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Building Industry Airs Concerns Over Prevailing Wage Issue

Building Industry Airs Concerns Over Prevailing Wage Issue

Construction: Offsite Pay Rates Ruling Adds to Confusion

BY MANDY JACKSON

The local building industry is split over the issue of requiring contractors to pay the prevailing wage on construction jobs.

Prevailing wage is a pay rate set for different construction trades in each of California’s counties, often similar to union wages.

The state’s Department of Industrial Relations will take testimony in San Diego this week on a prevailing wage ruling it made earlier this year.

“We had gotten requests from unions to rule on if prevailing wage should apply to workers doing work offsite,” said Doug Elliott, legal counsel for the Department of Industrial Relations.

The department ruled that offsite trades people should be paid the prevailing wage in two specialty areas. Sheet metal workers had sued over a project at Cuesta College in the San Luis Obispo area. Electricians bidding on a joint library project for the city of San Jose and San Jose State University also sued.

Chuck Cake, the acting director of the Department of Industrial Relations, suspended the March 4 ruling due to confusion over how far it could be implemented and whether it should apply to other trade groups.

Other hearings are taking place in Oakland on June 2 and Los Angeles on June 5. There is no timeline for a final determination.

According to Elliott, the department’s ruling applied only to offsite fabrication by contractors’ employees for components designed for a particular public project.

Many local contractors, however, say the wording of the ruling is unclear. And if the rule applies to laborers employed by parts suppliers and manufacturers , especially out-of-state and foreign companies , they say it could dramatically increase the cost of public works projects.

Andy Berg, a lobbyist for the National Electrical Contractors Association in San Diego, said the NECA is mostly in favor of prevailing wage requirements for offsite construction. However, the union organization does not approve of requiring it for parts suppliers and manufacturers.

“I can’t see the state making some guy in Hong Kong pay the prevailing wage,” Berg said.

To require prevailing wage for out-of-state and out-of-country manufacturers would be impossible, said Jeff Anderson, vice president of San Diego-based general engineering contractor Vadnais Corp. Trying to implement it would definitely make local construction costs increase, Anderson said.

The Engineering and General Contractors Association in San Diego, of which Anderson is the president, is neutral on the issue of prevailing wage because its members are both union and non-union contractors. However, as a company, Vadnais supports prevailing wage requirements for onsite construction.

“We’d love to have prevailing wage because we’re a union contractor. It puts us on a level playing field,” Anderson said.

In April, the San Diego City Council voted to require contractors bidding on the $77 million first phase of a $125 million upgrade for the Miramar Water Treatment Plant to pay the prevailing wage.

Richard Mendes, San Diego’s utilities general manager, estimates the requirement could increase the cost of the first phase by 6 to 10 percent, or as much as $7 million.

Contractors are already required to pay the prevailing wage on city projects that use state and federal funding. The Miramar project is being paid for only with city funds.

Councilman Ralph Inzunza, who represents San Diego’s 8th District, said, “Where we see a large economic benefit, I think we should consider it.”

The city’s staff is putting together information about a possible citywide policy requiring prevailing wage on all public works projects that are funded solely by the city.

According to Inzunza, it would probably not apply to projects such as libraries and parks that are paid for by the city’s general fund, but to projects funded by sewer and water fees.

Jim Ryan, executive vice president of the Associated General Contractors in San Diego, said the association’s board was afraid the plumbers’ and pipe fitters’ unions would tie the project up in litigation for a year if the city voted not to make the salary requirement.

Ryan noted that salaries make up only 30 to 40 percent of a project as large as the Miramar plant. The rest of the $77 million cost is materials and equipment.

George Hawkins, executive vice president of the Associated Builders and Contractors San Diego chapter, said the process the state uses to determine prevailing wages is based on the 15 percent of laborers that belong to unions.

“The wage structure requires the contractor to use skilled labor where it’s not needed,” Hawkins said, such as during unloading of materials and cleanup.

Skilled, experienced construction laborers earn an average of $40,000 to $50,000 per year, he said, not including overtime pay and benefits.

“The construction industry is a well-paid industry and doesn’t need interference by government,” Hawkins said.

However, NECA’s Berg said, “Putting jobs out like this (for bids) without the prevailing wage would be devastating to the economy.”

It would be easier for contractors to hire laborers from nearby Riverside and San Bernardino counties and pay them less than local workers because the cost of living in those areas is much lower than in San Diego, he said.

C. E. Wylie Construction Co., a San Diego-based general building and engineering contractor, specializes in publicly funded construction projects, such as schools, libraries, and water treatment plants.

Edward Wylie, president of C. E. Wylie said, “Almost all of our projects have prevailing wage requirements. In fact, the City of San Diego is our only client that doesn’t consistently require paying prevailing wages.”

The state’s Department of Industrial Relations will conduct its hearing in San Diego from 9 a.m. to 5 p.m. on June 6 in the Silver Room at the San Diego Concourse, 202 C St. in Downtown San Diego.

The department will take written testimony through June 15 addressed to Wynn Norona, Office of the Director Legal Unit, P.O. Box 420603, San Francisco, 94142-0603.

Construction Completed for UCSD’s Bioengineering Facility

McCarthy Building Cos. Inc. of Newport Beach has completed the $30.6 million Powell-Focht Bioengineering Building at the UC San Diego campus in La Jolla.

The 110,000-square-foot building was built on a four-acre site for public and private foundations doing research in the life sciences bioengineering sector.

Built in 22 months, the facility was designed by Anshen + Allen Architects of Los Angeles. It was funded solely by private donations and will support the university’s research on the cardiovascular system, heart disease, and diabetes.

The building includes 63,000 square feet of lab space, 30,000 square feet of offices, a 5,000-square-foot underground vivarium, and 12,000 square feet of public, instructional, and meeting space.

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