This viewpoint was published in the Lansing State Journal on March 7, 2013.
Prevailing wage laws attract skilled, safe and productive workers who ensure that projects are done on budget, saving costs for businesses and taxpayers.
Prevailing wage laws ensure tax dollars are used to create jobs for local Michigan workers, not given to fly-by-night contractors who hire untrained, unskilled and undocumented workers in an effort to underbid established businesses. This in turn protects established businesses who hire the required skilled workers and who are already paying their employees wages at or near the prevailing wage. Workers paid prevailing wages are less dependent on taxpayer-funded programs.
Efforts to repeal prevailing wage laws are wrongheaded and reckless — to workers, to Michigan businesses that play by the rules, and to taxpayers. Construction industry prevailing wage laws are a check against a dangerous tendency in the construction industry: Cutting corners, low bids and other unscrupulous practices that degenerate into destructive wage and price competition. These practices can drive skilled and experienced workers from the industry. They also reduce productivity and quality. Reduced to poverty-level jobs, workers with less money will struggle to care for their families and contribute to the local economy.
Meanwhile studies show that the construction customer and taxpayers as a whole do not save any money when prevailing wage laws are repealed, according to a 2011 report by Keystone Research Center. This and other studies rightly point out that prevailing wage laws attract skilled workers, who are more productive. They are also the singular reason projects get done right the first time, and don’t have to be redone. These two factors are the key to keeping projects on or under budget.
One myth that must be debunked immediately: Prevailing wages do NOT increase construction costs. Decades of studies show prevailing wages do not raise costs, and may even help reduce long-term costs. When Michigan suspended its prevailing wage laws in the 1990s, schools construction costs showed no difference before or after. Data from the Federal Highway Administration shows states that pay higher wages saw lower overall costs than states that pay low wages. Counterintuitive, but true. Labor hours to complete a mile of highway are 32 percent lower in high wage states despite a 69 percent higher wage rate, and states that paid higher wages saw savings of more than $30,000 per mile to taxpayers, according to the Construction Labor Research Council.
Repealing prevailing wage laws are a bad idea, a recipe for a race to the bottom. We see first-hand what happens on work sites that don’t pay a fair day’s wage for a fair day’s work: Workers are less experienced, injury rates are higher and the end product is of poorer quality, requiring repairs and additional work that only add to the costs. Study after study also shows repealing prevailing wage laws lead to less workforce training, lower wages, and less health care and other basic benefits.
In other words, repealing prevailing wage laws will spark a self-defeating cycle of decline that will harm Michigan — businesses, taxpayers, workers and our infrastructure — in the near term and in the long run. And that’s something Michigan cannot afford now, or in the future.