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California Governor Brown signed into law bill SB7, which would block state funds to cities that do not pay prevailing wage on public works projects. This measure is directed to charter cities, some of which have avoided paying prevailing wage in the past to save money. The bill also limits state funds to cities that have allowed a public works project without the prevailing wage being paid in the last two years.

Charter cities are able to govern themselves with regard to municipal affairs. Of California’s 478 cities, 121 are considered charter cities – including Sacramento, Los Angeles, San Francisco and San Jose. As of June 2013, 51 charter cities have provisions which allow them to avoid paying prevailing wage when using their own funds, but not state funds, for public works projects.

Opponents of the bill, including the Associated Builders and Contractors, say the methodology used to calculate the prevailing wage was flawed as it does not take into account differences between individual cities’ and counties’ economies. The exemption enables a greater amount of construction projects that might not have been possible without the flexibility for cities to choose a wage rate that better represents the local market conditions.

However, backers of SB7 state the prevailing wage, calculated by the Department of Industrial Relations, was intended to provide a living wage for workers and accurately reflects economic conditions, county by county. It represents a public commitment to the middle class and a respect for workers. Wage requirements already apply in federal projects, so should also translate into state projects as well.

For more information on the bill, see full article.