Portland, OR
Multi-employer and public employee pension plans control over $50 billion in equity investments in real estate.
The two largest public employee pension funds in the United States, the California Public Employee Retirement System and the New York State Common Retirement Fund, have adopted a Responsible Contractor Policy to guide the selection of construction and building operations contractors on their real estate properties.
The International Brotherhood of Electrical Workers, the International Union of Operating Engineers, the Service Employees International Union, and the United Brotherhood of Carpenters and Joiners of America are working together to seek the adoption of this policy by other pension funds.
The Responsible Contractor Policy establishes a hiring preference for the selection of contractors who pay their workers a fair wage and provide employer-paid family health insurance, pension benefits and training opportunities. With a Responsible Contractor Policy, pension funds maintain their fiduciary duty to achieve a competitive rate of return on their investments while also encouraging the fair treatment of employees working on their properties.
All too often contractors push wages and benefits down to the minimum levels and speed-up work to underbid their competitors. Labor unions and employees make thousands of complaints each year regarding minimum wage violations, unpaid overtime, and other federal wage and hour violations. The federal Service Contract Act provides a helpful benchmark for judging the adequacy of wages and fringe benefits paid by contractors bidding for federal building services contracts, while local union contract rates and Davis-Bacon prevailing wage determinations by the U.S. Department of Labor provide an accurate benchmark for assessing a bidding construction contractor's pay policies. However, contractors will seldom use these barometers or benchmarks, and wages and benefits will drop without labor contracts or other incentives to ensure that workers receive a fair compensation. A Responsible Contractor Policy provides such an incentive for contractors to submit competitive bids that include provisions to treat their workers fairly.
The Responsible Contractor Policy is also good public policy. The problems of the working poor which are borne by the community as a whole are becoming increasingly common. The percentage of American workers covered by employer paid health care and pension benefits has declined over the last few years. This is particularly true in the building operations services and construction contract areas where contractors increasingly seek a competitive edge by pushing wages and benefits down to the lowest possible levels. Many of their workers are forced to rely on public hospitals and welfare programs to make ends meet.
The cost of providing these programs to the taxpayer is immense and has put several fiscal constraints on communities across the country. These increasing demands on local and state services has caused elected officials to balance their budgets by underfunding public employee pension plans or raiding their assets. The Responsible Contractor Policy is a significant step toward counteracting the increased reliance on government health and welfare programs and ensuring that workers employed on fund properties contribute to the health of the communities they live in instead of detract from it.
The AFL-CIO supports the concept of the Responsible Contractor Policy.
The AFL-CIO urges members of its affiliates and elected officials who sit on the board of trustees of public employee and multi-employer pension funds to seek the adoption of this Policy by their respective funds.