JUNEAU — Unions and municipalities have come to a compromise on a bill to raise the limit for prevailing wages in public contracts.
The proposal by the House Labor and Commerce Committee will increase from $2,000 to $25,000 the limit for work on public contracts to qualify for the prevailing wage.
Rep. Kurt Olson, the committee chairman, said municipalities had been clamoring to raise the limit, which is based on a federal law passed in 1935.
The initial proposal called for raising the limit to $75,000, drawing opposition from unions. Olson said he urged all parties to negotiate an agreeable number, and sees the $25,000 proposed new limit as a “reasonable compromise.”
“Nobody likes it,” he said, “but everybody can live with it.”
The bill was passed out of the labor committee on Friday and now heads to the House floor.
Raising the prevailing wage limit is necessary because even small jobs, like filling potholes, can cost over $2,000, said Kathie Wasserman, executive director of the Alaska Municipal League.
“Especially in Alaska, by the time you’ve got materials out you’re” over the limit, Wasserman said.
According to the Alaska Department of Labor and Workforce Development, prevailing wages are average wages for mechanics and laborers calculated twice a year. Paying prevailing wages can cause projects to become more expensive, Olson said.
While Wasserman said she would have liked to see the limit raised to $50,000, she believes the new legislation would help municipalities save money.
However, Fairbanks North Star Borough Mayor Luke Hopkins said he has not seen a huge difference in savings between contracts paid using the prevailing wage and those using the non-prevailing wage. Still, he expects the new limit will save some money.
Alaska ALF-CIO president Vince Beltrami said he isn’t happy with the legislation and believes raising the limit could lead to more contracts being awarded to firms that pay their employees on the cheap and perform shoddy work.
“The jury’s out on whether this will save money,” Beltrami said. “Bidders will bid less and pocket more money.”
Though union workers get paid the same wage regardless of the size of the project, Beltrami said non-union workers on smaller public projects could see their wages cut significantly.
Regardless, Beltrami said plans to support the measure and hopes the legislature will not try to up the limit again anytime soon.