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Phoenix to Discuss Prevailing Wage Ordinance

Structural engineer and foreman worker with touch pad discuss, plan working for the outdoors building construction site.

Update – According to Eric Froberg with the City of Phoenix and the June 23rd Policy Session meeting agenda, the council is considering whether to invest more than eight hours of staff time researching a policy related to prevailing wage. “Before any formal Council action would be taken on an ordinance there would be extensive public involvement with our stakeholders. This first step just gets the ball rolling,” said Froberg.

By Rebekah Morris and Tasha Anderson for AZBEX 

Earlier this week, BEX staff was made aware of a prevailing wage ordinance that will be proposed at the Phoenix City Council meeting on Tuesday, June 23, 2020. 

The purpose of the proposed Phoenix Prevailing Wage Ordinance, according to the draft document obtained by BEX, “is to regulate the minimum wages and benefits paid to construction workers within [Phoenix] on projects either directly funded or otherwise benefit from direct action by the city for the exclusive benefit of the city.” 

This ordinance applies to all employees of general contractors, subcontractors and suppliers providing any type of construction work on city-owned land or a city-owned or leased building, or “on any project that is a recipient of a subsidy pursuant to a contract in excess of $2K.” 

According to the document, the Labor and Compliance Department will determine the prevailing wages and benefits, using the federal Davis-Bacon Act (40 U.S.C. § 276a to 276a-5) as a guide. Once determinations are made, contracts going forward must contain a provision that requires the covered employee to be paid the agreed upon wages. The ordinance goes on to state that if this causes a cutback in pay for any class of worker, “The Department will review the appropriateness of using this methodology and may recommend to city council a different method for establishing prevailing wage rates.” If there’s “insufficient data” to make a wage determination, then the Labor Compliance Board will defer to the Service Contract Labor Act of 1965. 

Proponents Tout Quality, Minimal Impact to Cost 

Prevailing wages are intended to pay tradespeople more and, in turn, end up with better quality work. Davis-Bacon wages are already in place for federally funded contracts like most highway projects, airport projects and light rail extensions. Speaking with a union contractor on background, he was very supportive of the measure. He stated that the ordinance, if approved, would level the playing field and provide the City of Phoenix with the quality of work they are expecting. He went on to say that the Arizona Davis-Bacon wages are not outrageous, and in some cases, he is paying $5-$10/hour more than that to attract and retain qualified tradespeople on his projects. 

This issue does appear to have union support, with The Torres Law Firm founding member Israel Torres penning opinion pieces in both the Arizona Capitol Times and the Arizona Republic advocating for adopting prevailing wages as a way to strengthen the economy. The Torres Law Firm represents many unions according to their website. 

Opposition Cites Legality, Cost Increases, Administrative Burden 

The proposed ordinance has been opposed by the American Subcontractors Association of Arizona, as well as the Arizona Chapter of the Associated General Contractors of America as it contradicts Proposition 300 that was passed in 1984. Proposition 300 “outlawed requiring Davis-Bacon wage rates in state, county, and municipal construction contracts,” except in cases where federal funding is being used, according to summary provided by AZAGC. 

“We encourage the council to seriously review and study the unintended consequences of the proposal before taking any action,” said David M. Martin, president of AZAGC. The current proposal violates state law. We will be working with other stakeholders and interested parties to ensure this unconstitutional and illegal precedent is not established.  If it is enacted as written, The Arizona Chapter of the Associated General Contractors of America, Inc. is prepared to take it to the Arizona Supreme Court for clarification.” 

Stakeholder Input and Questions about Process Remain 

The ordinance is set to go before the Phoenix policy session meeting on Tuesday June 23rd. As of the date of this publication, the ordinance was not accessible on the city’s website. It is likely to be posted June 19th for the public to review. Speaking with several association and contractor representatives in preparation for this story, they have indicated that the issue has been around for about a month. There have been two virtual stakeholder meetings hosted by Councilwoman Debra Stark, but a request for comment was not returned by press time from the Councilwoman’s office, so we were unable to verify who was in attendance and how stakeholders were invited and notified. 

To read the Phoenix Prevailing Wage Ordinance draft document obtained by BEXclick here. NOTE: The document obtained by BEX may or may not be the ordinance proposed to Council. Check the Council website for the agenda that will be posted here. 

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