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Political Battle Brewing Over City Contracting Initiative

Political Battle Brewing Over City Contracting Initiative
What's the motivation behind Councilmember Carl DeMaio's "Competition and Transparency in City Contracting" initiative? How would the initiative, if passed, affect San Diego's living wage law? We discuss the arguments for and against what could be the most talked about local proposition on the November ballot.

GLORIA PENNER (Host): So let me talk about that next big political battle. It’s between labor and business and it’s already taking shape, this time in the city of San Diego rather than in Chula Vista and Oceanside where they’ve had their battles. In those two cities, business won those battles with yes votes on Propositions G and K, which basically allows labor unions to be frozen out of city contracts. But, David, this latest struggle is centered on a ballot measure being readied for the November election by Councilman Carl DeMaio. So, first of all, what does it call for?

DAVID ROLLAND (Editor, San Diego CityBeat): Well, it calls for easier and more outsourcing of city services, city jobs, to the private sector. It would essentially ban project labor agreements.

PENNER: Explain.


ROLLAND: Well, a project labor agreement is an agreement between city government and the labor community on basically the rules for a certain development project. Here are the rules that we’ll set out and, you know, it can – the agreement can be whatever, you know, the two parties work out in terms of apprenticeships and in terms of, you know, wages and benefits and that sort of thing. And so it bans that just sort of like Prop G in Chula Vista, which you were mentioning. It seems to expressly repeal the city’s living wage law, which sets a minimum level of wages and/or benefits for people who work for companies that the city contracts with. It…

PENNER: Let’s just give those numbers. It’s about $11.00 per hour and another couple of dollars…

ROLLAND: Yeah, two…

PENNER: …in health benefits.

ROLLAND: …two dollars and twenty cents if you do not provide health benefits for your employees.


PENNER: Right, okay. So instead then the minimum wage would come into effect, is that correct? The state or federal minimum wage rather than the living wage.

ROLLAND: Yeah, the – what Carl’s ballot measure says that you – It prohibits you from requiring companies that you contract with from paying – from requiring any higher pay than state and federal laws set forth.

PENNER: All right, now I mentioned, Kent, that Proposition K in Oceanside, it basically allowed Oceanside to become a charter city.

KENT DAVY (Editor, North County Times): No, that’s exactly what it did.


DAVY: Yeah.

PENNER: But along with that it allows Oceanside some flexibility in dealing with public works contracts, doesn’t it?

DAVY: Yes, in becoming a charter city, it does not have to use project labor agreements, it does allow for the city to have contracts that avoid the – what’s the – I’m sorry, David, the term for the…

PENNER: Living wage?


ROLLAND: Project labor agreement?

DAVY: No, the labor – the labor wage rates.

ROLLAND: Prevailing wage?

PENNER: Prevailing wage.

DAVY: Prevailing wage, thank you. Yeah.


DAVY: Those are the two, and those are the two big elements in that charter agreement.

PENNER: Is it considered anti-labor?

DAVY: Oh, I – Yeah, I think it is. It was – It is anti-labor particularly in the sense that of those two provisions, it was fought bitterly by people from the labor side of the spectrum.

PENNER: Okay, so, you know, I’ve set this up as kind of a labor versus business battle that’s going on here but the voters, Andrew, already approved Proposition C four years ago, which requires city jobs to be outsourced to encourage managed competition. So it’s there, it’s on the books, why hasn’t it happened?

ANDREW DONOHUE (Editor, It hasn’t happed because it has required a very lengthy and bureaucratic dance with labor unions. There’s a whole set of negotiations that have to go on and then it has to go through the city council, and you have a city council that right now is six Democrats to two Republicans and it has not found many friends on the council either. So what’s amazing is Dave gave a very succinct description of what this measure is. It is incredibly enormous in actually what it does, I mean, it goes – it’s like what Prop G did in Chula Vista this primary, plus like four other things. I mean, we’re talking about what would essentially be a bomb that would be dropped on the city in terms of labor – different labor issues, killing living wage, banning PLAs, forcing managed competition on a number of different issues. This is an enormous thing and it’s going to be a huge battle.

PENNER: Okay, so let me turn to our listeners on this. Andrew just explained it so well. I mean, it is going to be a huge battle. It’s going to change the way that the city does business. And its proponents are saying, well, it’s about time. You know, the city is in financial trouble. We’ve got to rein in the costs, and we have to do it by making sure that the city doesn’t spend more than it needs to spend while it still gets quality work out of its contractors. You got a thumbnail sketch this morning of what’s going on. I would like to get your sense of whether you think this new measure is going to do that job. It’s going to save the city, save tax money, and yet keep up the quality of life in San Diego plus the quality of life of the people who work for all those companies and for the city. Our number is 1-888-895-5727, 895-KPBS. You still have time to get in on this conversation. All right, so let’s go back now to who’s leading the fights on both sides. David, Carl DeMaio, of course, we know is leading the battle for this proposition, and on the opposite side we have Marti Emerald, who came out very vociferously against it on KPBS’s These Days this week. And Donna Frye is against it and several others, Todd Gloria, I believe. What is their argument?

ROLLAND: Well, their argument is that Carl—it would be my argument as well—that Carl DeMaio is misleading the public on this measure and I say that because he comes – he’ll come right out and say, and characterize this kind of thing, as sort of the savior of the city budget problems. That is grossly overstating what would actually happen. I think, you know, we quoted the Independent Budget Analyst, Andrea Tevlin, in our story this week as saying that the impact of the living wage on the city’s budget has been minimal and also outsourcing, nobody has ever, as far as I know, maybe Andy can correct me if I’m wrong on this, but as far as I know, nobody has really come out and say (sic), this is how much money outsourcing is going to save. They talk about it in grand terms, that it’s going to save tons and tons of money but I think that would also be minimal. Obviously it depends on how much – how, you know, what level of city services that you outsource to the private sector but really – You know, then it comes down to, well, how, you know, how much under what the city departments can do, you know, will these private companies come in in their bids. And I think it grossly overstates the savings you can make.

PENNER: Well, we’ll get Andy’s response to that but we’re also going to go right to the callers as soon as we come back from the break because lots of people want to talk about this and this will be your time on the air. I want to hear from you. Our number is 1-888-895-5727. This is the Editors Roundtable. We’ll be back in just a moment. Hang in with us. I’m Gloria Penner.

PENNER: I’m Gloria Penner, and this is the Editors Roundtable. I think you know who’s at the roundtable. I want to save the time for our callers so I’ll thank them at the end. Let’s go – We are talking now about a ballot measure that would change all kinds of things in the city of San Diego. It basically would eliminate the living wage for companies that do business with the city, it would require something called managed competition and outsourcing. And I think it was pretty well explained a few minutes ago, so let’s go right to the callers and see what they feel about this. We’ll start with Chris in City Heights. Chris, you’re on with the editors.

CHRIS (Caller, City Heights): Hi. Thanks. Listen, I have two comments. First, when we pay the least possible amount of money for work, then we attract corruption. And, second, contractors who bid less are able to do that because they’re not employing experienced workers. Instead, they’re hiring people they can pay less because they have less experience. And when employees are not compensated adequately and not getting respect at work, including a variety of benefits like health insurance and other things, they have less loyalty to their employers and they have far more reasons to accept money from, well, let’s just say outside sources. So if we want quality work performed, we have to pay the right amount for it. And I’ll take my comment off the air.

PENNER: Thank you so much, Chris. That was so articulately said, Kent, does she have a point?

DAVY: Well, it’s – Most economists would not agree with her. I mean, typically wage rates are set by a law of supply and demand, not on the basis of pegging a number and saying that’s the right number for some given kind of labor.

PENNER: What about her concept of loyalty?

DAVY: Well, loyalty certainly has changed in the workplace but I think that that has little to do with the rate of wages being paid as opposed to the idea that you’ve got a dynamic economy now that sheds jobs like crazy and brings new jobs in different industries so...

PENNER: What about quality of work? I mean, is quality of work linked to loyalty? To how much you pay your workers? You know, it’s true that the job market – I mean, you’re lucky if you get a job.

DAVY: The quality of work and morale have, I certainly think, have a correspondence. Better morale tends to bring happier, you know, with a happier worker probably better products and services. However, that doesn’t necessarily mean that if I can hire somebody at $3.00 an hour less that I’m going to get crappier work.


DONOHUE: But this is sort of the…

PENNER: Andrew.

DONOHUE: …ideological battle because it’s actually a government job and not a free – or, not sort of a private company. The supporters of living wage and ordinances like it will say that, you know – They will ask, do you really want your government wages, your government – your tax dollars to go to low income poverty wages where you may be forcing someone to end up having to go into a hospital and taxpayers end up picking up the bill on the other end. I think that’s sort of one of the key – or one of the main arguments that’s being made by people that are in favor of the cost of living wage.

ROLLAND: Well, not to mention that if you pay a little bit better, you strengthen families, really. I mean, you know, the largest part – the largest problem facing families is stress over money and that impacts a child’s ability to learn in school which, you know, if they’re less educated they’re more likely to get in trouble. Then we talk about the impact on the criminal justice system. Andy already talked about the healthcare, you know. You know, too often people like Carl DeMaio, they just want that instant gratification on the front end and they don’t think about the longterm consequences.

PENNER: Well, let’s hear from Mel from Hillcrest. Mel usually gives us longterm consequences. Mel, you’re on with the editors.

MEL (Caller, Hillcrest): Oh, thank you. Well, I think the editors should talk about the Associate General Contractors who put over $100,000 into this initiative to get the signatures. Now they are not philanthropists. They do it for one reason and one reason only, so that they can pay lower wages and the difference goes into their pocket, the contractors. So the moral of the story is follow the money. See who paid, who is paying for this initiative and who will pay for the campaign.

PENNER: Okay, thanks, Mel. And that shouldn’t be hard to track, especially for investigative reporters that you have your staff, Andrew.

DONOHUE: Or investigative activists like Mel Shapiro. You know, that – the AGC is behind, you know, a lot of these measures or big supporters of a lot of these measures like the ones we saw in Chula Vista and, yes, I mean, they want to be able to compete for these government contracts and government jobs and they don’t want to have to have preordained, you know, wage limits on them.

PENNER: Maureen Cavanaugh on These Days asked Carl DeMaio several times on this week—I think it was yesterday, my how time flies—who funded the signature gatherers for the initiative and I – maybe I was in and out of the car but I didn’t hear him be specific, so that’s rather interesting. John from Encinitas is with us now. John, you’re on with the editors.

JOHN (Caller, Encinitas): Yes, say, so my thought on the outsourcing services, I’ve spent the last 20 years of my career outsourcing services and production all over the world, not only globally as well as locally, and I think a lot of this – some of the – I think there is opportunity to reduce cost for the taxpayers, for everyone. I think a lot of it comes down to the execution and some of the regulations in place. And, frankly, what I’ve seen in the public sectors around the procurement of services and outsourcing, I wouldn’t say that they’re necessarily performing at a level that necessarily yields the kind of results that you would expect. And I think that in the private sector, when you look at some of the cutting edge procurement activities that are going on, I mean, it’s pretty obvious that you can reduce and change standards of living for many of the people, so I’ll just – That’s my comment. I think you can – you can reduce the costs for all.

PENNER: Okay, thank you very much. I appreciate that. And we’ll take one more call, and this one is from Jordan in Encinitas. Jordan, you’re on with the editors, and then we’ll get some comments from the editors. Go ahead.

JORDAN (Caller, Encinitas): Hi. Thank you. I’m calling today because I’m a local contractor and I know a lot of other local contractors here, and I didn’t donate for this initiative but if I had money, I would only because most of the contractors in San Diego are not union contractors. San Diego cannot afford to pay union – all the contractors in San Diego union wages and, quite frankly, my crew runs circles around city employees because I don’t get paid by the hour. I don’t have that guaranteed locked-in hourly rate and a lot of other crews that I know do the exact same thing. I mean, that’s just how we were raised and I think this is a great opportunity. Oh, and by the way, I can’t find anybody to do quality work, that builds a name for my company because no one can take a name away from your company but yourself, for minimum wages. And, quite frankly, the average employee of mine makes $40,000. Now is that below the poverty rate? I don’t know what the poverty rate in San Diego is.

PENNER: No, I don’t think that is below the poverty rate, not for a family of four? I think it’s like $27,000, isn’t that what it is?

DONOHUE: I think so, yeah.

PENNER: I don’t know, I’m giving – I shouldn’t even throw out a figure. I’m not sure. Okay, well, Jordan, thank you very much for that perspective. He really has an interesting point there, is that he can’t afford union wages.

DONOHUE: Well, and I think there is – there’s an important point that, you know, managed competition, if done correctly, can save the city money and, frankly, there’s probably a lot of things that the city’s doing that it shouldn’t be doing. But I would caution people against thinking that this is something that’s going to solve the city’s budget problems or its financial crisis. I mean, we’re talking about something that should be used intelligently in all – probably in a lot of different government aspects but even if you’re saving $10, $20 million a year, the city’s got a heck of a lot bigger problems than that. So I think just the fact this has gotten so much attention and the fact that Carl has, you know, sort of a platform to talk about this is because there’s been no real clear leadership from the mayor on how he’s actually going to solve these problems so everybody who’s got a plan to try to save the money – save the city a little bit of money can step in and try to act like it’s going to fix all of our problems.

PENNER: David and Kent, I’m going to have to skip you on this because we’re almost out of time.