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ANALYSIS: Unemployment can aid Missouri construction

Sunday, December 28, 2008 | 4:18 p.m. CST; updated 7:08 p.m. CST, Sunday, December 28, 2008

JEFFERSON CITY — More people out of work isn’t good: It crimps family budgets, dampens the state economy and lowers the government’s tax revenue.

But higher unemployment rates also can mean an advantage for Missourians competing for public works project contracts.

That’s because of a 1993 law that restricts who can work on public construction projects during times of high unemployment. When there is “excessive unemployment” — the third straight month with a state jobless rate exceeding 5 percent — only Missourians and workers from certain states can work on public construction projects.

The law helps reserve jobs for Missourians, positions that are being funded through their state tax dollars. The rule also can be a boost for contractors that are based in Missouri and, therefore, are more likely to employ workers able to take public construction jobs regardless of the state’s unemployment situation.

Data released earlier this month by the U.S. Bureau of Labor Statistics show that Missouri’s seasonally adjusted unemployment rate in November inched up by 0.2 percentage points to 6.7 percent. More importantly for those in construction, November marked the 17th straight month the state jobless rate has topped 5 percent.

Doug Smith, the president of a trade group that represents heavy, highway and municipal-utility construction contractors, said that the effect of the excessive unemployment provision is relatively small but that it can help steer projects to Missouri contractors.

“It’s an advantage but not a significant advantage,” said Smith, with the Associated General Contractors of Missouri.

Herb Johnson, the secretary-treasurer of the Missouri AFL-CIO, said he’s not aware of complaints that contractors aren’t using Missourians when they should. Johnson, who also has been a member of the state unemployment council, said the state’s fund for paying out unemployment benefits has been strained, but not because Missourians are getting tossed off public construction projects.

The most recent excessive unemployment period started Oct. 19, 2007. With the labor restrictions now in place for 14 months and running, it equals the longest stretch of excessive unemployment since the law was created.

And over the last five years, the worker residency rules have been triggered five different times, though generally only for a few months at a time. The last time the restrictions applied before the current 14-month stretch was from December 2006 through January 2007.

The excessive unemployment rule focuses on where the worker lives and whether the laborer’s home state has any laws that limit the ability of Missourians to work on public works projects there. When the law kicks in, if a state blocks Missourians from public projects, workers from the restrictive state cannot work here either.

Just fewer than half the states are restricted during excessive unemployment. But three of Missouri’s neighbors — Illinois, Iowa and Oklahoma — are among those that are blocked.

The Missouri Department of Labor and Industrial Relations oversees the worker restrictions; however, a spokeswoman said tips about violations and complaints about problems are the only practical ways to go after potential violators. Labor department spokeswoman Wanda Seeney said the department has the authority to work with the attorney general’s office to get an injunction pulling a violator’s work contracts, but that has never happened.

Further limiting the law’s reach, not even every pothole filling, bridge construction or municipal project requires checking payrolls to see where the workers live. That’s because who’s paying the tab for the construction makes a big difference, with projects receiving at least some federal funds exempt from the excessive unemployment provisions.

The federal exemption means that one of Missouri’s most frequent originators of public construction projects — the Department of Transportation — generally doesn’t have to worry about the state’s jobless rate.

Sally Oxenhandler, a spokeswoman for MoDOT, estimated that only about 10 percent of all road projects are solely state funded and therefore have to comply with the rule. For those that must follow the contracting rules, Oxenhandler said the department checks payrolls.

“We ask our resident engineers to check payroll as it comes in, and that would alert us whether a contractor might be using out-of-state labor when they need to use Missouri labor,” she said.

Oxenhandler said there’s only been a problem once. In April — six months after the excessive unemployment restrictions kicked in — an Iowa contractor was the low-bid for an asphalt paving job in the northwest corner in Caldwell and Daviess counties. Oxenhandler said the asphalt company was told that it would need to use Missouri workers.

The excessive unemployment protections aren’t saving a Missouri construction sector that has been hit hard during the recession. But with unemployment on the rise, the economy souring and uncertainty about when a recovery will start, the worker residency restrictions are a little boost to help secure the foundation of Missouri’s construction industry.

Chris Blank has covered state government and politics for The Associated Press since 2005.

 

 


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Comments

Ray Shapiro December 29, 2008 | 1:31 a.m.

From the article:
["Herb Johnson, the secretary-treasurer of the Missouri AFL-CIO, said he’s not aware of complaints that contractors aren’t using Missourians when they should. Johnson, who also has been a member of the state unemployment council, said the state’s fund for paying out unemployment benefits has been strained, but not because Missourians are getting tossed off public construction projects."]

Can anyone tell me why this article was even written?

(Report Comment)
Mike Sykuta December 29, 2008 | 11:27 a.m.

I wonder whether such restrictions on interstate labor trade have ever been tested as a violation of the "Commerce Clause" of the U.S. Constitution. It is unconstitutional for states to create laws that discriminate against out of state producers in favor of in-state producers for pretty much any product (see Graham v Heald, 2005). The same logic should extend to labor services. Perhaps the fact that this is for "public works" makes a difference? A little investigative reporting would be nice.

(Report Comment)

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