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Union Wage Rule Means Fewer Projects Completed With Stimulus Cash

State governments that contract jobs paid for with stimulus money will be required to pay workers on construction projects union wages rather than market rates -- good news for workers but good news for not as many of them. 

The Office of Management and Budget included in the $787 billion stimulus bill the Davis-Bacon provision, a 1931 law typically only used on federal highway projects. But under the new spending plan, Davis-Bacon will apply to all state and local jobs on energy, housing, agriculture or construction.

Higher costs per project mean fewer projects completed, especially since some "shovel ready" projects were bid as non-union jobs. Some local officials and economists say the union wage mandate means taxpayer dollars won't be stretched as far as otherwise was planned.

"All this recovery money being spent, you have a lot of hands out," said economist Jack Kyser. "And so people have said OK, this has to conform to Davis Bacon, which means prevailing wage. And so you get hung up. So as I say, you're going to have projects, but you're not going to have the money go as far as you'd wanted it to go."

Los Angeles County officials who received $8 million in Community Development Block Grant money to weatherize homes for low-income people said they typically bid the job low and pay about $15 an hour for a worker to caulk windows. However, under union scale, that job pays $25 an hour and $5 in benefits, so instead of repairing 100 homes, they might do 50 homes for the same price.

Elsewhere, the union wage for a plumber in Long Island is $45 an hour, the market rate is $30. In Las Vegas, the Davis-Bacon wage for a glass worker is $57 an hour, a job the Nevada State Housing division currently pays $15 to do.

On the flip side, organized labor says it is about time workers were making higher wages, and people should not have to work three jobs to live a middle-class life.

"That's plantation capitalism, how do you justify working two or three jobs? Is that what we want is that what a middle class is all about, is that what this stimulus money supposed to be used for?" asked Maria Elena Durazo, executive secretary-treasurer of the Los Angeles County Federation of Labor, AFL-CIO.

Organized labor insists the inclusion of the higher rates is not payback by the White House for its widespread support of President Obama in the campaign. But some critics are not so sure. Non-union builders' associations say since Democrats took control of the House, more bills coming out with Davis-Bacon attached.

In the past, cities and states got around the Davis-Bacon provision by diluting federal money with local cash, but with the stimulus, that's not allowed. One think tank estimates that with about $200 billion in the stimulus set for construction projects, Davis-Bacon raises costs by about $17 billion.