Contractors frustrated by prevailing wage formula

Mike Gott: It's hard to reach 1,000 reportable hours of pay in smaller counties.

Sean Thouvenot: State association must defend prevailing wage to legislators every year.

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Although it’s been five years since a partial repeal of the state’s prevailing wage law was signed into law, frustration in the construction industry over the formula used to calculate it persists.

The law establishes a minimum wage rate in Missouri for public works projects valued over $75,000, such as bridges, government buildings and roads, according to the state Labor Department. The rates must be incorporated into contract specifications for public works jobs. However, employees can bargain for a higher rate of pay and employers can pay the amount, but the prevailing wage rate differs by county and the types of work performed.

“Missouri prevailing wage is determined yearly by the number of reported hours in an area by craft,” said Sean Thouvenot, vice president of Neosho-based general contractor Branco Enterprises Inc.

However, the legislative changes to the law in 2018 did away with prevailing wage unless there were 1,000 reportable hours of pay for a particular occupation in a given county. If the 1,000 hours isn’t reached, it’s replaced by a county’s construction minimum wage – a rate of pay that amounts to 120% of average wages determined by the Missouri Department of Economic Development. The annual wage order is issued by the Division of Labor Standards every July.

“One thousand hours is not hard to get reported in some counties, but when you start going to outlying areas such as Dallas and Webster and Douglas counties, it becomes hard to get 1,000 commercial hours worked and reported,” said Mike Gott, business manager with Springfield labor union group Plumbers and Pipefitters Local 178.

For example, while prevailing wage for plumbers in Greene County is $50.63 per hour, the hourly rate in Dallas County is based on the minimum wage formula, which this year is $18.63. That amount applies to all construction occupational titles for qualifying public works projects.

Wage matters
Thouvenot said Branco, which is a nonunion company, and statewide industry group Associated General Contractors of Missouri, for which he is immediate past chair, didn’t support the legislative changes, which also raised project limits to $75,000 from $50,000.

“The confusion lies mainly in that there are stakeholders in projects and political subdivisions, usually in rural areas, that think they are going to save money on their projects by getting rid of prevailing wage,” he said. “What they fail to understand is prevailing wage is basically a tool to establish uniform wage rates for tradespeople. The prevailing wage also sustains a skilled workforce and enhances education for workforces, apprenticeship programs and things like that. That’s all involved in prevailing wage. You’re getting a better worker by paying and training your workers better.”

He said if every construction position in a county is calculated on the prevailing wage formula and pays $16 per hour, for example, money won’t be saved because no one is going to work for that amount.

“If you are going to hire a quality contractor, they are going to pay their people a good wage, and it’s going to be far above whatever that 120% above minimum wage is,” he said.

Thouvenot recalled a past job his company had in Gainesville, which is in Ozark County. The county’s construction minimum wage, which is currently $17.85 per hour, was lower at the time than Branco’s base rate for employees.

Gott said Local 178 works in 20 counties in southwest Missouri, noting 11 of them utilize the prevailing wage formula. It’s a wide range of pay based on the county, he said.

“You could absolutely see them vary $45 an hour,” he said.

Not every industry organization is directly impacted by the state’s varied prevailing wage rates.

Dan Montgomery, business representative for Carpenters Union Local 978, said the Springfield group signs a collective bargaining agreement with its union contractors for each type of job, such as commercial carpenter and floor layer. The wage sheets annotate differences for apprentice and journeyman hourly pay and benefits. The agreement encompasses 15 counties in southwest Missouri, he said, noting the wage package currently is $49.23 per hour.

“That’s regardless of what Polk County or Greene County’s difference is for skilled workers,” he said.

Officials with both the Springfield Contractors Association and Missouri Chamber of Commerce and Industry said their organizations don’t have an official stance on prevailing wage. However, the state chamber’s 2023 legislative agenda noted a desire to reform the state law, stating it adds “unnecessary costs to taxpayer-funded construction projects.” The agenda said positive reforms to the system have been made.

“Going forward, the Missouri chamber will work to amend the law to ensure that prevailing wage is not required for maintenance work,” the document reads.

While Springfield Area Chamber of Commerce officials didn’t respond to questions about the topic, its 2023 legislative agenda said the chamber supports continued review of existing prevailing wage laws to further improve certainty and predictability.

Future fear
The Local 178 group was not in agreement with the changes, Gott said, but has followed the rules and is consistent to get hours reported through the contractors as best as possible.

Although he didn’t identify any names, Gott said he suspects some legislators would like to do away with prevailing wage altogether. Still, he doesn’t believe it’s currently a high political priority in the state.

Thouvenot said prevailing wage is annually on AGCMO’s legislative agenda. Its position statement states, “AGCMO supports the concept of the prevailing wage and opposes further erosion of the wage protections or complete repeal of prevailing wage statutes.”

“We have to defend it basically every year, it seems like,” he said. “We’re not really hearing anything right now on prevailing wage for this upcoming legislative season, but I’m sure it will rear its head. In the last four or five years, it just hasn’t gotten any traction, thank goodness.”

Despite the recent legislative silence on the issue, union representative Montgomery said he’s still concerned about the future of prevailing wage.

“It’s not a union vs. nonunion,” he said. “We are all concerned.”

When the next legislative session begins in January, Thouvenot said he expects AGCMO will be back to defend the current system. However, he doesn’t believe there’s much momentum in the industry to revert to the formula used before 2018.

“It’s something we talk about all the time with lawmakers and ways to make it better,” he said. “But again, you have to be very careful opening that can of worms, because you could open it and things get worse.”