Tempe approves prevailing wage ordinance for construction workers

Tempe City Council approved the establishment of a prevailing wage ordinance at its May 9 meeting with a 5-1 vote.

The new prevailing wage ordinance establishes wage standards for workers on most city of Tempe construction projects valued at more than $4 million, a city release explained. This ensures that workers are compensated fairly.

T he wage for each position is determined by the US Department of Labor under the provision of the Davis-Bacon Act.

Based on an independent consultant’s report, it is estimated the prevailing wage ordinance may increase costs to the city from approximately 2.3% to 7% annually, about $2.4 million to $7.3 million, using fiscal year 23-24 as an example, the release stated.

That’s less than 1% of Tempe’s $616 million capital improvement project budget, the budget that funds construction projects in Tempe.

“While no one would say that the millions this will cost is a small amount of money, it is a small amount to ensure the equity and fair treatment of the workers who build our city projects,”  Councilmember Randy Keating stated in the release.

The city of Tempe has been evaluating the need for a prevailing wage ordinance since 2019, first brought to a city council committee on which Councilmember Keating served.

According to the release, Councilmember Doreen Garlid voted against the ordinance for two reasons: first, the additional cost as Tempe prepares for budget reductions due to the repeal of the $21 million in residential rent tax, and second, the likelihood of a lawsuit that would come with its adoption.

“I support the fair treatment of the men and women who build our community,” Garlid stated in the release. “But passing this ordinance will pull our city into an existing lawsuit that will cost hundreds of thousands of dollars. Those legal fees will be 100% borne by the residents of Tempe at a time that I believe we need to be prudent.”

The cities of Phoenix and Tucson are currently being sued over their prevailing wage ordinances.

The ordinance will be located in Chapter 26 A of the Tempe City Code. Non-compliance with the new ordinance could result in the suspension of a contractor from responding to solicitations for all city construction contracts for one year, the release stated.

Those interested may watch the discussion from the May 9 Tempe City Council meeting.