Senate votes to repeal prevailing wage laws

Gary Heinlein
The Detroit News

Lansing — GOP-backed legislation ending Michigan's prevailing wage requirement on public construction projects sped through the Senate Thursday despite opposition from Republican Gov. Rick Snyder.

Senate Minority leader Sen. Jim Ananich, D-Flint, talks over upcoming bills with Sen Curtis Hertel Jr., D-East Lansing, as the Michigan Senate passes prevailing wage" legislation Thursday.

Senate Majority Leader Arlan Meekhof, sponsor of one of the three bills passed by the Senate, said prevailing wage requirements inflate public construction project wages, adding 10 to 15 percent to overall project costs. The 50-year-old prevailing wage law requires public projects contractors to pay workers the "prevailing" or union wage scale.

The three bills passed on 22-15 votes with five Republicans joining the 10 Democrats voting against them. Senate Majority Floor Leader Mike Kowall, R-White Lake Township, and GOP Sens. Tom Casperson of Escanaba, Mike Nofs of Battle Creek, Tory Rocca of Sterling Heights and Dale Zorn of Ida voted against the bills.

Sen. Virgil Smith of Detroit was absent after being charged Tuesday with felonious assault, malicious destruction of personal property, domestic violence assault and battery based on a shooting incident involving related his ex-wife's car. He was released on bond Tuesday.

"We need to continue to pass common-sense policies that support taxpayers and help the economy," said Meekhof, citing Michigan's increasing recovery and job growth following a decade-long recession.

But Casperson challenged members of the GOP majority to "ask yourselves when you're accused of supporting the corporations at the expense of working people ... would they be wrong? We should have more discussion," he said.

A Senate committee amended one of the bills to include a $75,000 appropriation that would be used to educate people affected by the change. Democratic Rep. Curtis Hertel Jr. of East Lansing charged it was an act of cowardice.

Adding appropriations to bills is a technique lawmakers increasingly use to prevent opponents from organizing voter referendums to overturn them once they become law. Courts have ruled such provisions prevent laws from being overturned under state constitutional provisions that protect appropriations.

The Senate narrowly defeated a countering amendment from Sen. Rebekah Warren, D-Ann Arbor, that would have stripped the $75,000 appropriation back out of the legislation. It failed in a 19-18 vote.

Meekhof and House Speaker Kevin Cotter, R-Mount Pleasant, are making the repeal legislation a major priority, although Snyder has said he doesn't favor it. He could face a tough decision whether to sign or veto the legislation from members of his own party.

In a floor speech, Senate Democratic Leader Jim Ananich of Flint predicted Snyder would veto the legislation and lawmakers then would get back to what he said should be the top priority — coming up with at least $1.2 billion more for road repairs.

Following Thursday's Senate session, Meekhof said he still hopes to persuade Snyder to approve the prevailing wage repeal. He noted the governor initially wasn't in favor of a right-to-work law giving workers in Michigan the ability to stop paying union dues.

Snyder had said that was "not on my agenda" before coming out in favor of right-to-work legislation passed and signed by him in a span of five days in the 2012 lame-duck session of the Legislature. The legislation followed voter rejection of a union-backed ballot measure that would have prevented lawmakers from passing such a law.

"Now when he's out touting the great turnaround in Michigan, he uses it, and so he will use this (repealed prevailing wage) as well," Meekhof said.

The repeal bills passed the Senate a day after they were sent to the floor by its Michigan Competitiveness Committee on 4-1 votes. They passed the committee following a hearing that lasted about one-and-a-half hours.

Warren, the lone committee Democrat, questioned why such sweeping legislation was being rushed. Committee Chairman Mike Shirkey, R-Clarklake, said positions on the issue are hardened and more discussion was unlikely to change minds.

Opponents of the legislation, including the Michigan Infrastructure and Transportation Association, say the prevailing wage law levels the playing field on publicly funded projects, supports skilled trades training and upholds middle-class wages.

A prevailing wage prevents unscrupulous companies from using low-paid employees to undercut contractors that employ skilled trades workers to assure high-quality results, they argue.

Supporters say repeal would cut the costs of school and government construction projects saving hundreds of millions of dollars for taxpayers.

But repeal of the state law would have little impact on road construction costs. Most road and bridge projects receive part of their funding from the federal government, whose Davis-Bacon Act requires prevailing wages.

Backers of the repeal include the Michigan Chamber of Commerce and Associated Builders and Contractors of Michigan. Opponents include construction unions and Barton Malow Corp., a major contractor in school construction in Michigan.

Six states have prevailing wage laws similar to Michigan's, and 18 states don't have them. The rest of the states have varying forms of prevailing wage laws.

Arguments about whether a repeal would save or lose money are hotly disputed.

Proponents cited a 2013 study by the Anderson Economic Group of East Lansing that concluded prevailing wage mandates cost taxpayers and schools an extra $224 million a year. An Ohio report says repeal of its prevailing wage law for school projects has saved $487 million since 2012.

Warren and other Democrats counter by claiming the country's most-prominent economists have refuted those studies and dispute whether prevailing wage laws increase construction costs at all.

The conservative Michigan Freedom Fund called Thursday's vote "a tremendous blow" for taxpayers.

"Taxpayers are demanding that Lansing be more responsible with their tax dollars, and today's Senate vote was a great first step," said Freedom Fund President Greg McNeilly. "We encourage the state House to take the next step and to take up these bills as soon as possible."

But Mike Jackson, executive secretary treasurer of the 14,000-member Michigan Regional Council of Carpenters and Millwrights, said repealing prevailing wage provisions "will cost taxpayers far more money in the end" by opening the door to underhanded contractor practices that lead to cost overruns and substandard work that needs to be redone.

"It is unclear to me why, during a construction boom and a skilled trades shortage, the Michigan Senate would want to lower wages and benefits for tradespeople," Jackson said in a statement. "We should be doing everything we can to attract and retain quality workers who can fill the large number of jobs we see coming in the near future."