by Terry Rogers
Recently, Sussex County Council voted down a Right to Work ordinance after several public hearings on the subject. The ordinance would give employees the right to work without requiring them to be a member of the union that represents workers in a company nor would they be required to pay union dues. The City of Seaford recently passed a Right to Work ordinance citing that the ordinance could encourage businesses to locate or relocate in their town. Sussex County Council defeated the measure with a four to one vote after a lengthy explanation by the County Solicitor, Everett Moore.
“There was discussion concerning a recent ordinance that has been enacted by the City of Seaford,” Mr. Moore explained. “I will not get into a legal analysis of municipal law, but will point out the municipal law is different. Their ability to enable law is different than the Home Rule Statute that the County must follow, although I still believe the federal preemption rules may still be an issue for them. As for the County’s ordinance, after reviewing the Delaware cases and Delaware’s Home Rule authority, it is my opinion that a Delaware court is unlikely to uphold this ordinance in its current form. In addition, as discussed, the ordinance may be preempted by the NLRA (National Labor Relations Act). If either or both hurdles are not met, the ordinance will be invalidated.”
There are many economic development experts who say that compulsory membership in a union is a contradiction to the right to work principle. Currently, 28 states have passed right to work legislation and many of those states have seen an increase in manufacturing firms. Labor unions argue that eliminating the requirement that employees must join a union would effectively end unions in the state. However, at least one legislator who represents Milford says that he believes adding right to work legislation at the state level could be an economic benefit for Delaware.
“Enacting right to work laws would increase our revenue, and it would not cost us a dime,” Senator Gary Simpson said. “Such legislation would not do away with unions as some have surmised, but it would create an environment where corporations would find Delaware an attractive place to do business. One friend of mine asked why Alabama, Indiana, Georgia, both Carolinas, Kentucky and Tennessee attract large manufacturers like Boeing, Honda, Toyota, BMW, Mercedes, KIA, GE, Starbucks and Lenovo Electronics to name just a few in the recent past. He went on to say, ‘Could it have anything to do with those states being right to work states?” When will we wake up and quit playing politics with this issue? If we want manufacturing jobs in Delaware and the high paying wages that come with them, then we need to make it conducive for corporations to want to come here. We can’t “bribe” our way to attracting these businesses, but we can make ourselves attractive by quickly enacting right to work on a statewide basis.”
Senator Simpson’s comments coincide with Mr. Moore’s recommendation to Council. Mr. Moore repeatedly stressed to Council that, because the State of Delaware does not have a right to work law, the County cannot override state regulations and create their own legislation under the Home Rule Statute. Even though the requirement is different for municipalities, federal laws under the NRLA may also make Seaford’s ordinance invalid. In order for the law to be valid, the State of Delaware would need to enact a statewide right to work law.
In another area related to labor law, the state continues to discuss prevailing wages in the state. All three Milford legislators would like to see prevailing wage eliminated in Delaware, claiming that it costs the state a significant amount of money. A project in the City of Milford, an addition to the Milford Museum building, is estimated to cost over $500,000. The small addition, which would allow the Museum to add a conference room, additional display space and a gift shop, would require the Museum to use prevailing wage as the building that houses the Milford Museum is owned and maintained by the state.
“I will continue to back any proposal that aims to reform or eliminate this archaic system that pays workers on state projects a minimum hourly rate based on occupation, type of project, and the county in which the work is taking place,” Representative Harvey Kenton said. “The system the State Department of Labor uses to set wages is unsound, resulting in rates that are significantly higher than what is usually paid in the market. For instance, an unskilled laborer working on the Museum project would make $44.70 per hour, the equivalent of nearly $93,000 annually. It is an egregious waste of taxpayer money. However, the Governor as well House and Senate Democrats, have repeatedly blocked any attempt at meaningful change.” In one example presented to legislators in July 2017, the Bureau of Labor Statistics estimated an electrician working on projects not funded by the state would earn $27.24 per hour. With prevailing wage, the state would be required to pay the same electrician $66.85 per hour for a project using state funds, even if the project was only partially state funded.
Senator Simpson agrees with Representative Kenton’s assessment. He has long been an advocate for eliminating the state’s prevailing wage mandate on state-funded building and highway construction. The Senator points to cost savings from 15 to 20 percent on projects if prevailing wage were not in place. He also sees savings for county and municipal governments whose projects are partially funded by the State of Delaware as these projects must also follow prevailing wage. Senator Simpson said that since the State spends billions each year on projects, Delaware could see a savings of between $150 and $200 million for the State. He said that even if only 10 percent savings was achieved by eliminating prevailing wage, it would still be a significant amount saved in the state budget.
“Suggestions to reform prevailing wage will continue to be proposed by House and Senate Republicans and will continue to be bottled-up by Democratic legislators who hold a majority in both legislative chambers,” Representative Charles Postles said. “I support a proposal to set the rates using the federal Bureau of Labor Statistics data. Not only would this save Delaware a million dollars annually by dropping the need to conduct its own defective wage survey, but the rates the state pays would better reflect actual market wages. I also support proposals to exempt school districts, counties and municipalities from the need to employ prevailing wage, regardless of whether or not a portion of the project is being funded by the state.”
Much of the argument against eliminating prevailing wage comes from unions. Prevailing wage is based on a federal law known as Davis-Bacon which sets a wage floor for federal construction projects. The law was enacted to ensure that contractors who bid on federal construction projects will pay workers a living wage. It is also designed to ensure that the workers will be skilled and that the project will be completed safely. Unions disagree that prevailing wage increases taxpayer cost. However, independent studies have had different results.
A study conducted by the Anderson Economic Group in East Lansing, Michigan in 2013, found that the prevailing wage law in that state cost taxpayers, public universities, community colleges and school districts an additional $224 million per year. Another study conducted in 2014 by the Wisconsin Taxpayer Alliance found that prevailing wages in Wisconsin were overinflated by 23 percent compared to the Bureau of Labor Statistics and, when benefits are included, the overinflation rises to 45 percent. The study found that using Bureau of Labor Statistics wage data as opposed to current prevailing wage calculations, Wisconsin could see savings of between $200 and $300 million.
Prevailing wage was in the spotlight in Delaware in July 2017 when the Department of Labor planned hearings on changing the regulations. However, the hearing was postponed indefinitely when questions were asked about potential adjustments. No date has been set for another hearing.
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