Prevailing Wage Job Or Not?

Dorman Painting

Should I bid on a smallish prevailing wage job or not? I've never done one before but I have done jobs somewhat bigger than this job. I'm a paintcontractor in the Louisville Ky/Southern Indiana area.

The labor rate for this job is around twenty bucks per hour plus a nine dollar an hour fringe benifit. Are these jobs harder or any different than an open market job? I realize an open market job I pay the going rates instead of being told what to pay my people.

This is decent job but I'm leary about getting involved in prevailing wage jobs. I don't like the whole idea of labor being artificially increased. I'll definitely have to bid the job twenty percent higher than I normally would. What advice can some of you that have had experience in the prevailing job world give me? Another thing, I don't have a bunch of money in the bank to cover such high payroll while I wait for a first draw. I'm scared on this and am thinking about not bidding. I can't see my company making anymore money on this job than if it were a normal open market job, I'll probably lose a little money.

Chris Johnson

Prevailing jobs are good well paying jobs.

Be prepared to certify your payroll every 2 weeks, you will get audited when you are done the project. If you make an error you will be fined, no exceptions.

You must meet full payroll every 2 weeks, a prevailing wage inspector will be on site a minimum of every 2 weeks and will interview a minimum of 2 of your guys.

Once you have a signed contract, the bank will be your friend since it is a government funded job, you can borrow or get a line a credit without issue.

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Chris

Grumpy

If you've got all your insurance and licensing and properly set up employees there's no reason not to pesue it.

Dorman Painting

So I only pay my people once every two weeks? Also, when you say I will get audited, are you refering to a tax audit or a payroll audit?

I've always worked basically as a one man band, occasionally using contract labor. I have liability insurance but do not currently carry workmen's comp. I've signed a waiver in the past that allowed me to not have to carry workmen's comp. I'm just really scratching my head on this, way to many strings attached for my taste. But the money seems to be there?

KillerToiletSpider

You will have to carry WC on a government job, and provide it for your employees, who will have to be considered employees, you won't be able to use so called subs. You will also have to file a W-2 for all employees, and with hold taxes at the proper rate from their paycheck, the auditor will check that. You can pay them bi weekly if that is the norm for your company policy, most union contracts require an employee to to be paid within 2 business days of the last day worked in the pay period, with a pay period not exceeding seven days.

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Kgmz

What state are you thinking of doing this prevailing wage work?

By doing a simple internet search you can find everything you need to know and download the forms, etc. you will need. Every state is a little different on how they handle this.

So don't go by how everyone else is doing it in other states. For me in Washington and Oregon, it isn't a big deal, just normal paperwork you should be doing anyway and should have on hand if you are ever audited. And in over 25 years I have never been audited by the state or federal government for anything, not even prevailing wage work. And we have done prevailing wage work as the prime general contractor and as subcontractors.

Kentucky link below, you will also need a performance bond to guarantee you are going to pay the wages

http://www.labor.ky.gov/ows/employme...revailingwage/

Indiana, prevailing wage is called "Common Construction Wage"

http://www.in.gov/dol/2775.htm


Just read KillerToilets post and he is right, you will have to be a real employer who carries WC and pays taxes, etc. everything he mentioned.

Do you even have a Federal ID number for payroll taxes (otherwise known as your 91 number), etc.?

Dorman Painting

Thanks for the links and information. I've always been a one man band and everything has really dried up in my area, I'm thinking about doing more commercial jobs.

Of course when going the commercial route it also means expansion of the company...growth. People are afraid of change and I'm no different, I've never had the hassles of dealing with WC, payroll taxes etc. I'm a sole proprietor and yes I have a tax number, I pay taxes every year believe it or not. Just because someone's small or works as an individual doesn't mean they don't pay taxes on their wages. I've had plenty of 1099's etc. that I've had to file for.

The going rate for a painter in Kentucky is around 18 bucks an hour on the wage jobs, plus another 9 bucks an hour for fringe benefits. I have a hard time paying people this type of money when the open market around here doesn't even come close to commanding this type of wage. It will artificially increase the cost of labor big time...however I realize to adjust for those circumstances in my quote. I'm still debating on this...thanks for the info.

Tiger

Simplify your life. If you don't have an accountant, get one. Your accountant can do payroll, W2s and make sure everything is in order for the audit. You can do something you're more qualified to do.

Dave

Floordude

I thought prevailing wages, were the basis for "the going rate"

Someone, is actually making sure somebody else is making a living and not being exploited.

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Dorman Painting

Do you actually think an unskilled painter, which BTW, I'm a paint contractor, is worth almost twenty bucks an hour??

I was going to bid a high school here in Indiana, the unskilled guy was right at 20 per hour, the semiskilled guy was 28 an hour and the skilled guy was 33 or so an hour. I'm sorry, but the open market in MY area, certainly doesn't command these gaudy labor costs.

An unskilled painter in my definition, which I think is much more appreciable than the common wage committe's, is a person who is VERY green about anything and everything. No way that guy is worth twenty bucks an hour, sorry, I'm aint buyin that.

Chris Johnson

Prevailing wage is basically a union project without the union, but in order to be fair to everyone, every one must pay the same rates. Prevailing wage is the union rate plus all the benefits.

Both union and non union companies can bid the work with it being a fair chance for the union company to get the job as well, we all know non union companies can underbid the union companies by not offering benefits and paying lower wages. This can't happen on prevailing wage jobs.

I have worked 2 prevailing wage jobs so far, right along side union workers and I am non union. Since it is prevailing wage you don't have issues, you are not scabs, you are paying your guys the same as what they get plus the benefits.

It's a big adjustment for the crew when the job is done, last one I did last summer framers were paid $ 49.17 per hour including benefits pay, when the job was done they all went back to $ 25-40 per hour, laborer was at $ 35.27 went back to $ 18 per hour...a real shich for them.

Some guys were smart and saved the 'bonus' money, others bought T.V.'s, Blu-ray players, everything else you can think of.

Also remember...if you have any questionable employees (i.e. you think the info on the I-9) is not really them...they will get found out...really quick. I had one guy apply, everything looked good, D.L., SSN, birth cert., he spoke english like he was born here...number didn't match his name...gave him an opportunity to go to SS admin and fix it, never saw him again.

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Chris

eastend

So the purpose of prevailing wage is to protect the union worker- right? And usually it is government jobs that require prevailing wage. Which means that the taxpayer has to subsidize overpriced wages. Is that fair?
Case in point: We did a prevailing wage project that required my company to pay $50 per hour ( including benefits) for guys that were stripping paint from wood. Takes a little skill, but not rocket science. In the free marketplace you can find competent workers at $12-15 to do this job. So, why does the government insist on paying over 3x as much. Talk about government waste!

I, of course, had to charge way more than I normally would to cover the prevailing wage ( mind you- my guys loved it- they normally make $18-25 hr) So that project cost the taxpayer much more than it should have- and this to protect a union worker??

Doesn't make sense to me.

Dorman Painting

Absolutely, it costs the taxpayers MUCH more money than it really should to construct a school or any government job. No way does a unskilled worker, which BTW, is basically a laborer, command a twenty dollar an hour salary in the open market.

The unions are the MAIN reason that work is going south of the border and beyond. My whole family has worked or retired from Ford Motor Company, and while I certainly realize the great benefits reaped by having the union, they've basically priced their work force out of the market place. That's why the union has been shrinking since the 70's.

I will have to charge around sixty dollars a man hour on these prevailing wage jobs to make a profit. I normally charge around forty dollars a man hour, so yeah, the cost of labor jumps dramatically.

Chris Johnson

I don't look at it as protecting the union worker, I consider it using the creme of the crop, at the prevailing wage rates that one must pay you have no difficulty selecting from a large pool of qualified workers.

Your regular worker who you pay say $ 18.00 and hour to is still in training, suddenly you put him in a prevailing wage job and you must pay him the highest rate. If you were a union company then you could pay him less based on where he is in his apprenticeship program, since you are non union there is no such thing as a recognized apprenticeship program and you must pay the highest rate.

You are allowed to have laborers at a lower rate, make sure though they are in fact doing labor rate work, if he is say holding a paint brush and applying paint you must pay the higher rate. You do have the right in prevailing wage work to adjust pay levels throughout the day for various work being done, i.e. unloading and stocking materials and putting away ladders and clean up can be considered labor rate, applying paint and related work is the higher rate. Issue with that is you need to employ someone FULL TIME to walk around and keep detailed accurate records of who's doing what and when...not worth it when you consider the cost of that employee at a prevailing wage rate.

Since your pay rate is so high and your employee pool opens up to the best of the best, prevailing wage jobs are generally 'better built' since you don't have fly by night guys trying to do work they are not qualified for. You have the choice to keep em or let em go...there will be a line up of guys wanting to replace them.

When the job is done if you don't have more work for the crew and lay them off they will qualify for unemployment and since the pay rate was so high your reserves account can dwindle quickly. That's a chance you have to take, most guys will have something else lined up if you have nothing for them and not be a burden on society.

Take the job...you will glad you did.

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Chris

KillerToiletSpider

Chris is correct, it has nothing to do with protecting the unions, it is to double the labor pool and draw the best craftsman, whether they are union or not.

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eastend

how does that increase the labor pool and draw the best craftsmen? In my scenario, I'm using my guys, and I'm just paying them double or triple what they normally make.
If there was no prevailing wage, I'd still be using my guys, and paying their normal rate- and saving the taxpayers a bunch!
Maybe in theory P/W is supposed to attract a "higher" caliber of worker because there is a higher rate of pay. But at least in my experience that is not the case.
In the real world, are you saying you would not use your regular employees, and go get "better" help because of P/W? I really doubt it.

KillerToiletSpider

But in your area how strong is the union workforce? In a union town like Chicago union shops won't bid a large project if it is not P/W, and since about 80% of new construction is union built, you are losing a lot of the labor pool.

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Dorman Painting

You're wrong if you really believe that paying PW rates actually increases production or as you say, attracts the cream of the crop. It MAY attract the cream of the crop if you have assess to the better painters, such as a big city. But if you're in small town USA, the prevailing wage rate has virtually no impact on what kind of painter you can attract.

Paying PW rates does screw John and Susie taxpayer, why the government would want to build a school for twenty five percent more than it should cost is beyond me. PW rates ARE NOT in line with the open market, take that to the bank.

Brickie

Yes, it's called Union Welfare. The prevailing wage or as it's officially called "The Davis-Bacon Act of 1931" is a law passed by Congress in 1931 with the intent of favoring white workers who belonged to white-only unions over non-unionized black workers.

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Brickie

Yes, the taxpayers get screwed big time.

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