Study: Prevailing wage laws move African-American construction workers toward income equality
- An Illinois Economic Policy Institute study on the effect of prevailing wage laws found that the pay regulations increased take-home pay for African-American construction workers by 24%. In comparison, white construction workers had a 17% increase in net pay, indicating that prevailing wage laws help to close the income gap between African-American and white construction workers.
- The institute also found that when prevailing wage laws are in place, African-American, blue-collar construction workers earn an average of 88 cents for every dollar their white counterparts earn. In states without prevailing wage regulations, African-American workers make only 74 cents for every dollar white workers are paid. Also, the income gap between African-American and white laborers is 12% less in states with prevailing wage laws.
- The institute conducted the study in part to disputed claims from critics of prevailing wage laws that the regulations have a discriminatory effect on African-American construction workers. To the contrary, the study found that prevailing wage laws did not hinder underprivileged and minority participation in construction and improved all blue-collar incomes, regardless of race.
A Midwest Economic Policy Institute study on prevailing wages that was released in January found that a 2015 Indiana repeal of that wage protection on publicly funded projects, in the form of the Common Construction Wage, hadn't delivered the benefits the public was promised. Proponents of the 2015 repeal said taxpayers could expect a 10% to 20% cost reduction on public works projects, but those savings have not yet come to pass. In fact, the institute said since the law was repealed, wages (down 8.5%), productivity (down 5.3% and job growth (down 1.5%) have fallen.
But some states are keen on getting rid of prevailing wage laws so that they are viewed as pro-business by companies looking to build factories or provide investments. In fact, when aluminum manufacturer Braidy Industries announced that it was building a $1.3 billion rolling mill in Kentucky, company officials cited the state's repeal of its prevailing wage laws as one of the reasons it decided to bring its business there.
Other states, including California and Oregon, have made substantial moves in the other direction, however. Not only do those states have prevailing wage laws but both have taken extra steps to safeguard worker pay. On Jan. 1, a new California law took effect that requires general contractors to make good on their subcontractors' unpaid wages if presented with a valid claim. The Oregon House just passed a similar law, which will next go to the state Senate for consideration.
- Illinois Economic Policy Institute State Prevailing Wage Laws Reduce Racial Income Gaps in Construction Impacts by Trade, 2013-2015
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