This week in the Small Business, Insurance and Industry Committee, we conducted a hearing on two bills regarding the state’s prevailing wage system. Attendance at the meeting was high, reflecting how pressing an issue this has become. Most people agree that Missouri’s prevailing wage system is in need of reform. Finding a consensus on how to go about that, though, is another matter completely.

For background, the prevailing wage is the hourly rate paid to a contractor on a public works project, similar to the minimum wage, but specific to an occupation. For example, if you’re an electrician in Cape Girardeau and you’re hired to work on a government project, you will be paid a minimum amount based on what other electricians in your area make. Or, that’s the way the system is supposed to work. In reality, it’s become a mess.

The prevailing wage is calculated using wage data from the county where the work is to be done. This data is collected through surveys submitted by employers. For many counties, though, there is limited or no data, which happens for a number of reasons.

The surveys are completely voluntary, so there’s little incentive for an overworked employer to spend hours filling out a wage form. In rural areas, workers often do more than one job. A contractor might spend an hour laying pipe, two pouring concrete, and then some carpentry work. Classifying this contractor becomes a nightmare, especially considering there are hundreds of different job descriptions under the system.

When there is no wage data for a county, the prevailing wage is figured using collective bargaining agreements, often from the metro areas, where the cost of living is higher. This jacks up the rates in rural counties, creating a prevailing wage that is anything but representative of an area.

Even if there is wage data available, though, the system calculates the prevailing wage using the highest paid rate, which might not be at all typical for an area. But, this isn’t taken into account in our current system, and the wage is erroneously raised.

These higher labor costs put a significant strain on local governments to fund county projects. In many instances, the labor costs are so high the project is abandoned, costing those areas critical construction jobs.

I fully support the prevailing wage at the county level, but the current system is almost doing more harm than good. It’s not fair for a local taxpayer who makes $10 an hour to pay for a contractor to make a metro-based rate of $34 an hour. Something has to be done to align the prevailing wage more with what wages actually are in a county.

During the committee, we heard testimony on Senate Bill 30, which would repeal the prevailing wage system altogether, and Senate Bill 68, which modifies how the prevailing wage is calculated in certain counties. However, lawmakers can file bills until the end of February, so there’s a chance additional legislation will be filed in the coming weeks regarding this issue. Either way, I expect us to spend a significant amount of time this year discussing Missouri’s prevailing wage system.

Contact Me

I always appreciate hearing your comments, opinions, and concerns. Please feel free to contact me in Jefferson City at (573) 751-2459. You may write me at Wayne Wallingford; Missouri Senate; State Capitol; Jefferson City, Mo. 65101, or email at wayne.wallingford@senate.mo.gov or www.senate.mo.gov/wallingford.

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