Enacted by the West Virginia Legislature in 2001 in hopes of assuring that 75 percent of jobs on state-funded public works projects would go to local workers, the Jobs Act has been an abject failure, a legislative audit released Tuesday concludes.
“While the intentions behind the West Virginia Jobs Act were good,” the audit concludes that the legislation has been wholly ineffective, and recommends the Legislature consider repealing it.
However, during the audit presentation Tuesday, Senate Minority Leader Roman Prezioso, D-Marion, called for rejection of the report, raising questions about its accuracy, and whether it is politically motivated.
“Would you say, if we repealed the West Virginia Jobs Act, that we would hire more West Virginians?” Prezioso asked legislative auditor Adam Fridley.
House Minority Leader Tim Miley, D-Harrison, also called for the Legislature to look at ways to make the Jobs Act more effective, rather than to repeal it.
The post-audit report cites a number of factors for the lack of effectiveness of the Jobs Act, including a provision in the law required to comply with federal mandates.
The Jobs Act defines the local market area as including counties within 50 miles of the state line.
That means that 150 counties surrounding West Virginia, with a total population of 17.3 million people, are considered part of the local market area. The local market includes the major metropolitan areas of Pittsburgh and Washington, D.C.
“In terms of general population, West Virginia makes up 9.5 percent of the local labor market,” the audit notes.
West Virginians also make up only 8 percent of the total labor force in the 205-county local market area.
“The Job Act’s effectiveness in increasing the number of West Virginians employed may be limited by the disproportionate number of non-West Virginians in the local market,” the audit states.
However, amending the law to impose stricter limitations on out-of-state workers would likely be challenged in court as a violation of the commerce clause of the U.S. Constitution, the audit concludes.
Even with the broad definition of local markets, the audit finds that WorkForce West Virginia grants requests for waivers to employers to hire out-of-state workers to fill state-funded construction jobs more than 90 percent of the time.
Conversely, WorkForce West Virginia has referred in-state workers for about 5 percent of all job postings for Jobs Act-eligible projects but does not have data to show if any of the referred candidates were actually hired by out-of-state contractors.
Also hindering WorkForce West Virginia is a three-day window under the law for the agency to refer candidates for job postings, the audit finds.
“WorkForce officials indicated that the three-day turnaround period restricts their ability to locate, contact, and procure qualified candidates for public improvement projects subject to the Jobs Act,” the audit notes.
Under the law, enforcement of the Jobs Act falls to the state Division of Labor, but the audit finds that the division receives no funding for Jobs Act compliance, and relies on 18 inspectors statewide to enforce the act.
However, those inspectors also have to enforce a wide variety of Labor regulations in addition to the Jobs Act, a list that includes, according to the audit, “state wage payment laws, minimum wage and overtime requirements, child labor, verifying the legal employment status of workers, state wage bond requirements, employee meal break requirements, the maximum work hours schedule for nurses, employer limitations relating to employee polygraph examinations, the application and licensure of state polygraph examiners, and the registration of employment agencies.”
As a result, enforcement of the Jobs Act “tends to be reactive,” often occurring once projects are underway, or even after they are completed, the audit finds. While contractors can be fined after the fact for violations of the Jobs Act, in those instances, “no West Virginians are hired as a result,” it notes.
Prior to the repeal of the Prevailing Wage Act in 2016, Jobs Act compliance was conducted concurrently with prevailing wage compliance on state-funded construction projects.
“Since the repeal of the Prevailing Wage Act took effect, Labor personnel have attempted to stay abreast of most of the contracting activities subject to Jobs Act provisions through the media, agency contacts, and other means,” the audit notes.
The audit finds that many out-of-state contractors fail to comply with Jobs Act reporting requirements, a problem exacerbated by the use of multiple out-of-state subcontractors on many projects.
It finds that in-state contractors are most likely to hire in-state workers, with a survey finding that in-state companies hired 93 percent of employees from in-state, while 21 percent of employees of out-of-state contractors were from in-state.
Steve White, director of the Affiliated Construction Trades Foundation, said Tuesday that, while the state agencies’ record keeping on in-state hires might be insufficient, the Jobs Act has been effective in encouraging contractors to hire West Virginia workers.
“When the contractors see in the contract that there’s an interest in local hiring, they take notice,” he said.
Prezioso’s motion to reject the report was defeated on a voice vote.
Also Tuesday, a post-audit report concludes that Marshall University’s inventory management system is inadequate for tracking assets valued at less than $5,000, creating a high risk for “misappropriation” of laptop computers, personal computers and iPads.
In the 2017-18 budget year, purchases totaling $1.13 million were not entered into inventory records or tagged with asset tags, the audit finds.
Additionally, an attempt by auditors to track 107 items in the university’s inventory management system resulted in 85 percent of those items, with a value in excess of $500,000, not being found in the location indicated for the item.
Eight of the items, valued at approximately $25,000 were either assigned to rooms that don’t exist, professors who are no longer with the university or to entities no longer affiliated with the institution.
In a response, Brandi Jacobs-Jones, Marshall’s senior vice president for operations, said the university agrees with the findings of the post-audit report and is working to correct deficiencies in its inventory management systems.