 going to have a conversation about Vermont's prevailing wage just to understand it a little bit better. And Joyce, it's just us. I think we're going to be first names. I just, I have to step out at 2.30 and I'm sorry for that. I will watch the tape. But as I said, we just wanted to understand it a little bit better. We know you did an issue great on because of the Senate's proposal, but you're going to take us deeper and help us understand this. So over to you. Joyce Manchester with the Joint Fiscal Office for the record. And I have a few slides prepared, but I'm happy to engage in a discussion as well or answer questions if I can. And there are others, Becky Wasserman in particular, who know the legal side of the prevailing wage. So we'll get started and see how far we get. So I'm going to share my screen. Theresa, maybe. Oh, you know what, Joyce, we also have your slide deck. Do you have it? Sure. Rather than. Absolutely. That's absolutely fine with me. Good idea. Okay, so you can see that I have an outline of my talk. I have four parts. We're going to start with the state prevailing wage and then talk a little bit about Davis Bacon because those Davis Bacon wage rates sometimes supersede the state prevailing wage. We're going to talk briefly about how adjacent states handle the prevailing wage and then look a little bit at the Pearson amendment that was passed by the Senate for the BAA. So what is the state prevailing wage? So right now on the books is a state prevailing wage that applies to construction projects in Vermont that are funded through the Capital Construction Act. So anything coming out of the capital bill can be subject to the state prevailing wage. I'm now talking about the specific requirement of the state prevailing wage. So it says all employees working on construction projects as defined below shall be paid no less than the mean or average prevailing wage determined by the Vermont Department of Labor plus 42.5% fringe benefits. And that component, the extra 42.5% can be paid either in benefits of an equivalent value or in wages. So if firms don't have fringe benefits set up, they can just add on to the hourly wage to meet that requirement. And what's the definition of a construction project? It's any project authorized or funded in whole or in part by the state of Vermont Capital Construction Act. So generally, those are capital bill projects. And the project has to cost more than $100,000 funded through the capital bill or at least be 50% funded through the capital bill. And the total project costs more than $200,000. So that's the current rule for determining when the prevailing wage applies. So it's interesting in Vermont, we have three geographical areas that have perhaps three different prevailing wage rates assigned to them. Sometimes it's the same rate across the state. Sometimes it's very different. And I'll show you examples of that in just a minute. The first area is that pink Burlington, South Burlington, Vermont, a metropolitan New England city and town area. That's something that's defined by the Census Bureau. The second is the southern Vermont area. That's the green at the bottom. And the third is the northern Vermont area. So that's most of the northern central and eastern parts of the state. And here I just found a space to put in a note about apprentice wages. So it turns out that if there are registered apprentices working on the project, they too may be paid a wage that is some percentage of the prevailing wage for that occupation. So that's just to say that apprentices fall under this law as well. I didn't know that. That's interesting. We have a question here, Joyce. Sure. Bob, go ahead. Bob here. So in my scene, it's just to say there's three different wages within the state. There can be. I'm going to show you an example in a little bit. But in some, of course, each occupation may have its own prevailing wage that must be paid. And in some occupations, that prevailing wage is the same across the state. In others, it varies across the state. So you have to know where the project is located in order to know the prevailing wage. I'll just wait then until we put through this a little further. Thank you. Sure. Okay. So every year, the Vermont. I'm sorry, more questions. Okay. Thank you, Madam Chair. Joyce, can you, I think I understand it, but can you explain the benefit part? So 42% benefit level is probably higher than a lot of employers offer. Maybe I'm wrong. But if the average wage was $30 and just for math sake, let's just say it was $13 in benefits, if the employer wasn't paying $13 per hour in benefits, do they then make that up in the wage? Okay. So if they were paying $5 in benefits, they would have to make up that other $8 and have to pay at least $48. Is that what I'm understanding? That's what the law says. Yes. Okay. Thank you. Sure. Are there, just hang on. Kimberly and that's already just a super quick clarification and the where the project is located drives the wage. So you could have workers doing the same occupation at a site. I'll be paid different things depending on their home address. Depending on where the project is. That's right. Oh, okay. Got it. So let's see. I work for a construction company in Middlesex, central Vermont. Well, no, let's just make it easier. I work somewhere for Fairhaven. I've got myself into the bottom, the green colored area. I work there, but they have a job for me up in Chittenden County. So I'm driving up to Chittenden. I'm being paid the prevailing wage for the southern Vermont area, not the Chittenden area. I believe it depends on where the project, where the construction project is located. It's project based. Yes. Not home office based. Right. Thank you. Let's see. Marty and then Peter. And then my question was, who determines what percentage you're going to pay to the apprentice? Right. So I believe you have to find out from the Department of Labor what the percentage is. I did not see that in the annual report on the prevailing wage. So that's a good question. I don't have a clear answer to that one. Okay. Thanks. Joyce, thank you. So I'm looking at the live link to the Department of Labor. There's a state map in there that kind of blows up the areas for prevailing wage. On the very top, in very small writing, it says effective 2016 based on the 2010 census. Is it going to be updated because of the, and I don't know why it's based on the 2010 census, but is the 2020 census going to impact? Yes, it could impact it. So we don't have detailed information from the 2020 census. It's supposed to be released this summer. So we don't have information, for example, about different areas of the state or different age groups or any of that detailed information. All that is coming this summer. So at the moment, and of course, this, the report that you're looking at was released prior to July 1st of 2021. So in fact, the only thing they had available to them, they didn't even have this state total for population at that time. So yes, that 2021, 2022 annual report was based on the 2010 survey. So then what could occur is that it will, and I would think it would probably adjust the wages that are in this report? So the wages in the report, we're going to get to that in just a second, but they come from a survey of workers. Let's go to that. Is that here? Yes. Yes. Okay. So there's the link that you're looking at. As I indicated, today's mean prevailing wage rates are effective. July 1st, 2021, through June 30th, 2022, and they were established in 2016. That means that the way in which they are determined was established in 2016. And I believe it was 2016, at which time they added the 42.5% benefit fringe benefit rate. So the current wage rates are based on a 2020 occupational employment and wage survey estimates. So that 2020 survey went out to many, many, many workers in the state. You can look at that survey and get a distribution of wages for very specific types of workers. So it's 2020 data that's determining the prevailing wage that exists today in 2022. And I'm going to talk about this more later, but you can imagine that wages could be quite different today than they were two years ago because of the pandemic and the different demands for labor, the shortages, especially on the low end of the wage distribution, especially in construction and so forth. So I'm going to argue that the 2020 prevailing wages are probably not a very good indication of market wages today because things have changed so much. So it's not just the census that's out of date, it's also the market wages that are represented in the prevailing wage. They're two years old now. So we have two questions right now. One is Bob and the other one is Jim. So I think you side-swiped or maybe answered this. So if a contractor is bidding a job right now, bids are out now or get your work done and he gets it and he's not going to come up and tell that until August he'll start. He pays then, he starts until August, but he pays the prevailing wage that we're in now. He doesn't need the prevailing wage increase because it has gone up because you've gone by it to another year. I am not sure of that and I could find out from the Department of Labor. That's a good question that I had not thought about. So the question is, if you contract for a project in this prevailing wage year, but you actually do the work in the next prevailing wage year, which prevailing wage rate applies? And I am sorry, I don't know the answer to that question. Well, we're going to really get a free moment, Joyce and that old time. I will find out. Yes, thank you. Thank you. Jim? Not a question, but a response to the question earlier. If you hit on that link, the Vermont prevailing wage rate schedule, go to the last page, there's your apprenticeship schedule. It's based on number of hours that they work. So like if they're brand new, just starting as a brand new apprentice, you can pay them 60% of the prevailing wage and benefits, and then it progressively with more hours, it goes up to your 100%. Finding that I had completely missed it. That's great. Okay, so here are some examples of a few of the prevailing wage rates. There are quite a few, as you can imagine. And this shows you comparisons across the three geographic areas. So for construction laborers, which was the most general construction category I could pick out, you can see that the Burlington South Burlington wage rate is 1936 per hour, and it's a bit lower than that in the other two areas of the state. For electrical power line installers and repairs, the rate is pretty similar across Burlington South Burlington and Southern Vermont, and then is a bit lower for Northern Vermont. For helpers who are carpenters, the rate is pretty similar across Burlington South Burlington and Northern Vermont, and then it drops a bit for Southern Vermont. For solar photovoltaic installers, you can see that it's exactly the same wage rate across the state. And then a lot of variation for surveyors. For some reason, Southern Vermont surveyors get paid quite a bit more than those in Burlington, and those in Burlington are paid more than those in Northern Vermont. So I was really surprised to see the range of prevailing wage rates for that occupation. And then of course the fringe benefits of 42.5% are on top of these hourly wage rates. Okay, we do have a question, Robin? Yeah, hi Joyce, it's good to see you. Yeah, this is pretty wild, that's what I think. So this is, but this is the base to set on the average wage that currently exists in that region, right? That's how they figure it out. So somehow with Southern Vermont had a a third of it surveyors or something and their prices went up and that's the way it is. It's based on an occupational employment survey, which has a very good representation of workers across the state in various occupations. So yes. Okay, keep going. All right, switch gears and talk a little bit about Davis bacon wage rates. And the reason is that there's often overlap or both prevailing wage and Davis bacon wage rates could apply to one project. And so you kind of need to understand what Davis bacon is doing in order to understand how it's a little bit different from the prevailing wage. So Davis bacon wages generally apply to federally funded projects. I know you had a brief discussion of Davis bacon wages on Thursday, I guess when Josh Hanford talked to you about some housing projects. So here's some background. The Davis bacon act applies to every federal government contract in excess of $2,000. And as he said, that hasn't been updated for many decades for the construction alteration or repair, including painting and decorating of public buildings or public works. And there are also related acts that have to do with federal assistance for construction through grants, loans, loan guarantees and insurance. So those related acts would also fall under Davis bacon wages. And now here's the important point. Davis bacon takes precedence over the state prevailing wage, if both apply. So if a project is subject to Davis bacon and the prevailing wage, then the Davis bacon wage will be the one that matters. Is Davis bacon typically higher, lower or close to the same as the state prevailing wage? Yeah, so I tried to figure that out and boy, it is difficult because the occupations that I could see for something that looked a little bit comparable were different enough. I'm not sure if there are different categories or more finely denoted categories or what, but I was not able to find a precise comparison across the two. It looked to me like there were fewer distinctions among jobs in the state prevailing wage than in Davis bacon. And I'm going to show you some examples of Davis bacon wages in Vermont in just a minute. So you'll have something to look at anyway. Bob and Jim, I do believe the government project can take that to you to the contract. Go set it out for him. Before he even bids the job, they'll get paperwork to tell them that. At least I bought a few times. Yes, that's absolutely true. I think there's a lot of bureaucracy, shall we say, but maybe it's better documented than what I've seen for the prevailing wage. Jim? Yeah, I may be wrong, but first of all, this first bullet says each federal government contract, not federal money, but federal contract. And I would think more often than not, our local projects are done with state contracts. I also understand, I mean, Joyce, you made a point about the 2000 was in the statute been there forever, it never got changed. But the way AOT explained it to me was I thought the projects were in the millions as a threshold, at least at the state level before Davis Bacon became effective. That's what you're saying here. So I wanted to present the basic rule, the basic law for Davis Bacon, and then we can talk about ARPA because ARPA specifically says that Davis Bacon does not apply unless the contract is $10 million or more. Okay, so that's the difference in ARPA-funded projects from your everyday federally funded construction project. Yeah, it all gets a bit confusing, but sure. Keep going, please. Okay, so let's see. Right, so this is a little bit confusing, but officially the Davis Bacon prevailing wage should be the combination of the basic hourly rate and any fringe benefits listed in a Davis Bacon wage determination. And for Davis Bacon wages, we're going to see in just a second that some of them are determined by the occupational employment survey, the way that we've seen for the state prevailing wage, and some of them are determined by union wages. So there are cases in which there are union wages and union fringe benefits that are, well, the union fringe benefits are less than 42.5%. And that's okay because it's part of the union contract. Okay, so again, this is a difference between the state prevailing wage and the Davis Bacon Act. So I've just said this, but the particular wage rate can be a union rate. So that's a current union negotiated rate for local workers. It could be a survey rate, which comes from this OES, Occupational Employment Survey, or it could be an average rate for several unions that operate in the same area. So we're going to see some rather different wages. I was able to look at some actual contract rates for contracts that were settled as of January 7th, 2022. So for example, in Chittenden County, a multifamily building construction project had an electrician hired at 2610 plus 9.25% and $7.70 in fringes. And that is based on a union rate. So there's a union contract that applies in Chittenden County for electricians. And this is the average rate that they pay. So that's the Davis Bacon Rate. As another example, there's a laborer on this project, either common or general, whatever that means. And that person gets paid $13.11 per hour plus $3.52 in fringes. And that's a survey rate. Okay, so that comes from the State of Vermont Occupational Employment Survey. So you can see that those fringes are not 42.5% of wages. But again, that's because this is Davis Bacon, which is set up differently than the state prevailing wage. And as another example, I found a building construction project in Bennington County. You can see there the carpenter gets $32.39 per hour and $23.43. So that's a union rate where the fringes are bigger than 42.5%. And then there's a plumber who gets $24.04 and $8.25 in fringes. So that's only about a 25% benefit rate. Okay, so again, that's Davis Bacon, quite different from the prevailing wage. I guess I'm asking, why are we looking at this? I mean, this usually comes with this coming from the federal government. They want this on that particular job. There it is. And you know it. Why is it before the legislature? What I was asked to do this presentation is that an amendment to the BAA has passed the Senate that would require the state prevailing wage to apply to all projects using ARPA funds. We're going to get there in just a second. This slide. So if you're using ARPA funds and they're $10 million or more, then Davis Bacon applies. The amendment says if they're $200,000 or more, then the state prevailing wage applies. So the question is, does that amendment have much of an impact on the cost to the state of these projects? I had forgot about the amendment and I apologize. That's quite all right. Right. Okay, so the point of this slide is to say that the U.S. Treasury has determined that Davis Bacon requirements do not apply to projects funded only with award funds from the coronavirus state and local fiscal recovery funds. So that was a determination that came out in December, I believe. But projects may be subject to Davis Bacon when those award funds are used on a construction project in conjunction with funds from another federal program that requires enforcement of Davis Bacon. Okay, so again, it gets to be confusing because you need to know the exact federal source of funding to know whether Davis Bacon applies or not. Okay, so let me just say a couple of words. I just have one slide I think about how adjacent states handle the prevailing wage. So again, I'm going back to the prevailing wage now. New Hampshire is the only state in New England that does not require a prevailing wage on state funded projects. It's one of 24 states nationally without a statewide prevailing wage law. So Vermont may have a slight advantage in attracting construction workers relative to New Hampshire because we may be paying higher wages. So here's a note here that Governor Sununu vetoed legislation in 2019 that would have imposed the prevailing wage requirements. But on our other two sides, New York and Massachusetts, both have prevailing wage rates. New York sets its wage by class of worker and county. Lots of counties are grouped together, but they're not always grouped together for different occupations. So you really have to look at the exact county and the exact class of worker to know what the prevailing wage would be. The Massachusetts prevailing wage rates are paid by town. And in fact, I was not able to see a list of prevailing wages. You have to be a registered contractor and then request the prevailing wage for the town in which your project is located. So the best I can do is say yes, both New York and Massachusetts would have competitive rates and maybe higher prevailing wages than Vermont based on their union contracts and based on their wage surveys. Okay, now here's the grand finale where we talk about the Pearson Amendment to the BAA. And again, this did pass the Senate, so it's part of the BAA. It says that the state prevailing wage has to be paid to workers on construction projects funded with ARPA money of $200,000 or more. Okay, so this is the state prevailing wage. And again, it's true for ARPA projects of $10 million or more that you have to pay the Davis Bacon wages. All right, but we're talking about between $200,000 and $10 million paying prevailing wages. Okay, so that means the prevailing wage rate plus 42.5% of the wage. Now it is part of the amendment to say that it does not apply to a project that's already existing, essentially, that has been invited or advertised for bid, it's under contract or already has obligated funds as of the effective date of the act. So we're really only talking about projects going forward. And therefore, JFO is unable to estimate a fiscal impact for the amendment because we don't know what the prevailing wage will be starting in July, it will be based on 2021 wages. And because we don't know how big the construction projects will be and how much ARPA funding will come to those construction projects going forward. So basically, we have a lot of unknowns and we can't come up with an estimate. However, because we know that the prevailing wages now out of date and labor supply is relatively constrained, we have a pretty good idea that market wages are now higher than the state prevailing wage, right? In order to find enough workers for construction projects, it's likely that the contractors have to pay more than 2020 average wages. So based on that alone, we think that the amendment to the BAA would not have a very large cost. Joyce, we have a question. Jim? Sure. A couple of examples and maybe you can comment as to whether they would apply or not, Joyce. We're using a lot of ARPA dollars for housing related issues, some of it for weatherization, which could be individually small projects, but you could have some large ones. We may give money to an agency and they use, say, $500,000 to rehab a small apartment building. Would that then become subject to prevailing wage and who has to work out the contracts for that to make sure that the contractor is in compliance? So if it's an already existing project, the state prevailing wage will not apply, right? This only applies to new projects going forward. And whether the prevailing wage applies depends on the source of funding. It has to be at least $200,000 coming from ARPA, and not the total cost of the project from all sources, but the source of funding from ARPA has to be $200,000 or more. And so it's really hard to tell whether a project is subject to the state prevailing wage unless you know all the background details. Okay, but if you assume that the ARPA funds are over $200,000 and we give that money to, I don't know, housing and conservation board, they in turn make a deal with a contractor to rehab this small apartment or multi-family dwelling, would they then have to comply with it and the contractor working on it have to comply with it? Right. So if the contract is itself $200,000 or more from ARPA, then yes, they would have to comply with the state prevailing wage. Another question, we've got a lot of ARPA funds that were assigning to the new, I don't know what it's called, broadband development board. And they in turn are then funneling that money to grants to local communication union districts, which are made up with volunteer boards, etc. If they use some of that money to put up poles and wires, is that a construction project? And two, would they then have to be subject to this prevailing wage provision and their contracts, assuming again it's over $200,000, which I, my guess would be a lot of what would be beyond that. I don't know the legal answer to your question. I'm guessing that broadband is not construction, but I don't know that for sure. Does anyone on the committee know that for sure? Well, the way that we're funding things, it's funding it to be, it is constructing the actual is to provide broadband. Right. So the question is, is construction constructing buildings and so forth, buildings and roads and bridges and whatever? Or is it constructing telephone pole infrastructure? I don't know the answer to that. Yeah, I don't know. I can find out. One of your examples was the electric linemen and that sort of thing, which I would think they're going to consider stringing fiber for broadband to be a similar type of occupation. Yes, but I don't know. Right. So it depends on the project, right? The project has to be a construction project. And then you hire lots of different kinds of workers to work on your project. So it depends on the definition of construction project. So Joyce, I know we're getting nitnoid here, but one of the things there's a lot of money in the in the ARPA funding for weatherization projects, for missing middle potentially, for for rental building rehab at $30,000 a unit. So if the project is below, let's say $100,000, there's three units in the rental rehab, there's $90,000 that's maxed out that it's eligible for. Is that considered the one project? Or is it the grouping that the neighbor works of Western Vermont is going to receive $4.5 million to run all of these? But they're metting it out at $30,000 to $90,000 at the time. What applies? I don't know if I didn't know it here, but you know. No, no, these are good questions. I believe it's the project. So the whole contract, so it's the construction firm that gets the contract. So if their contract is $200,000 or more. Okay, so the thing is, those projects, I don't believe there's going to be a construction firm. Having my little church receive $30,000, we hired our own people. The neighbor works had nothing to do with hiring contractors, nor did they even recommend. Right. So my understanding is that the contract to a construction firm has to be $200,000 or more. So if the contract is $30,000, it would not. It's the written document between that the construction firm signs. If it's more than $100,000 that applies, if it is not, it does not. It has to be $200,000 or more funded by ARPA, right? Okay, gotcha. Under clear. Gotcha. Thank you. Sure. Hi, Joyce. This is a bit of a clarifying question on that. Suppose we're in the, in a higher note, let's say $7 million, and the contract goes through a construction firm. I think I've heard you say this, but I just want to clarify the responsibility for that, for meeting compliance, meeting administrative compliance lies with the entity at the top, because in a bigger number, in a legacy of $7 million project, you could have multiple cases over $200,000 for those subs underneath, but but the compliance would still go up to the top. I believe that's correct. And on the last slide, I have considerations for lawmakers, and you can see that the what, one, two, three, fourth bullet talks about compliance and how that's going to occur. So it turns out that the Pearson amendment wanted to keep administrative costs low for the contractors, for the construction firms. And so there is no enforcement mechanism. It will be a matter of reporting by the, by the workers themselves to say, I'm not being paid the state prevailing wage, um, complaining, and then getting some, some back pay, I guess, in order to, to make that contract in compliance with the state prevailing wage. So as, as far as I know, there's, there's no requirement that ACCD or any other agency of government and force this, it's a matter of workers reporting that they are not being paid prevailing wage and coming forth with a complaint. And who would they go to, to complaining if at their level at the individual level starting? Probably the Department of Labor, but because it's the Department of Labor that sets the prevailing wage and that has responsibility for the prevailing wage. And then, and then I guess those disputes though, do they get picked up to various boards who adjudicate and whatnot? But I know anyway, we're getting way into the weeds. Okay. Thank you. I'm going to stop. Jim? Yeah, I guess along the same lines, my understanding on the capital bill that in contractors that obviously want to do business with the state and comply with it, have to keep records for three years on each wage. Would that work the same way here? No, I have not seen a requirement to keep records for three years. So I just don't know that may be up to the Department of Labor and how it writes the rules around this amendment, the requirement in the amendment. Additionally on compliance, could you mention workers here, they can come forward or think they're underpaid, but could other contractors who didn't get the bid because they were too high? Could they put in a complaint against the ones who did get the bid because they're alleging that they're not paying, paying the right wage? And I don't know the answer to that question. It's probably a Department of Labor question to know how they go about enforcing prevailing wage. Thank you. Artie? I did check with the Department of Labor on this when it first came out, asking them, you know, what was their opinion on this proposal. And in short, they were, they follow the administration's concern here that it might complicate projects, but that's not really their determination. Their determination was from the Department of Labor. They have nothing to do with, they would apply their prevailing wage tables. And if someone came to them and complained that they were not paid the right amount, then their wage and hourly folks would take a look at it and take a look at that particular complaint. But they certainly did not imply that they would entertain a complaint from a contractor who didn't get the job as an example, but they would entertain a complaint from a worker who felt that they were not properly paid. And that the rates are set annually and they're there on the website and anybody could look at it and see, I should get paid $13.15 and if they're not, then they would comply. Just get a message from Senator Pearson saying that it's no longer the Pearson amendment because of course there were 14 other co-sponsors on the amendment. So we should simply be calling it the prevailing wage amendment for the BAA. So I apologize for that. So I'm on my last slide. I think we've covered all of these points. So one takeaway is that the prevailing wage is based on these 2020 wages, which are probably out of date now, that if we look at projects going forward, we don't have enough information to know if each project will be subject to the prevailing wage requirement and that there seems to be no enforcement mechanism other than workers coming forward to say, I'm not being paid prevailing wage. So if you are interested in looking at the fiscal note, I've given you a link there on the last page. And happy to answer any other questions. I don't see any other questions, Joyce. So thank you very much. Thank you all. Appreciate the time. And there was a couple questions we did ask and you're going to research that and get back to us. I will do that. Yes, indeed. Thank you.