LCPtracker Blog

Latest Tech Trends, Prevailing Wages, and the Labor Shortage

Today, we sat down with LCPtracker’s CEO, Mark Douglas, for a Q&A session on the construction industry’s technology trends, prevailing wage compliance, and the future of construction. Check out what Mark has to say about the industry’s hottest topics below.

Q: What has it been like to play a part in the technological shift in the public sector of construction?

A: It has been quite a ride. There’s a lot of change going on right now in construction. In many ways, I think the industry has been going through some major growing pains – and likely for a few different reasons. But one of those, unfortunately (albeit understandably), has to do with the industry’s past tendencies in being slow to adopt the latest administrative technologies. Naturally, the main focus has always been more geared towards technologies directly impacting the primary objective: building. But more and more often now, organizations are turning to other forms of automation that can greatly contribute to leaner, more efficient processes.

One of the biggest trends over the past few years has been the rise of mobile technology on the jobsite. Tablets and smartphones are being used to streamline the processes of logging worker hours, creating daily progress and incident reports, conducting compliance walk-throughs and interviews, etc. And then, of course, nowadays everyone wants everything integrated. So, contractors and even public agencies overseeing project compliance are asking for these mobile applications to integrate with payroll systems and prevailing wage compliance software.

Q: Why do you believe prevailing wages are so beneficial for the public works construction industry?

A: Since LCPtracker started in 2003, we’ve been asked this question a lot. Personally, my response continues to evolve as we learn more from our clients year after year. The short answer is that prevailing wages help ensure stable job opportunities for hardworking people that provide family-sustaining wages. They also keep companies from exploiting cheap and/or unskilled laborers and ensure that those hired on the job are adequately experienced and equipped to perform work safely and efficiently. Not to mention, prevailing wages produce additional tax revenue, boosting the economy and providing a better return on investment of public funds.

Q: And what’s the long answer?

A: It’s hard to get too deep into it with a short Q&A. But I will say that our clients have helped us gain a more granular, in-depth understanding of the importance of prevailing wages in the industry. Over the years, their stories have transformed our company and its vision in much the same way that construction career pathways have transformed the lives of their employees. Some of them have started targeting traditionally underutilized and disadvantaged demographics to transition them into successful careers in construction. These opportunities to learn valuable skills and earn a sustainable wage have been life-changing for many. And it’s also been an avenue to help combat the industry-wide labor shortage.     

Q: What’s typically your response to the debate on prevailing wages?

A: I understand why some might think differently on the issue, but there’s unfortunately a lot of misleading information out there. And most of the arguments against prevailing wages are based on a surface level understanding and unfounded claims. For one, a common and often misguided argument is that prevailing wages needlessly increase the cost of construction by a significant amount – some instances cited as high as 25%. But if do your research and talk to the contractors or agencies, you would find that a project’s cost of labor, on average, is about 30% of the total budget. Is it really possible that prevailing wages increase labor costs 600%? The math doesn’t check out.

While there are certainly some cases where the costs increase, there’s plenty of research indicating that, in the long run, eliminating prevailing wages does not save any money at all. In fact, some states have repealed prevailing wages, only to find that it had no effect on project costs and it did not encourage a more competitive environment. There was no change in the number of bids on each project.

The truth is, low wages attract cheap, inexperienced workers and high turnover rates. This leads to inefficient labor, decreased productivity, and leaves the contractor more vulnerable to instances of injuries or fatal accidents – which can increase project costs by thousands.

Q: What role do prevailing wages play in addressing the labor shortage?

A: At the moment, it’s the elephant in the room. It’s perhaps the biggest reason why we absolutely need to preserve prevailing wages. We’re already having a hard time encouraging people to enter the construction workforce. Each year, we have more workers retiring and less people ready and willing to fill their voids. Simple logic will lead you to two conclusions: 1) lowering wages will discourage people from choosing a career path in construction; and 2) it will encourage existing workers to leave the industry in search of better employment options.

One of the most common things I hear from our contractor clients, year after year, is that they struggle to adequately staff their projects. This labor deficit leads to project delays and missed deadlines. And in order to compensate, contractors are often forced to do one of three things: pay overtime hours, offer more lucrative wages and benefits to attract and retain more skilled labor, or simply pass up opportunities to bid on certain projects entirely.

Q: What does the future hold for LCPtracker?

A: We aim to meet industry demands as interests move towards new forms of technology. Mobile technology is only just one form of this. Another is the need for more dynamic reporting. We continue to strive to provide our clients with reporting that goes beyond the visualization of compliance data. One of our big pushes is to allow our clients to use this reporting for workforce measures. As I previously alluded to, some of our clients already use workforce reporting to target underutilized and disadvantaged demographics for workforce programs and training. Many cites have had great success already in creating and implementing hiring goals.

We actually have demonstrations and training sessions on these kinds of tools coming up in May at our biggest educational event of the year, Ignite 2019. It’s an all-encompassing construction compliance and workforce development conference. And if nothing else, it serves as a good opportunity each year for us all to get acquainted with some of the newest changes on the horizon for this evolving industry. It’s an exciting time for public works construction.