Construction laborers on the low rung of city contracts will earn a “living wage,” under an ordinance that gained final approval Jan. 29.
Starting with contracts solicited after May 1, contractors building West Palm Beach projects such as fire stations or wastewater facilities will be required to pay workers at least the $14 an hour minimum that applies to city employees. That number is scheduled to rise to $15 in October 2019.
The law applies to contracts of $200,000 or more per year, sparing smaller companies from the burden.
“We determined that there’s still a good segment of our contracts below that $200,000 threshold that a lot of small businesses can fit into, so it won’t have a tremendous negative impact on our small businesses,” Procurement Director Frank Hayden said Thursday.
Competition in the industry should keep the change from increasing the cost of city contracts significantly, he said.
The initial draft of the ordinance had the cut-off at $500,000 but the city commission decided to lower it because most city contracts are below that amount, he said.
There will be roughly 1,000 contracts per year that will fall within the requirements of the new law, Hayden estimated.
In 2016 the city established a living wage for its employees, hoping to set an example for companies throughout the city to raise the bar and enable employees to more easily support themselves and their families.
The new ordinance mandates that minimum wage for private companies that do construction or road or right-of-way projects for the city or its Community Redevelopment Agency. The requirement will be written into contracts and employees can bring complaints about violations to Hayden’s department for enforcement.
Contractors that violate the provisions can be fired or declared ineligible for future work with the city for up to three years and face additional penalties, in addition to having to pay employees what’s owed.
Hayden said the city decided to apply the ordinance mainly to construction work because that’s where there’s a need. Engineering firm workers, consultants and unionized specialists already generally make more than $15 an hour, but many manual laborers in construction do not, he said.
The city pays roughly $100 million a year in contracts, maybe one-third of those in construction. The city’s water and wastewater plants hire contractors to put in large water mains, for example. The city also has been building new fire stations, which cost about $5 million each. That’s the kind of work where the new rule will come into play, Hayden said.
“It should have a major impact on their earnings.”