MONTPELIER — The Vermont House gave preliminary approval Wednesday to a bill requiring contractors to pay their workers based on federal pay standards when working on state-funded construction projects.
Members voted 95-52 to advance the prevailing wage bill that will shift Vermont from a more local standard, which does not include the cost of benefits, to standards laid out in the federal Davis-Bacon Act. The law calculates what workers should be paid in regions based on surveys filled out by contractors.
“Unfortunately, the current state prevailing wage only takes into consideration wages. It doesn’t take into account benefits,” said Rep. John Moran, D-Wardsboro, who reported the bill to his colleagues on the House floor Wednesday.
“So, if you have one employer who pays $11 an hour with no benefits and another who pays $11 an hour with $4-an-hour benefits, when they compete for contracts the nonbenefit person has a competitive advantage to underbid the good-paying benefits job.”
Moran and other proponents of the bill argued the bill will help raise pay and benefits for construction workers. It will also help return better paying jobs to Vermont, according to Moran.
He said many contractors who already pay higher wages and offer benefits have opted to seek work in New York and Massachusetts where the prevailing wages are based on union negotiations.
“In Vermont, this bill is a modest proposal. It’s moderate,” Moran said. “You’ve got to reward the employers who are doing the right thing and paying good salaries and benefits and put them on equal footing. We’re bringing young people back to Vermont and good-paying jobs back.”
Moran was peppered with questions about the bill on the House floor. Rep. Ronald Hubert, R-Milton, asked if profit margins for Vermont contractors would be harmed by raising the wage they must pay employees.
Any profit will be determined by the contractor when preparing a bid on a state government project, Moran said, but all contractors will have to use the same prevailing wage standard in their bids.
“They will make a decision on how much profit they care to experience,” Moran said.
Rep. Thomas Koch, R-Barre Town, said the bill looks to force higher pay “by fiat, not by any rules of economic science.” He said forcing higher wages on state government projects will mean more money from taxpayers.
“The net effect, where it’s really going to hit … is in the amount of capital construction that we’re going to be able to afford,” he said.
A fiscal note prepared by the Legislature’s Joint Fiscal Office predicted the impact on the state to be between $1.9 million and $3.36 million in higher contracts, according to Moran.
Rep. Cynthia Browning, D-Arlington, wanted to ensure that her colleagues understood the impact.
“What this means is that the same projects will cost more, but the total amount of the money in the capital bill will not increase,” she said. “While some contractors will pay more, Vermont taxpayers will get less for their money.”
Rep. Chris Pearson, a Progressive from Burlington, said the comments made by detractors “would have you believe that it’s been a good thing to save money on the backs of Vermont’s working families.”
“It will be good for Vermont’s working families and it will create jobs right here,” he said.
The bill has the backing of Democratic Gov. Peter Shumlin, who said Wednesday he hopes to sign it into law.
“I support it. The House has done good work and I hope it passes and gets to my desk,” Shumlin said.
“Our hope is that this is going to help create jobs and economic opportunity for contractors that got whacked really hard in the recession,” the governor said, “so we’re doing this to create jobs, not to stop jobs.”
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