Dive Brief:
- Michigan lawmakers are close to repealing the law that guarantees a prevailing wage rate to construction workers on state-funded projects, according to the Associated Press. If the state's Republican-led legislature is successful, Michigan will be the fifth state since 2015 to repeal such a law, joining Arkansas, Kentucky, West Virginia and Indiana. Wisconsin lawmakers passed a partial repeal in July 2015. There are currently 22 states without prevailing wage laws on the books.
- Proponents of the repeal claim that prevailing wage rates, which typically are based on union wage rates, force construction costs up, create red tape and make it harder for nonunion contractors to submit competitive bids. Critics of the repeal argue that prevailing wages fund important trade and safety training programs, help to ensure quality work through fair wages and keep nonunion construction companies from swooping in and driving down hourly rates.
- Michigan's Republican Gov. Rick Snyder is reportedly opposed to the bill but cannot veto it because it was introduced via a $1.3 million ballot drive initiative, which was funded by the Associated Builders and Contractors of Michigan.The repeal would not affect federal projects that require payment of prevailing wages under the Davis-Bacon Act.
Dive Insight:
State branches of ABC have been staunch opponents of prevailing wage requirements. The association's official position is that it is not opposed to collective bargaining as long as employers and their employees are the ones who determine wage rates and working conditions.
While some states are eliminating or reconsidering prevailing wage laws, other states like New York are expanding their scope. The New York State Assembly is considering a bill that would extend prevailing wage requirements to private projects that receive any funding at all from state agencies, with few exceptions. Those exempt from the new regulation include homeowners, certain small nonprofits, affordable housing where 75% or more units are set aside for those making up to 60% of the area median income and 421-a-eligible projects.
Perhaps adding momentum to the pro-prevailing wage side is a recent study from the Midwest Economic Policy Institute, which found that Indiana's repeal of its prevailing wage law has been short on taxpayer benefits. At the time of the repeal, proponents said it would result in a drop of 10% to 20% of the cost of public works projects, a savings that never came to pass. In fact, the institute said blue-collar wages (-8.5%), productivity (-5.3%) and job growth (-1.5%) have all suffered post-repeal.
