Tempe adopts prevailing wage despite state ban

(The Center Square) – Tempe City Council has moved forward with a union-favored ordinance requiring wages on public jobs to be artificially inflated to union-level wages.

Not only does a nonprofit law firm say the measure is likely illegal under Arizona law, but the city expects to pay up to $7 million more annually to administer the new requirements.

The City Council on Thursday night approved adding a prevailing wage requirement to all infrastructure contracts. Prevailing wage is a government-derived pay rate based on profession that, when the requirement is implemented, bans companies that would be willing to offer a more competitive rate by using non-union or labor from cheaper locations. The measure doesn’t affect public utilities.

It was modeled from an ordinance enacted by the Phoenix City Council in January. Tucson has a similar requirement. Phoenix officials predicted the measure would cost the city $17 million more annually on higher-priced contracts. City officials said Tempe would pay anywhere between $2 million to $7 million in administrative costs out of its more than $600 million capital infrastructure budget.

Critics of prevailing wage told the City Council that the new ordinance would cut out bidders of projects, even local businesses who don’t bid on prevailing wage contracts. They also stressed that the measure runs afoul of state law.

“Make no mistake; this is an illegal act, and you will end up in court,” said Mike Gardner with the Arizona Builders Alliance. “The city of Tempe should not put their thumb on the scale and say that a union contract is more valuable than a non-union contract.”

Jason Sangster, business manager with Ironworkers Local 75, praised the council for moving forward with the measure.

“This ordinance is going to stop wage theft and ensure an ironworker will get paid like an ironworker,” he said. “This will level the playing field for our contractors.”

Tempe could soon find its way into a court battle similar to Phoenix and Tucson.

“Tempe’s new ordinance is illegal and is harmful to small businesses, minorities, younger workers, and all Tempe taxpayers,” said John Thorpe, staff attorney at the Goldwater Institute. “The ordinance imposes costly new burdens on companies that do work for the city, and that forces many smaller businesses out of the market. It also forces Tempe taxpayers to foot the bill for higher project costs, and to wait longer for public projects to get done. History has shown the harmful effect these ordinances have—and in this case, which is precisely why the Legislature prohibited cities from doing exactly what Tempe is doing now.”

Councilmember Randy Keating addressed the potential legality issues.

“Is the prevailing legal? I don’t know,” he said, referencing a ballot initiative that allows for minimum wages and the state’s ban on prevailing wage. “I can tell you who thinks it’s legal. The attorney general of Arizona.”

Keating’s reference is to Attorney General Kris Mayes’ June 2023 opinion that a city-mandated prevailing wage didn’t run afoul of state law.