In the city of San Jose and the surrounding metropolitan area, the construction industry carries considerable economic importance, employing more than 30,000 people each year. The NOVA Workforce Investment Board described construction as a foundational occupation, creating the infrastructure necessary for the South Bay region to attract and grow driving industries.
In this highly mobile industry, where paychecks depend on the weather and workers are employed only for the length of a construction contract, industry and community have developed tools designed to ensure safety and quality of work and to induce positive economic impacts from major construction projects. One such tool is prevailing wage on public works.
Prevailing wage is an important economic development tool in the state of California. Both the state and the federal government utilize prevailing wage policies which apply to taxpayer-funded public works projects receiying state or federal funds. Many local governments in the state have their own prevailing wage policies covering projects funded by local taxpayers. The City of San Jose’s prevailing wage policy was adopted in 1988; its statutory purpose is to ensure equitable and sufficient wages, protect local job opportunities, and stimulate the local economy.
This policy brief examines the economic, fiscal, and social impacts of San Jose’s prevailing wage policy by analyzing a hypothetical scenario: how would construction costs, tax revenues, overall economic activity, and other relevant factors change if San Jose’s public works projects were not built under prevailing wage?