A proposed bill in St. Louis County would mandate the imposition of several burdensome regulations on many more projects and developments within the county. Bill 182 would apply three new rules: prevailing wages, participation rates for woman- and minority-owned businesses (also known as disadvantaged business enterprises, or DBEs), and apprenticeship programs, to any project in the county that receives any form of tax incentive or subsidy. These three requirements are common, unfortunately, for government-funded projects, but this is a dramatic expansion of their use.
Prevailing wage laws are harmful because they inflate the cost of projects taxpayers pay for or, in these cases, subsidize. Research on the subject suggests that prevailing wage laws can increase the total cost of public construction projects by as much as 25 percent. For local governments with many projects needing to be built, that could mean lower-priority but beneficial projects will go undone for lack of funding. Repeated year after year, the harm done by leaving these projects uncompleted compounds, leaving the community with fewer and inferior government services compared to what market labor rates would have otherwise allowed.
DBE programs require that a certain amount of work involved in a project go to contractors and subcontractors owned by women or minorities. DBE programs also inflate the cost of projects for taxpayers and have often been vehicles for fraud and abuse. Increasing costs and encouraging criminal activity . . . where do I sign up?
Finally, the proposed law requires that bidders offer apprentice-training programs, which are generally found in union shops. There is nothing wrong with apprenticeship programs, but instituting such a mandate is blatant favoritism for union shops over nonunion competitors. It would be a substantial burden for a typical independent, nonunion company to create an apprentice program before it could bid for a project. Whatever that burden may be, the county council has absolutely no business mandating it. This is a blatant ploy to guarantee that union companies will win all county bids.
Not surprisingly, much of the language in the bill was put in by unions, according to the Post-Dispatch story.
I am a strong opponent of tax incentives and subsidies for businesses, but imposing these types of regulations on all sorts of projects in St. Louis County is a terrible abuse of the political process. St. Louis County has no business making these rules, and, indeed, I question its legal authority to do so in some of these cases. Local government should address the major issue of incentive and subsidy abuse by saying “No” far more often. Saying “Yes, but with a bunch of new regulations and red tape” is the worst policy of all.
