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Monday, March 8, 2021

A Simple Step To Boost Delaware Construction Jobs

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John Stapleford
John holds a Ph.D. in urban and regional economics (University of Delaware), M.A. in government and planning (Southern Illinois University) and B.S. in chemistry (Denison University). He is director of the Center for Economic Policy and Analysis for the Caesar Rodney Institute and a professor emeritus of economic development from Eastern University. He most recently worked as an associate director and senior economist with Moody’s Economy.com. John was Director of the Bureau of Economic Research at the University of Delaware and the co-founder of the Delaware Small Business Development Center. He is author of a book, numerous articles in professional journals, and over one hundred applied research monographs.

A simple way has been found to increase the demand for construction workers in Delaware by 2,000 jobs. Scrap the state’s prevailing wage methodology and shift to U.S. Bureau of Labor Statistics comprehensive construction occupation wage data.

 

Supported by a foundation grant, in March of this year the Caesar Rodney Institute completed an analysis of the methodology currently used by the Delaware Department of Labor to annually calculate Delaware’s prevailing wage. The prevailing wage by construction occupation dictates the hourly rate that must be paid on any capital project that receives state funds.

 

Caesar Rodney’s analysis shows that the official prevailing wage overstates the actual market wage for experienced construction workers in Delaware by almost 40%. The result is a $135 million overpayment for state capital projects for the most recent fiscal year. The overpayment most significantly disadvantages Delaware’s public schools. (The full report may be read at http://www.caesarrodney.org/pdfs/CRI_-_PW_-_Final_Document2.pdf)

 

Delaware’s Secretary of Labor, the Governor, and the legislature have all received the CRI analysis. Despite the straight forward, fact-based evidence of bias demonstrated in the report, no political action is being taken on what is a clear waste of taxpayers’ money.

 

So, with the help of a Delaware law firm, Caesar Rodney has drafted a legal complaint. The basis for the legal challenge is:

  1. Taxpayer Waste:  The survey methodology in the Prevailing Wage Law (PWL) is flawed and the data collected over-represents union wages.  The end result is a prevailing wage that does not reflect the actual prevailing wage in Delaware.
  2. Unconstitutional:  The PWL violates both the Delaware and U.S. Constitution.  On its face, it discriminates against non-union contractors and is biased in favor of unions.  It delegates legislative power of the General Assembly to a state agency without adequate guidelines, resulting in the DDOL making Delaware law through the Regulations, not the General Assembly as is required by the Delaware Constitution.
  3. The Regulations Violate the PWL:  The PWL requires that the prevailing wage be determined.  However, the voluntary survey method and the connected pro union outreach program results in a prevailing wage determination that is inaccurate.  The Regulations do not require the DDOL to collect all available relevant data.  It sets up a voluntary survey system that can be easily manipulated.  The Regulations allow (and in fact encourage) the collection and use of data from out of state contractors that are not licensed in Delaware or even work on Delaware construction projects.

 

Shifting Delaware’s prevailing wage rate to the U.S. BLS data will save the state the cost of conducting its own construction wage survey and increase the construction accomplished from each year’s capital budget allowance. As important, using the actual market wage rate for experienced construction workers rather than the higher prevailing wage will allow for almost 2,000 more construction workers to be employed. During one of the worse slumps in Delaware construction industry history, these jobs would be very welcomed.

 

If you would like to donate to the support of the legal action against Delaware’s dinosaur prevailing wage system, simply go to Caesar Rodney’s website (http://www.caesarrodney.org/index.cfm?ref=90100).

 

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