Expansion of Prevailing Wage to Private Industry Says California is Not Open for Business

Bill LaMarr
Executive Director of the California Small Business Alliance

Recently, there’s been relatively good news on the economy. Home prices are increasing and the stock market continues to grow; signals that we may finally be starting to recover from the Great Recession.

As a result, California’s robust private sector can continue to build and hopefully grow upon its long history of ensuring that employees have good, high paying jobs in a variety of industries. Outside of the private sector, California has always ensured that public employees and employees working on public projects are paid a fair wage and have good benefits.

Ensuring that employees have good wages and benefits is paramount to the success of any business. Small business owners have always had the flexibility to ensure that their workforce is paid a good wage.

Now, SB 54, a last minute piece of legislation by Senator Loni Hancock of Berkeley, proposes a huge extension of public works and prevailing wage law to private industry in the name of safety. SB 54 establishes that work at private petroleum refineries and petrochemical companies using private capital are to be treated the same as public works projects and mandates the use of a prevailing wage. While it goes without saying that these facilities should be as safe as possible, mandating prevailing wage and public works designation of a private facility using private capital is a major leap and has nothing to do with safety.

If the Governor signs this bill it will only be a matter of time before there are other industries that are deemed “unsafe”, causing this expansion to come knocking on their doorsteps. As California lawmakers are debating an increase to the minimum wage, this legislation will establish a higher wage that they deem appropriate. Will the next effort be to mandate prevailing wage in grocery stores, restaurants or hardware stores? If this bill passes where does the expansion stop?

Paying a good wage for good work is something that small business owners take pride in. They enjoy seeing their employees and their families able to enjoy the fruits of their labor. But the decisions they make as to how much to pay their workers is a decision that only they can make based on a variety of factors including skill, experience and their individual importance to the success of any given company.

Legislatively mandating prevailing wage on any private industry removes employers’ critically-needed flexibility to determine how best to run their business and compensate their employees. While this particular bill is only focused on refineries and petrochemical facilities, it sets a dangerous precedent.

SB 54 has now reached the Governor’s desk and awaits his signature or veto.  If you operate a small business, you should urge Governor Brown to veto SB 54 because if it he doesn’t, your business could be the next to fall victim to a mandatory prevailing wage requirement masquerading as a safety measure.

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