Groups of tents along the highway in remote places of Alaska will likely be a less common sight now that the state labor department requires contractors to provide their workers meals and lodging or pay them $75 a day on public construction projects.
The new requirement has left many wondering why it was put in place and how it will affect them.
The Alaska Department of Labor and Workforce Development issued new wage rates Sept. 1 - as it does each September and April - for workers on construction projects funded by the state. Along with stating the minimum amount each worker must be paid, the latest rates included a new requirement for remote work sites.
Contractors are now required to provide meals and lodging for some of their employees working away from home, on sites at least 65 road miles from the main post offices of Fairbanks and Anchorage or inaccessible by road in a two-wheel drive vehicle.
In lieu of room and board, contractors may pay their employees a $75 per diem, with the exception of some of the most remote areas in Alaska.
In the most remote areas, contractors must provide meals and lodging through commercial facilities - if there are any - or set up camps for their workers. West of Livengood on the Elliot Highway and east of Chicken on the Top of the World Highway are among some of the most remote areas where paying a per diem in lieu of a camp is not allowed.
The new requirement will improve living conditions for some workers, according to Mike Gallagher, business manager of the local laborers' union. Gallagher recalled some publicly funded construction projects where workers slept in tents and motor homes, without access to facilities. "We just feel that it was inappropriate," he said.
The new requirement will also make it easier to recruit new workers, Gallagher said. "There were times when we had a very hard time getting apprentices on these projects because of the housing situation."
The new requirement could also increase the number of people hired who live near where the construction project is located because contractors hiring locally would save money by not putting up their workers or paying a $75 per diem.
"Now that contractor has a big incentive to hire locally and give that person work in their backyard," said Jim Sampson, executive president of the Alaska AFL-CIO.
The downside: The new requirement will increase costs.
"That $75 is a pretty big difference for a union contractor to absorb," Dick Cattanach, executive director of the Associated General Contractors of Alaska, told members of the AGC during the association's annual convention Nov. 5. "It adds about $9 (to each hourly wage) a day for the average eight-hour day."
The additional money needed to pay for the per diem or meals and lodging is going to be added into contractors' bids for state construction projects, Cattanach said in an interview. "It isn't going to hit a contractor's bottom line."
As contractors increase their bids to meet the new requirement, the state will end up footing the bill. The Alaska Department of Transportation and Public Facilities funds the vast majority of these public construction projects.
"It is too early to tell what the impact of the meals and lodging will be," said Mark O'Brien, chief contracts officer for the state transportation department.
Since the new requirement was put into effect, the Alaska department of transportation has not received any additional funding, he said. That leaves O'Brien's department with two options to cover any costs incurred from the new requirement.
"One would be request funding from the Legislature," O'Brien said. "Or we would have to take it from the existing federal aid program and that would reduce the overall amount of money for all projects."
By the first week of November, the state transportation department had put out two bid requests for projects where the new requirement will apply, O'Brien said. With each bid request, the department had specifically brought to the contractors' attention the new requirement along with the other applicable labor department provisions.
Why now?
The new requirement came out of U.S. Rep. Don Young's (R-Alaska) office in Washington, D.C. Last spring, Young - who is the chair of the House committee on Transportation and Infrastructure - included language in the new transportation bill requiring meals and lodging or a per diem for workers on remote federal highway projects in Alaska.
"There was recognition that Alaska was a little bit different as a state than other Lower 48 states," Sampson said. "I have been a strong advocate of giving these hands some decent conditions. It's a major step forward."
Sampson said he pushed for the requirement because some contractors weren't providing minimal housing for their employees on remote work sites. This left workers to find their own housing, either by hauling campers to the work site or paying for their lodging when it was available.
The new requirement caught some people by surprise.
"We weren't alerted ahead of time," Cattanach said.
Cattanach said he found out about the new language when the National AGC sent him a copy of it. At this point, the new language had gone through the House and the conference committee of the Senate, he said.
The AGC sent Young a letter saying that its members had concerns about the new language. Young's office responded that the AGC and labor unions had three workdays and a weekend to submit revised language, according to Cattanach. Representatives from Young's office did not return calls for comment.
Cattanach talked about the bill line by line with labor leaders and representatives of the state Department of Transportation to come up with conditions that the three groups could agree upon, he said. "We modified the language considerably and came up with what we felt was a reasonable compromise."
Gallagher of the laborers' union agreed that the conditions were a compromise everyone could live with.
"Our preference is to give everyone room and board," Gallagher said. But providing room and board is not always realistic, he said. Sometimes a job is so short it's not worth setting up a camp, and other times nearby lodges are full.
So requiring contractors to pay their employees a $75 per diem in lieu of meals and lodging was a compromise that made sense, Gallagher said.
After Gallagher, Cattanach and others settled on the revised language, the AGC asked the state labor department if it would adopt the new federal highway requirement for state-funded construction projects, Cattanach said. "We thought the rules should be the same."
The state labor department granted the AGC's requests because the new requirement "fit with the governor's priority to employ more Alaskans and rural Alaskans," said Grey Mitchell, director of the state labor department's Division of Labor Standards and Safety.
Cattanach said that another advantage of having the new requirement prevailed is that it applies to all contractors working on a state-funded construction project.
"What this does is it levels the playing field," he said. "Everybody will be playing by the same rules."
The new requirement, however, doesn't cover all workers.
Under the state law, contractors are only required to provide meals and lodging or per diem pay to workers in certain trades, such as carpenters and power equipment operators, because these trades' contracts include the new requirement.
The state Department of Labor sets the prevailing wages, or the minimum amount each worker must be paid, according to contracts between different trade associations like the AGC and the laborers' union. At the time the prevailing wages were issued Sept. 1, some of the contracts had already been negotiated to include the new requirement while others hadn't.
Cattanach said that the new requirement should apply to more trades when the next prevailing wages are set in April 2005 because the AGC has negotiated with several other unions new contracts that include the requirement.
Trades that do not negotiate with the AGC can also make the new requirement apply to them by including the new language in their contracts with other trade associations like the National Electrical Contractors Association and the Mechanical Contractors Association.
- Journal of Commerce reporter Melissa Campbell contributed to this report
