One of Alaska’s legislators is seeking to update the minimum threshold for paying construction workers who work on state projects. The Kodiak Island Borough Assembly voted to support the legislation, but shared uncertainty about how or if this would benefit the island’s workforce.
The Little Davis-Bacon Act is a set of laws that establishes a minimum wage for construction workers who are awarded contracts by the state of Alaska. This is not to be confused with the Davis-Bacon Act, also known as the Big Davis Bacon Act, which is a set of federal laws relating to federal public construction projects.
The state law only applies to projects that exceed $25,000 in cost. But Alaska House Rep. Kevin McCabe of Big Lake said he wants to increase that threshold to $150,000 – partially to account for inflation over the last decade.
“Many states have either eliminated the thresholds altogether or raised them to one million. The bill proposes a small raise in the threshold or cap to $150,000 to better reflect inflation and current industry costs,” McCabe explained.
The last time the Little Davis-Bacon Act was amended and adjusted for inflation was in 2011, when the threshold for public construction contracts at the time was $2,000, and then it was raised to the current amount of $25,000.
McCabe argued at a House State Affairs Committee hearing last month on April 16 that this bill would help address the labor shortage of construction workers across the state. He said it would also encourage smaller contractors to bid on public construction contracts.
A couple days after the hearing, on April 18, the Kodiak Island Borough Assembly also took up the issue. Assembly members decided to send a letter of support to amend the law. Before voting though, Assembly member Larry LeDoux asked Mayor Scott Arndt if this would actually put more financial burden on the construction workforce.
“LeDoux: While it’s cheaper to carry on public projects, it also takes away funds from our workforce who would be paid less as we raise it [the threshold] up. Is that correct?
Mayor Arndt: No, not necessarily.
LeDoux: Not necessarily, but they could pay less.”
It was for this reason Assembly member LeDoux voted no on the resolution to send a letter of support for HB 173. Mayor Arndt said he believes this won’t affect big construction projects in Kodiak but might help with specific contracts in some of the other rural communities like Old Harbor, around the island. He pointed out there are administrative costs and fees that come with state projects under the Little Davis Bacon Act as well, which could hinder construction in island communities.
Various construction unions shared LeDoux’s concerns during the second hearing of House Bill 173 in the House State Affairs Committee.
Don Etheridge is with the state’s largest labor organization, Alaska AFL-CIO, which includes the construction industry. He told the legislative committee on April 16 that the group is opposed to the bill.
“It’s not the employer or the contractor, it’s the employee that’s going to pay the price. Because they [contractors] don’t have to pay the Davis Bacon [wages] so they will do it for a lesser wage, and instead of the contractor taking the loss, it’s going to be the employee,” Etheridge said.
Etheridge argued that if the amendment passes, construction projects could still be broken up into multiple parts, each capped under the proposed threshold of $150,000, which wouldn’t require employers to pay their workers Little Davis-Bacon Act wages.
Kodiak Island Borough Assembly member Ryan Sharratt said the majority of local contractors are already paying that level of wages or higher in order to retain their employees.
“Mr. LeDoux’s statement is not wrong; however, in the economy today, most employers can’t maintain employees if they are not paying in excess of the Little Davis Bacon [wages],” Sharratt explained.
The KIB Assembly voted on April 18, five to two in favor of supporting the legislative amendment to the Little Davis-Bacon Act. The bill has been referred to the Senate Finance Committee in the Alaska State Legislature but time is running out for it to receive a vote.
All bills that haven’t passed out of the Legislature die after the end of the session next week, on May 15.
