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Thu August 18, 2011 - Midwest Edition
COLUMBUS, Ohio (AP) In a move aimed at saving taxpayer money, Ohio legislators have changed the state’s construction laws to lower what workers must be paid on certain jobs and simplify the awarding of contracts.
The revisions were among those inserted into the two-year budget lawmakers approved this summer.
Legislators reduced the number of instances in which contractors have to pay workers a prevailing wage, tied to the local union scale and generally higher than what might otherwise be paid. The change means fewer projects will require contractors to pay workers the higher wage.
The General Assembly also said contracting of public projects has been streamlined. No longer must each component — such as plumbing and electrical wiring — be bid on individually.
Here are some questions and answers about how the changes affect workers and companies, and how they are expected to save taxpayers money.
Q: When will companies be able to pay lower wages?
A: If a taxpayer-funded project costs Ohio less than $125,000, contractors are not required to pay workers a wage on par with the union scale. By 2013, that limit will increase to $250,000. Gov. John Kasich wanted the cap set at $5 million, but the legislature agreed on the smaller amount.
Before the change, projects costing less than $78,258 were exempt from state prevailing wage laws.
The changes only apply to the construction of structures such as buildings and parks. Highways, roads and bridges are typically funded with federal dollars, so they are covered under a different wage law.
Q: Will this save taxpayers money?
A: It will, but it is unclear how much will be saved. The savings will come from contractors being able to make lower bids for qualifying projects, since they can pay lower wages. However, both proponents and opponents of the prevailing wage agree that few projects will come in below the eventual $250,000 limit.
Q: How many projects will be affected?
A: Estimates differ. Proponents of higher thresholds — such as the governor’s proposed $5 million — say the new limits are so small that they won’t make a difference. Unions opposed the move, saying up to 30 percent of public projects could be affected, as union contractors may opt not to bid on projects in an area where they are competing against companies who can underbid them by paying their workers less.
Q: Will construction workers see smaller paychecks?
A: Possibly. Those in favor of eliminating prevailing wage altogether say skilled employees won’t work for a contractor who doesn’t pay a decent wage. However, opponents say contractors will use the new laws to drive down the cost of labor in order to underbid other businesses.
Q: How did the state change the way contracts are awarded?
A: Since 1877, Ohio has required that each component of a project be bid on individually. For example, when Ohio State University began its medical center expansion, different companies bid on the plumbing, the wiring and the construction. Now one company will be allowed to bid on the entire project and hire subcontractors to take care of those individual components.
Q: How will that save taxpayers money?
A: An Ohio contractors’ group said it will make the process more efficient by bringing all contractors to the table earlier in the process, which saves time and 10 to 30 percent off the price of a project. Jack Hershey with Ohio State University’s Office of Government Relations said it can shave 6 months to a year off the process. However, exact numbers aren’t available, as it is uncertain how many new public projects will begin once the changes take effect, or what contractors will bid on them.
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