Welcome comrade! I figured we would chat about prevailing wage. There is an editorial about it in the Daily Herald that you should read. It describes how villages like Winfield struggle with managing budgets when our State makes them overspend on contracted services.
I have serious issues with government power and nothing makes me quite as angry as when governments step into private markets and start mucking things up. Of all the ignorant rerouting of productive markets the most ignorant is “prevailing wages”.
Markets choose prices for products all on their own. Think of cheeseburgers. The spectrum of prices on cheeseburgers from White Castle to Morton’s Steakhouse is driven by the cost of ingredients, overhead, labor and quality. At no point does a government commissar need to step in and choose a prevailing price for cheeseburgers. The market for burgers takes care of that without them.
Labor is a product. The market for labor is defined by the willing buyers and sellers and the supply and demand between the two as well as a consideration for quality. But the government in it’s infinite wisdom has decided that instead of paying (lower) market rates for labor when doing government contracting, they will pay much more. In the case of the DH article, the state of Illinois is going to force Mount Prospect (and ultimately all municipalities) to pay 100% more for their landscaping.
What I can’t figure is how this helps the taxpayer. It certainly doesn’t help the municipalities that are tasked with being responsible with the taxpayers dollars.
Of all the aggravations, the worst is the DH editorial board that writes:
It’s not hard to understand the philosophical justification for requiring public bodies to pay a “prevailing wage” for the contracted public works jobs they undertake. Towns ought not be in the habit of exploiting independent contractors nor of skirting wage requirements by hiring independent contractors at lower rates than they pay their full-time staffs.
Actually DH, it’s next to impossible to understand the philosophical justification for prevailing wage other than it being a sop to unions that recirculate the money in the form of campaign contributions to Democrats. To the taxpayer paying the bill it looks freaking stupid. I guarantee that the DH editorial board takes the lowest of 3 quotes from non-union contractors when they need work done on the DH HQ.
I especially like the socialist codewords, “Towns ought not be in the habit of exploiting independent contractors…”
Exploiting…
How is it exploitative when the seller sets the price not the buyer? Last time I looked, nobody was wearing ankle shackles while working on plumbing gigs for Winfield.
Tim
I absolutely agree with your general parroting of the Daily Harold and other communities commentary on this subject; however, I am not sure that your references of “Welcome Comrade” and the hammer and sickle are appropriate without the context of Lenin and Stalin, as opposed to modern China. Without doubt, in today’s China one always finds serious negotiation, even when someone is about to get preferential treatment; in addition, if you are a government official caught on the take, you might have yourself hanged in the square. They have their problems, but negotiating price is certainly not one of their problems.
Rather than the theme of prevailing wage laws increase cost, the article could consider that it is really a kickback scheme that has the side effect of poor or ineffective performance.
A friend tells this story about consultants to illustrate the problem.
My firm held a contest to find the top 10 Visual Basic programmers in the world. We developed a test, had thousands of applicants, and as a result, my firm now represents the top 10 VB programmers in the world. One interesting fact is that we found that the number one VB programmer was 10 times more effective in his programming efforts than the 10th person was, although even the 10th person was 10 times more effective than people were in the 80th percentile. Unfortunately, when people asked to hire one of the programmers, they were only willing to pay the “prevailing rate;” yet, when asked which person they wanted, they always wanted the number one person, but were unwilling to pay a premium, although the work would be finished in less time at higher quality.
The story expresses the underpinning problem, understanding the value of the services performed at a particular quality level under competition in the perception of the buyer. The states actions clearly undermine the rights of a community to make a decision, and the rights of free enterprise to offer services to match requirements. Herein lies the irony, the direction in China is exactly the opposite.
That is exactly what I experience in my business as well! They want to hire me with my 15 years of experience, but only want to pay the rookie rates for someone with 1-2 years of experience.
And the fact it would take me half as much time, and save them money over the course of the whole project – they just can’t seem to understand that.
Stop selling your services to the government. The private sector values your time.
Error, Error, Fatal Error 99
Blog Responder has not had to sell himself in the private market of late as a consultant, found in H1B function call.
Alright. Fair enough. I sell a product that is not my time or expertise. Maybe that is where it is at. Don’t be a consultant or hired gun, sell a finished product.
…and I was talking about the private market, anyway. The government will actually pay me when they have the money!
Tim, took a few days to think about this one, especially given the fact a conversation around wage laws is a loaded subject and involves positions on unions, political graft and all that.
Before attacking the state on this one though, the issue is bigger than that. Any project using $2,000 or more of Federal funds is subject to the Davis-Bacon Act, which says basically the same thing as the State law does… and if state funding is from a Federal block grant, guess what.
Also, one thing to consider in all of this is the criteria needed in order to determine what a “responsible bidder” is on a contract. If a contractor makes a bid much lower than the competition, based on low wages, and wins the contract… there is a risk (of course subject to some debate) of the contractor not being able to come up with enough qualified people at that rate to fulfill the contract, or go bankrupt covering the loss in the contract. It is the contractor’s responsibility usually to carry bond to cover that scenario, but there is the cost of delays, calling in the bond, and re-bidding the work.
And, yes, you’re right… it is a philosophical issue, like so many laws on the books. Ahh, politics!