average of all wages is supposed to be used. But in some cases, not even one hour of reported wages and benefits was as high as the rate later announced to "prevail." One of those cases was that of elevator constructors. The labor commission announced a prevailing wage of $51.17, even though the overwhelming majority of hours were paid at $38, $13.17 less. The highest wage reported was $45.46.

The prevailing wage for plumber foremen was set at $43.61, yet the highest wage reported for any plumber-foreman was $40.86. The prevailing wage published for hod carriers tending masons was $27.63, yet the highest wage reported on the survey was $23.65. The wage most often reported was $21.85, and because it constituted more than 30 percent of all hours, would have prevailed if the announced rules had been applied.

For electronic communication technicians, the wage said to prevail was $42.44, yet only three hours were reported paid at that rate or higher. More than 30 percent of the hours were paid at $35.27, $7.17 less.

In a few instances the errors went against the employees. Errors in that direction may be less significant, however, because prevailing wages are minimums, not maximums. The prevailing wage announced for electric sign workers is $25.56, almost $14 less than the most common wage reported on the survey and the one that should have prevailed had the rules been followed. The sheet metal worker prevailing wage was set at $36.33, which is $1.26 less than the formula would dictate. Highway stripers will get paid at least $18.46 on public jobs, although that is $3.54 less than the wage they should get according to the formula.

These are just examples of the 36 job categories in Clark County where the prevailing wage calculations can't be explained by the formula. Contractors and labor organizations have 30 days after prevailing wages are announced to protest any wage they believe to be incorrect, but only one Clark County contractor objected to the wages announced for this year. Fence contractor Jelindo Tiberti protested the wage of $37.12 an hour announced for the workmen who build chain-link fences; the wage represented an increase of some $10 over the $26.44 contractors were required to pay in the previous 12 months. He won a reduction to $18.17, which survived an attempt by labor interests to prove the wage should have remained $26.44.

Johnson said one of the changes he will make in the coming year's survey is to involve more of the department staff in analyzing data from the prevailing wage survey and making sure it is used in accordance with the law. He is also focusing attention on the survey itself and has sought input from labor and management groups about redesigning it. He also promised that the public, which pays the bills, will also get an opportunity to express opinions, probably through some sort of hearing. Earlier this year he expressed concern that only about 20 percent of Nevada's contractors participate in the wage survey and said he was trying to devise ways to increase the sample.

Participation is voluntary. Many won't participate because it requires revealing so much about the company's operating costs. Unions usually support prevailing wage laws because they eliminate a nonunion contractor's main advantage -- lower labor costs -- in competing for public works projects. Unions often help contractors with whom they have contracts compile the paperwork for wage surveys. As a result, union wages are more likely to be represented in the surveys. Assemblyman Bob Beers, R-Clark, a computer consultant, criticizes the survey practice, but said solutions may have to come from the executive branch. The Legislature, he noted, already prescribed methods of setting the prevailing wages, but they apparently weren't followed.

"I am discouraged that you can't come up with the same answer the state does by following their rules, but I am encouraged by the new director," Beers said.

He added that the fault may lie in having a state prevailing wage law at all. "From my personal experience it sure seemed like there was something broken here. ... I have worked with a number of construction companies on their job-costing software and have seen disparities in the rates paid on government vs. nongovernment jobs that just seemed outrageous. "When the government consistently pays more for a person's time to work than anybody else does," he added, "I am pretty sure that's not good public policy."

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-- (Dee360Degree@aol.com), March 24, 2000

Answers

Friday, March 24, 2000

Copyright ) Las Vegas Review-Journal

Wrong wages required by law in Clark County

These are some of 36 incorrect prevailing wage rates published by the Nevada State Labor Commissioner. Contractors are legally required to pay them on every construction project for state, county, city or other public agencies. Mandated wage Craft Should be paid and benefit Difference* Well driller $14.07 $27.76 $+13.69 Elevator constructor 38.00 51.17 +13.17 Sprinkler fitter 20.00 27.86 +7.86 Hod carrier 21.85 27.63 +5.78 Cement mason foreman 29.68 32.28 +2.60 Communication electrician technician 35.27 42.44 +7.16 Sheet metal worker 37.59 36.33 -1.26 Highway striper 22.00 18.46 -3.54 Electric sign worker 39.33 25.56 - 13.77 *Negative differences may not result in underpayments to workers because prevailing wages are minimums, and nothing prevents contractors from paying more. But positive differences always exceed the legal requirement.

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-- (Dee360Degree@aol.com), March 24, 2000.