Washington Supreme Court ruling on current wage laws could increase the cost of public works

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(The Center Square) – The Washington Supreme Court has overturned a lower court to declare the state’s latest applicable wage law constitutional.

The law “requires the Washington Department of Labor and Industry’s industry statistician to adopt the applicable wage from the Collective Bargaining Agreement (CBA) covering work in a particular county with the highest wages, if such a CBA exists,” the court said in his decision Thursday.

Several groups of builders and contractors had filed lawsuits, alleging the law, passed by the Washington Legislature in 2018, was “an unconstitutional delegation of legislative power.” The trial court ruled for the government, the appeals court for the builders, and now the state’s highest court has overturned that decision.

Previously, L&I could use various metrics to calculate the prevailing wage, which is the hourly rate that the government requires contractors to pay their workers. The new law changed that and likely increased the cost of the process.

Andrew Villeneuve, founder of the Northwest Progressive Institute, hailed the verdict.

“This welcome decision confirms that the Legislature has followed the Constitution in its efforts to prop up our prevailing wage system, which has been beneficial to Washington workers,” he said in an email to The Center Square. “We thank the court for its thoughtful resolution of the case.”

He explained: “The purpose of SSB 5493, passed with bipartisan support at the 2018 session, was to improve our prevailing wage system. The law directs the Department of Labor and Industry to set prevailing wage rates and provides that the Department’s industrial statistician determines the prevailing rate either by conducting wage and hourly surveys or by wage and hourly surveys where there are no applicable collective agreements there are other suitable methods on which these rates could be based.”

The Association of Prime Contractors had “challenged the constitutionality of SSB 5493, alleging that the legislature exceeded its powers in passing this law. But as the Supreme Court has made clear, the legislature has not overstepped,” said Villeneuve.

Washington state constitutional issues aside, Sean Higgins, a research fellow at the Competitive Enterprise Institute, doesn’t think the law is an improvement.

“The ‘existing wage laws’ are literally designed to inflate the labor costs of public works projects, so there is no benefit to a company bidding on the contracts to be non-union,” Higgins told e-mail The Center Square. “These laws state that the company accepting the government contract must pay its workers the ‘regulatory wage’ in that region for the type of contracted work. Exactly how this “relevant wage” is determined may vary, but the law usually sets it to be what unionized companies pay their workers.”

Higgins explained that there is nothing in Washington law “that establishes a minimum number of companies that must be surveyed. It’s just “whatever the unionized numbers”. If there is only one unionized company in that area then what it has negotiated in its collective agreement automatically becomes the ‘determinant wage’ for the type of work.”

In this situation, “the non-union contractor loses any advantage they have to use their lower labor costs to win the contract by bidding low,” he said. “It also means that if your company does government contracts, you might as well accept a union at your company because you still have to pay your union wages.”

It also means public works projects will cost more, “with taxpayers ultimately footing the bill,” he said.

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