Builders, trade unions battle over 'prevailing wage'

An industry that relies on careful measurement is fighting over the best way to measure the going rate for its labor.

Builders and unions are arguing about how the state calculates the "prevailing wages" for construction trades, including plumbers, carpenters, electricians and bricklayers.

The prevailing wage is the state's minimum wage on its construction projects, but its influence also spills over into private building, union and nonunion work, and the cost of apprenticeships.

The Minnesota Department of Labor and Industry intends to change its formula in a way that all sides agree will reduce the rates. The matter now resides with an administrative law judge.

A builders' group says the formula needs changing because the so-called prevailing wages exceed market rates. State-mandated rates make it too pricey even to take on apprentices -- a worrisome development for the industry, the group says.

The building trades union counters that the prevailing wages are fair and that cutting pay for experienced workers is a strange way to attract apprentices.

To set a prevailing wage, the Labor Department looks for the most common wage paid for each kind of work the year before. That's called the mode. Instead, the department wants to use the median wage, the midpoint in last year's pay rates. Whatever the technical merits of either method, the difference is as much as 30 percent in some jobs, according to builders and union officials.

Apprentices get mixed up in this because their wages are set as a percentage of the prevailing wage for their trade.

That expense discourages builders, according to the Associated Builders and Contractors (ABC) of Minnesota, an association of 400 nonunion builders.

"We see that as a huge problem," said Kris Pilling-Davis, ABC director of education and training.

Market rates alone are keeping construction wages strong, ABC President Robert Heise said.

"There's a lot of competition out there, and workers are not underpaid at all," Heise said. "There's such a shortage."

Builders need this change, Heise said, "because they are now competing not only in Minnesota but also nationally and internationally for work."

This may have no immediate impact on unionized trade workers, whose wages are set by negotiated labor contracts as well as by state law.

ABC says three-fourths of Minnesota's construction workers don't belong to unions. The Minnesota State Building Trades Council, a statewide association of construction unions, counts things differently, saying its members collect about three-fourths of the dollar value for construction work in Minnesota.

Second-year electrical apprentice Holly Patenaude, at International Brotherhood of Electrical Wworkers Local 292 in Minneapolis, started at $15.48 an hour, half a journeyman's wage. In her second year, she makes $20.30 an hour. She worries about ripple effects if the prevailing wage calculation gets changed.

"People claim my wages won't go down with this change, because I'm protected by our collective bargaining," said Patenaude, of Elk River. "But if nonunion contractors win more work, they're going to have to," she said.

She turned to electrical work after a series of clerical jobs, she said, because she wanted work with a future.

"If the wage wasn't that much more than I was making sitting at a desk, why work this hard? What's the point?" Patenaude said.

The prevailing wage is fair, said Dick Anfang, president of the building trades union. "If they choose to pay less than that, shame on them," Anfang said.

He said this disagreement has raised a side issue: the powerful rule changes government departments make far from any legislative debate.

The council argued to a state administrative court that the Labor Department overstepped its authority by changing the prevailing-wage formula. A decision is expected within 60 days.

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