By Roland Murphy for AZBEX
The weigh-in banter is over and the contenders are getting ready to square off in the fight over prevailing wage laws in Arizona.
As expected, the Phoenix City Council voted earlier this week to enact an ordinance establishing so-called “prevailing wage” requirements for many municipal construction contracts.
As we reported Tuesday, Council passed a prevailing wage ordinance last year but repealed it following outcry over procedural concerns and the possibility of conflict with Arizona state law. (AZBEX, Jan. 9)
The new ordinance mandates businesses that contract with the City for construction projects valued at $4M or more to pay wages and benefits comparable to those received by union workers. Supporters say prevailing wage laws protect workers and ensure fair compensation. Opponents say they unfairly burden small and minority-owned businesses and risk harming production schedules and budgets.
Prevailing wage laws are generally supported by Democrats and trade unions and opposed by Republicans and the construction industry as a whole.
One of the stumbling blocks for last year’s Phoenix ordinance had been a 1984 state law that expressly prohibits municipalities and counties from enacting prevailing wage ordinances. After Phoenix repealed its ordinance, Arizona Attorney General Kris Mayes, a Democrat, issued an opinion that a 2006 voter-approved law that allows municipalities to establish minimum wage requirements superseded the 1984 statute.
Mayes’ decision to define prevailing wage as a type of minimum wage has proven controversial, with opponents calling it a deliberate and convoluted overreach.
The Goldwater Institute has referred to Mayes’ opinion as a “policy preference” and not a structured legal reasoning. Goldwater had warned Phoenix City Council about the likelihood of litigation when it passed its earlier ordinance and is expected to join opponents in challenging the recently approved measure.
Mayes’ opinion has not been challenged in court yet, since no city had officially enacted the requirement before this week.
That will now almost certainly change. On Tuesday, the Arizona Chapter of Associated General Contractors of America announced it will sue any city that sets prevailing wage requirements. Specifically, the Chapter said it will “partner with affected organizations to advance all legal remedies to ensure violating cities are held in-check and these illegal ordinances are not implemented.”
The announcement said, “The association wants to make it clear that we advocate for free and open competition among all contractors whether union or non-union. These ordinances are a direct attack on contractors that choose to remain non-union. (Chapter President) David Martin will not go into details about the association’s strategy in challenging the ordinance because there are key provisions in each that make them completely illegal.”
Martin was quoted as saying, “Instead of battling these issues at the council level we’ll take our arguments through the court system.”
Phoenix Chamber of Commerce Senior VP Mike Huckins has said the group will join AZAGC’s litigation and that Council should be focused on more pressing issues rather than raising labor costs.
In earlier discussions, Phoenix City Manager Jeff Barton had predicted the prevailing wage would likely be between 6% and 30% more than Phoenix’s typically budgeted labor costs. In its coverage of Tuesday’s Council action, the Arizona Republic reported Barton said the new ordinances would likely add $17M to Phoenix’s annual infrastructure budget and require 12 new staff members to implement the rule at a cost of $1.4M per year. Barton added the estimates were subjective because the studies used to draw data vary significantly depending on what group is funding them.
Supporters of the ordinance and of prevailing wage regulations, in general, touted the overall benefits they expect the policy to deliver for workers. The Republic quoted Councilmember and longtime union activist Betty Guardado as saying the ordinance would help ensure Phoenix wasn’t contributing to making families homeless and that any costs would be outweighed by the benefits enjoyed by families.
“We’re creating an environment that promotes fairness and prosperity for every worker,” Guardado said.
Policy watchers expect two additional developments to take shape in fairly short order. First, both Tempe and Tucson had previously discussed enacting their own prevailing wage ordinances. Now that Phoenix has taken the lead, those cities are expected to make some movement in the near future.
Second, while there has been no litigation filed that we were able to find as of 8 a.m. Thursday morning, we expect lawsuits to come about sooner rather than later.