The arguments in favor of this effort are clear to see. From the press release:

The study [a study issued last October by St. Louis REALTORS] found there are at least 42 building code books used across 89 jurisdictions in St. Louis County. Together, the codes that were counted had a whopping 809 chapters, totaling about 17,000 pages.

42 different codes governing the work of plumbers, electricians, contractors and other professions is a lot. A contractor can be working on projects in neighboring cities and have different codes to follow. Admittedly, those codes are usually very similar. But there are differences between codes, and those differences undoubtedly lead to confusion and higher costs in construction in St. Louis County.

While the benefits of this change are obvious, the concerns are more nuanced. Interest groups use codes to advance their goals, which in most cases is profitability and higher pay. Unions use codes to limit competition. Industries use codes to require people to use items that are profitable to sell. In 1999, the Pipefitters Union tried to dramatically tighten the St. Louis County mechanical code for the benefit of its members by excluding competing unions and non-union workers. It failed the first time but succeeded in 2010 at getting those laws changed. More recently, the sprinkler industry has unsuccessfully attempted to use codes to mandate sprinklers in new homes. There is now a ban on such a requirement in Missouri. A sprinkler requirement would be great for the sprinkler industry, but it would increase the price of new homes. These kinds of decisions should be up to the home buyer, not the sprinkler industry.

Those are just a few examples. My concern is not that we would have fewer codes in the county. Some type of simplification could be beneficial. My concern is that a comprehensive code system would be used by interest groups for their own benefit at the expense of taxpayers and consumers. It is easier for an industry to capture one code than many codes.

Hopefully, the beneficial aspects of this proposal can be accentuated, and the risks reduced, because there are parts of this proposal that are genuinely needed. If codes are consolidated in St. Louis County, it would be imperative to have the boards that oversee the codes represent the public and not interest groups.

The post Should Building Codes Be Unified in St. Louis County? appeared first on Show-Me Institute.

As I’ve said before, state workforce development policies have to encompass the spectrum of professions in Missouri rather than just prioritize college educations, and the “Ditch Diggers” poem and video help to give human faces to the argument.

The post Video: An Ode to the “Ditch Diggers” Building Missouri appeared first on Show-Me Institute.

The prevailing wage sets a floor for pay, but it can actually hurt the workers it’s intended to help by denying employment to people who can do the job at a more competitive price. To make matters worse, making projects more expensive also means that less taxpayer money will be available for other priorities.

THE SOLUTION: Let the market set wages.

Rather than dictate wages, the government should have policies that support a healthy jobs environment where higher wages for all sorts of construction projects—including public construction—develop on their own without the harmful effects of wage floors.

Policymakers must keep in mind that project delays can hurt their communities over time. It would be better to let the market set wage rates for these projects and to begin delivering those public services sooner rather than later.

WHO ELSE DOES IT? States with no prevailing wage law include Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, New Hampshire, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Utah, Virginia, and West Virginia.

THE OPPORTUNITY: Moving away from market-distorting policies like the prevailing wage will help the state promote job growth and spend taxpayer money efficiently.

KEY POINTS

• These reforms would promote job growth and make public works projects more affordable.
• Taxpayers get the most bang for their tax buck when their money is spent efficiently and effectively.

SHOW-ME INSTITUTE RESOURCES

Blog Post: Special Interests Inhibiting Joplin’s Recovery?

Blog Post: Playing Favorites on the Board of Aldermen?

Blog Post: The Race Is On: Wisconsin Pushes to End Project Labor Agreements and Prevailing Wage

For a printable version of this article, click on the link below. You can also view the entire 2018 Missouri Blueprint online.

The post 2018 Blueprint: Prevailing Wage appeared first on Show-Me Institute.

But repeal of the state’s prevailing wage law won’t put Missouri’s tradespeople on the fast track to pauperdom. Indeed, in true supply-and-demand fashion, a shortage of skilled laborers in the construction industry is already driving up salaries there.

“I think that all craft professionals are in the mid-to-upper five-figures, and once you add in per diem and bonuses and incentives, it is not uncommon that we have workers making six-figures,” [Steve Green, vice president of the National Center for Construction Education & Research] said, adding that often accounts “for a lot of overtime.”

With a slew of good paying available jobs, why is the labor shortage so pronounced?

“Construction is not a sexy profession: we don’t attract the younger workers like other professions do,” NCCER president Don Whyte said, adding that his organization is trying to change public perceptions to show that through construction, families can earn a robust middle-class living.

There are a lot of layers to this policy onion. Americans have long placed a premium on a college education, viewing it as a proxy for eventual prosperity while, in important respects, stigmatizing professions where a formal education isn’t required. Certainly college-educated individuals, on average, make more than those who don’t have a college degree, but the rising cost of that education and changing contours of the modern economy have taken a toll on the economic slam-dunk that college once was. Complicating matters further is that as government has subsidized college educations, it has produced more college graduates who otherwise wouldn’t have chosen college — and who instead might have become skilled tradespeople, creating a workforce gap in an industry which, literally, builds our country.

That’s a long way of saying that Missouri probably needs to reassess the way it looks at its workforce policies. The state spends hundreds of millions of dollars every year providing Missourians the opportunity for a college education, but is focusing on college-educated professions a silver bullet for a balanced economic future? Probably not. And that’s why recent efforts to promote apprenticeship programs in the state are not only welcome, but necessary to the economic future of Missouri.

To be sure, the best way to advance that goal will require robust debate, but it’s long past time that the state looked at its workforce portfolio and recognized that a college education leading to gainful employment is good for the state—but so too is a debtless apprenticeship in an industry that will pay handsomely for those services. I hope this important workforce issue gets the attention it deserves this session.

The post An Emerging Policy Frontier: Workforce Development appeared first on Show-Me Institute.

Well, Missouri is falling behind in that race. Like Missouri, Wisconsin’s prevailing wage reforms are still being debated today, but earlier this March PLA reforms passed out of the Wisconsin assembly and on to Governor Scott Walker. Our think tank colleague in Wisconsin, the MacIver Institute, has a video account of the debate.

For those familiar with the discussion so far in Missouri, the terms of Wisconsin’s PLA debate will sound familiar.

The bill’s supporters say it will encourage more construction firms to bid on projects, leading to taxpayer savings. Opponents say it is part of a continued effort to weaken labor unions and would put worker safety and wages at risk.

“We’re saying let the market decide, let employers decide,” [Rep. Rob] Hutton told reporters before the vote. “This is really just to clarify and get the government out of the business of determining whether a project labor agreement is necessary.”

The benefit of moving away from PLAs is twofold. The first is the benefit to taxpayers being able to spend less and get more for their money, as PLAs tend to push up the cost of public construction. But the second is nearly as important: to ensure that contractors, union and not, are treated on equal footing when they bid these public projects.

Fortunately and in furtherance of both ends, a version of PLA reform is moving its way through the Missouri House after passage in the state Senate. Chances seem very good that PLA reform will happen this year, and paired with a prevailing wage reform that just passed out of the House, reform in construction labor appears to be on the way in our state. Missouri may not beat Wisconsin to the post on these reforms, but so long as the state gets there by session’s end, it’s all the same to us. Nonetheless, vigilance remains necessary, especially given the legislative drag being experienced in the upper chamber; we’ll keep you updated.

The post Wisconsin Passes Project Labor Agreement Reform appeared first on Show-Me Institute.

Proponents of a new $311 million hotel claim that the project will create construction jobs. At a recent hearing before the City Council, developer Mike Burke said [begins at 46:35], 

Let me talk a little bit about jobs. During the course of construction, which is about 27 months, there are about 1,300 jobs on the site.

Let's be clear about this: there won't be 1,300 jobs for 27 months. If someone were to ask Mr. Burke about this directly, he would probably walk it back immediately. Some jobs, such as heavy digging and foundation, may exist for a few months at the start. Those will transition to other, different jobs once the structure is being raised, and then finally there will be the finishing jobs once the hotel is ready for its final touches. 

Moreover, even the time spent building the hotel won't result in new jobs. The hotel will be just be a new project for those workers who already have jobs. This is why the economic impact statistics for projects such as hotels, stadiums, and airports are so suspect. Proponents want to pretend that without the project in question, people wouldnt be working or traveling or staying in hotels. As my colleague Joe Miller wrote last month regarding a proposed riverfront stadium in St. Louis:

In fact, a paper from an economist at the University of Missouri studied the impact of the Edwards Jones Dome and the Kiel Center (now the Scottrade Center) in Saint Louis specifically. The author found:

By econometrically modeling construction employment during the 1970’s, 1980’s and 1990’s, it was found that there was no more nor no less construction employment within the St. Louis MSA during the time the Kiel Center and the Trans World Dome [Edward Jones Dome] were being constructed…

…instead of creating new construction jobs, jobs were shifted from projects that would otherwise have been undertaken, resulting in no net new job creation in the construction industry.

The author concluded:

These results, coupled with the more extensive analysis given in the article on construction employment, suggest that the net impact of stadium construction on construction employment and worker incomes is zero.

The post Will Building the Convention Hotel Create Jobs? appeared first on Show-Me Institute.

This post will not discuss the timing of the proposed ordinance. We can only note that the city could have scheduled a vote on public funding for a new stadium months ago. If the city had actually sought public approval, instead of trying to make an end run around democracy, timing would not be an issue.

However, in its effort to justify opposition to a public vote, the mayor’s representatives have again made claims about the stadium’s impact that fly in the face of economic evidence. According to city representatives, the stadium project will create an amazing 3,000 new construction jobs. But academic economists have studied the impact of stadium projects on the construction industry, and found that they have little or no positive effect.

In fact, a paper from an economist at the University of Missouri studied the impact of the Edwards Jones Dome and the Kiel Center (now the Scottrade Center) in Saint Louis specifically. The author found:

“By econometrically modeling construction employment during the 1970’s, 1980’s and 1990’s, it was found that there was no more nor no less construction employment within the St. Louis MSA during the time the Kiel Center and the Trans World Dome [Edward Jones Dome] were being constructed…”

This perhaps counter-intuitive result happened because:

“…instead of creating new construction jobs, jobs were shifted from projects that would otherwise have been undertaken, resulting in no net new job creation in the construction industry.”

The author concluded:

“These results, coupled with the more extensive analysis given in the article on construction employment, suggest that the net impact of stadium construction on construction employment and worker incomes is zero.”

This finding is in line with the bulk of the economic literature: stadiums do not boost economic growth, greatly increase tax revenue, or spur revitalization. A new football stadium is an expensive want, not a need, in Saint Louis City. With its lack of economic merits, civic leaders should reject the public funding for the stadium. If they cannot bring themselves to do so, they should at least allow residents to accept or reject a plan to use public funds for football.     

The post Riverfront Stadium Unlikely to Increase Construction Jobs in Saint Louis appeared first on Show-Me Institute.

This month, the St. Louis City Board of Aldermen is considering legislation that would rig the construction contract bidding process in favor of union contractors. And it looks like a political move to scratch the back of an important constituency at the expense of the smaller minority contractors shut out by this type of legislation.

Does any of this sound familiar? It should. In 2012, the St. Louis County Council enacted similar regulations. Just as that law was a shameful example of special-interest pandering in the county, this legislation appears to serve the same function for city politicians who rely on trade and construction unions to stay in power. According to a story in the St. Louis American, Alderman Joe Vaccaro, who introduced this bill, freely admitted that the labor unions came to him with this bill and asked him to introduce it.

Of course, the bill does not specifically say that it would limit bids and contracts to “union-only” contractors. That would be illegal. Instead, it mandates a requirement that will legally accomplish the same goal. The new ordinance requires bidders on contracts of $25,000 or more to offer apprentice-training programs that are generally found in union shops. For all practical purposes, the only way a contractor or company can offer this type of program—and be allowed to participate in city construction contract bids—is to become a union shop. It would be an extreme burden for the typical independent non-union company to participate in the apprentice program. Whatever that burden may be, the city has no business mandating it.

Minority contractors, who want nothing more than an equal playing field in which to compete, say that restricting non-union contractors from bidding on construction projects will prevent minority-owned contractors from winning contracts. The county bill ended up keeping African-American independent contractors out of county construction worksites. Government should not be in the business of picking winners and losers. And government favoritism that has a disproportionately negative impact on minority businesses and independent contractors is simply indefensible.

Moreover, if the city adopts this legislation and non-union shops no longer participate in the bid process, taxpayers will take a hit. Limiting the number of potential bidders can only have one effect: raising overall prices. Researchers at the Beacon Hill Institute found that Project-Labor Agreements (PLAs), another method of union-favored project bidding, raised costs to taxpayers by 27 percent over non-PLA projects (which included many non-union bidders). This new law for Saint Louis City likely would have a similar result.

Law should facilitate open access, such that access to public institutions is not contingent on personal relationships and political connections. Law should be structured to apply to everyone equally. By favoring unionized contractors over non-unionized contractors, this bill reeks of cronyism. This is one bad idea I hope will not come back again, but as Yogi said, “It ain’t over ’til it’s over.”

John Wright is a policy researcher at the Show-Me Institute.

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How narrow of a private interest? Last Wednesday, the U.S. Bureau of Labor Statistics released new data showing that of all construction labor, only 13.2 percent is unionized, a drop from 14 percent last year, and a near-record low. Put another way, Saint Louis County rewrote its “responsible bidder” definitions to protect the one-eighth of the national construction industry that is unionized, leaving the vast super-majority of labor —which is non-union — basically in the lurch for county contracts. As the St. Louis Post-Dispatch‘s Dave Nicklaus reported, union rolls in the state dropped by 51,000 members over the last year, putting overall Missouri union enrollment at “8.9 percent [of the workforce], down from 10.9 percent in 2011.” That fits the national trend lines.

Saint Louis County is trying to direct more money to fewer people, and the special interest nature of the change in the law is accentuated by last week’s construction employment data. Saint Louis County officials should reconsider their decision.

The post An Impromptu Follow-Up To ‘Responsible Bidder’ Blog Series appeared first on Show-Me Institute.

As articulated in the legal treatise Antieau on Local Government:

[L]ocal government officials are not limited to the quality and suitability of the article to be provided but can consider the bidder’s experience, skill, ability, business judgment, financial situation, integrity, honesty, possession of the facilities necessary to perform the contract, previous conduct in similar contracts, reputation and record for reliability, as well as any other factors reasonably relevant to a bidder’s successful performance if awarded the contract.

Antieau notes that at least one court has found that “discretion exercised in choosing the lowest responsible bidder must be based upon substantial difference in quality or adaptability.” Taken altogether, these observations make clear that contractors of similar talent, reliability and quality should be considered on basically even terms in a “responsible bidder” legal construction. If a contractor can do a job reliably and well, the real distinguishing mark should be the price.

But in Saint Louis County, this may no longer be the case. The county’s new ordinance requires that for a construction contractor to qualify as a “responsible bidder,” he or she must “participate in or maintain their own Department of Labor-approved apprentice program for each craft which the firm employs and have active, registered apprentices for each program.” The law further requires that “all on-site employees on the project will be employees and that there will be no use of independent contractors or ‘leased employees’ for on-site work.”

“Apprenticeship programs” are almost always an artifact of union membership. Very few non-union shops “participate in or maintain” such programs, let alone always have “active, registered apprentices for each program.” The latter requirement of “active apprentices” has nothing to do with responsible bids, but it does have everything to do with keeping non-union contractors out. Which, of course, is why it was included. The county’s move will affect all sorts of small businesses, as the St. Louis American‘s Adolphus M. Pruitt noted last month.

The bill restricts non-union contractors from bidding on County projects, thus prohibiting any minority-owned general or prime contractor from County construction work. The bill restricts contractors who don’t have active apprentices. The strange thing about this is that most unions will profess that they are not accepting apprentices. … And the number of minority apprentices active in their programs is dismal.

That is especially bad news in today’s terrible economy. I will explore the “independent contractor” aspect in Part Two tomorrow.

The post Part One: ‘Responsible Bidder’ Does Not Mean ‘Union-Only’ appeared first on Show-Me Institute.

A close reading of the Aerotropolis legislation reveals that the “new building” requirement for Emerald Automotive-type warehouses is ultimately a “new occupancy permit” requirement, since a “new building” is defined in the bill as:

a new structure or building for which a certificate of occupancy was issued on or after July 1, 2011 for commercial activity, including fixtures and equipment;

There is no definition of what constitutes a “new structure,” and if read by properly omitting the “new structure or” section, the definition of a “new building” could literally be construed as “a new building is a new building,” or even “a new building is a building.” This legislative ambiguity sows the seeds for real shenanigans if the bill were ever signed into law. Is a “new building” one year old? Five years old? Ten years old? More? Does the applicant for the tax credit have to be the first tenant of the building?

The only unambiguous requirement, then, is the requirement of a “certificate of occupancy,” which is a permit mandated for businesses in both new and old buildings. In fact, in Saint Louis City a commercial occupancy permit is valid until:

• The business changes;
• The business owner changes; or
• The property’s use changes.

If one of these elements changes, a business owner has to apply for a new occupancy permit. Does that make the structure a new building? Of course not. Therein lies the problem. Why did the author of the Aerotropolis legislation make the “new building” requirement so ambiguous that businesses moving into existing buildings could meet the tax credit’s “new building” requirement?

The building trades in Saint Louis may think the Aerotropolis legislation means that $300 million in tax credits will be going toward new construction projects in the region. There are ample reasons to believe that’s not the case.

And one more thing: We’ve talked about the ever-changing jobs estimates for Aerotropolis made by the proposal’s supporters. How do you create “18,468 construction jobs” — almost two-thirds of all the jobs promised — with legislation that doesn’t require new construction (and thus new construction jobs) for tax credits to be issued on a “new building”?

The post What’s Old Is New Again? “New Building” in Aerotropolis Legislation May Not Actually Mean “New Building” appeared first on Show-Me Institute.

Let’s start in Kansas City, where the city council appears set to establish new code requirements for doors. That’s right — doors. Apparently, the incentive we all have not to get robbed isn’t good enough in KC; now you’ll be subject to mandates to install special doors on new homes, which will raise the cost of housing in KC (although probably only marginally). At least they got rid of one bad part of the proposal:

[Councilwoman Cathy] Jolly brought the idea to the council in April, but encountered resistance from some council members who worried that some of the new code requirements would give a competitive advantage to an Overland Park company that specialized in a device to reinforce door frames.

Jolly insisted she was not trying to play favorites, and the latest version of the ordinance deleted language aimed at a particular device or specification.

I still think the reinforced door requirement is unnecessary, but at least the most “rent-seeking” aspect of the proposal was removed.

On to St. Louis. Before I criticize, I shall praise. There was an insanely obvious example of rent-seeking this month as the fire sprinkler industry attempted to get a county code passed that would require a comprehensive fire sprinkler system in every new home built in the county. I give both the sprinkler industry and the union credit for not even trying to deny the obvious benefits to them. The next item will get no such credit. The article features this quote from the president of the Home Builders Association of St. Louis & Eastern Missouri:

“The sprinkler industry has been basically advocating mandatory sprinklers in all new homes for probably 20 years and realized, ‘We can’t sell this to the general public, so let’s focus our efforts on convincing the fire service community,'” he said.

Mike Mahler, business manager for the 500 members of Sprinkler Fitters Local 268, conceded [the] point but said that did not mean residential sprinklers were not a good idea.

“We got the ball rolling on this because this is a great product,” Mahler said. “We educated the fire marshals: Here’s what sprinklers can do, here’s how they can save lives. And the fire marshals carried the ball from that point on.”

I commend the St. Louis County Council for removing this requirement from the new building code. Mandatory sprinklers are not needed for safety in the county and were properly taken out of the bill.

But on the other hand, the council seems set to approve a new licensing requirement for residential HVAC workers in St. Louis County. The city of St. Louis just passed the same requirement in April. Jefferson County is supposedly going to consider it later this year. Wherever it passes, it’s bad. This type of licensing requirement is a totally unnecessary handout to current HVAC contractors who want to push current and future competitors out of their way. It is “rent-seeking” at its worst. I testified against the bill yesterday at a committee hearing. At least two of the councilmembers asked some terrific questions of the public works director, and appear set to vote against it — although it will still probably pass. One of them summed up the real reasons behind the move in the a Post-Dispatch article about the licensing proposal:

“There is no evidence of a dangerous situation,” [Councilman Greg] Quinn said after the committee meeting. The licensing “was not generated by the public. It was generated by the industry to protect itself from competitors and increase profit,” he said.

To sum up, the makers or installers of doors, fire sprinklers, and heating and air conditioning units have all sought protective measures from local government. The same thing happens all the time at the national level, and it is one of the most depressing aspects of democracy.

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