prevailing wage

Contractors: Prevailing wages bill will raise state costs

Sam HautGovernment, Headlines

prevailing wage

A bill increasing the number of workers that are covered by Delaware’s prevailing wage law seems unlikely to pass.
Photo by Yury Kim, Pexels.

A bill that would increase the prevailing wage for contractors making products offsite is unlikely to be heard in the House after the legislature passed the 2024 fiscal year’s budget on Wednesday.

Senate Substitute 1 for Senate Bill 102, sponsored by Senate Majority Leader Bryan Townsend, D-Newark, would require laborers making products away from a building site to be paid a prevailing wage, just like construction workers on the site. It 

The law would apply to people working on plumbing, electrical systems, mechanical insulation work, ornamental iron work and commercial signage.

A prevailing wage is something the Delaware Department of Labor requires companies to pay to people working on construction jobs costing over $500,000. It’s different based on the type of job and which county it’s in.

For example, an asbestos worker in New Castle County would need to be paid $27.88 an hour, $34.33 in Kent County, and $49.97 in Sussex County. It’s unclear why a Sussex worker would be paid so much more.

Edward Capodanno, president of Associated Builders and Contractors of Delaware, said that they’re opposed to prevailing wages in general because he thinks the market should decide what people get paid.

“For us, it’s more of an issue of fair market value and allowing the market to bear what the wages are,” Capodanno said. “We’ve always been opposed to prevailing wages, even for the people installing the work because we believe that the market should bear what people are paid and that the state shouldn’t mandate what we pay our employees.”

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The bill’s fiscal note says it will cost $15,200 in one-time funding and $163,866 in ongoing funding for the 2024 fiscal year, $204,858 for the 2025 fiscal year, and $207,955  for the 2026 fiscal year, all from the appropriated special fund.

Part of the recurring costs come from the addition of two labor law enforcement officers in the Division of Industrial Affairs’ Office of Construction Industry Enforcement.

Even if the bill is not considered on the floor, it will still be live and available for action when the General Assembly reconvenes in January 2024 for the second half of the two-year session. 

Capodanno said they’ve been lobbying against the bill since it came out and testified before the labor committees in both the House and the Senate.

He doesn’t think the prevailing wage helps workers and only increases construction costs.

“They’re getting paid a fair wage,” Capodanno said. “I think the impact is on the state where, when you’re paying workers inflated wages, more than what they would normally make on a private job, you’re raising the cost of construction for the state of Delaware and then costing more for the taxpayers.”

He doesn’t know what impact the bill would have on construction costs or what impact the current prevailing wage laws have had on construction costs. He’s not sure anybody has studied that.

Delaware wouldn’t be the first state to pass a prevailing wage law that includes off-site construction. In 2019, New Jersey passed a similar bill.

It passed the House Friday, the last day of the session, and will go to Gov. John Carney for his signature.

The legislation is similar to 2005’s Senate Bill 214, sponsored by former Sen. Robert Marshall, D-Wilmington. That bill was assigned to the Senate Labor & Industrial Relations Committee but never received a vote.

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