Bill aims to shave school construction costs
Prevailing wage law is inflating state construction costs, and a Milford legislator says his bill could help save school districts money.
House Bill 296, sponsored by Rep. Bryan Shupe, R-Milford, would allow school district and charter school officials to decide if they want to pay prevailing wage rates for school construction projects.
“We cannot do much to stop inflation,” Shupe said in a press release. “But we can do something about forcing our school districts to use a defective system that needlessly wastes taxpayer money.”
The prevailing wage is the state-mandated minimum wage paid to workers employed on any project where state funds are used. The Delaware Department of Labor sets the rates annually based on a survey of employers. The rates vary by occupation, type of project, and the county where the work is being performed. Prevailing wage rates must be paid on new construction projects that cost more than $500,000, and on repair and renovation projects exceeding $45,000.
However, Shupe said, Delaware’s rate-setting process has long been criticized for being flawed and inaccurate, producing results far exceeding market conditions. In some cases, he said, hourly rates for workers performing the same job on identical projects differ markedly from one county to the next, and the rates can inflate the bottom line of any project using state money by 15% to 20%.
“The result is roads and schools that cost much more than they should, leaving taxpayers to dig deeper into their pockets,” he said.
Between the last fiscal year and the current fiscal year, Delaware school districts and charter schools saw the collective cost of ongoing school construction increase by more than $260 million due to inflation. School officials asked the state to cover $175.3 million of that expense, which was recently approved.
Comparing Delaware’s prevailing wage rates to federal wage statistics reveals the gaps between the state-mandated pay scales and the rates paid in the market.
According to the most recent data available from the Federal Bureau of Labor Statistics, officials said, 90% of the people employed in the following occupations made at or below the indicated hourly rates in Delaware in 2022:
- Carpenters - $36.71
- Construction laborers - $28.15
- Electricians - $45.60
- Plumbers and pipefitters - $46.38.
By contrast, officials said Delaware’s 2023 hourly prevailing wage rates for these occupations working on building projects are:
- Carpenters - $47.80 to $59.56 (varies by county)
- Construction laborers - $53.65
- Electricians - $79.17
- Plumbers and pipefitters - $68.46 to $77.38 (varies by county).
“When I served as the mayor of Milford, we decided to have Airport Road repaved,” Shupe said. “This is a high-traffic road between U.S. 113 and Route 15. The contractors and subcontractors had been selected, and the agreement was signed. With everything done, we asked our legislative delegation if the state would finance a portion of it. We quickly learned that state assistance would have increased the project's cost by an additional $300,000 because of the prevailing wage mandate.”
Sen. Eric Buckson, R-Dover South, prime Senate sponsor of the measure, said rate swings by county are unfair. A truck driver working on a building project in Seaford would get an hourly prevailing wage rate of $26.04, while the same driver working on an identical project in Middletown would receive an hourly prevailing wage rate more than twice as high, $53.07.
“Someone doing cement finishing work in Wilmington would receive an hourly prevailing wage of $88.04 per hour, while the same worker doing the same job on a Lewes construction site would receive less than a third of that, $27.02 per hour,” he said. “Allowing school district officials the flexibility to decide how to issue bid proposals for construction and renovation projects can increase efficiency and slash the obligations on state and local taxpayers.”
HB 296 awaits action in the House Administration Committee.
