Gov. Whitmer revives prevailing wage; opponents promise legal fight
Lansing — Gov. Gretchen Whitmer said Thursday her administration will require state contractors on construction projects to pay prevailing wages, bringing back a policy GOP lawmakers repealed in 2018 and setting up a potentially contentious legal battle.
Whitmer detailed the new policy during a press conference at a United Association Local 333 facility in Lansing. The Democratic governor described the measure as "pro-worker" and said it would have economic benefits on multiple levels in Michigan.
The Republican-led Legislature repealed the state’s broad prevailing wage requirement in 2018, a move that capped a three-year battle over the law that required contractors to pay union wages and benefits on state-funded construction projects. Union wages tend to be higher, meaning prevailing wage policies, based around pay in particular areas, often forced compensation levels upward.
Repeal advocates argued the prevailing wage raised costs and reduced the amount of building that could be done for taxpayers.
A 2018 analysis by the nonpartisan Michigan House Fiscal Agency described research on the financial impact of prevailing wage laws as "decidedly contested."
"By reinstating prevailing wage, we are ensuring working people can earn a decent standard of living, saving taxpayers money and time on crucial infrastructure projects, and offering Michigan a highly trained workforce to rely on as we build up our roads and bridges, replace lead pipes, install high-speed internet and more," Whitmer said.
But opponents of the prevailing wage vowed to fight the new policy in court.
Jimmy Greene, CEO and president of the Associated Builders and Contractors of Michigan, described the governor's comments as "propaganda" and said Whitmer was trying to heal divisions she's had with trades unions over Enbridge's Line 5 pipeline in the Straits of Mackinac. Some unions have pushed to keep the line active until a tunnel is built to replace it. Whitmer's administration has worked to shut down the current line as soon as possible.
Greene said his group, the Associated Builders and Contractors organization, will pursue legal action to ensure Whitmer's new prevailing policy is never implemented.
"We think this is essentially a campaign stunt," he said.
Whitmer is expected to run for reelection in 2022. In an Aug. 31-Sept. 3 poll by Glengariff Group for the Detroit Regional Chamber, about 48% of voters approved of the Democratic governor's performance and 46% disapproved. The poll of 600 registered voters had a margin of error of plus-minus 4 percentage points.
Senate Majority Leader Mike Shirkey, R-Clarklake, claimed the governor's Thursday announcement "smells of desperation."
"We know union members are migrating to Republicans because of policy, not politics," Shirkey said. "After losing the confidence of hardworking people in the building trades over her wasteful legal effort to shut down Line 5, she is trying to buy them back. They won't fall for this cheap stunt. These are people who work too hard to be fooled."
A new deal after repeal
Supporters of the repeal effort in 2018, including the Associated Builders and Contractors, gathered petition signatures to initiate the legislation and circumvent then-Gov. Rick Snyder, a Republican, who opposed the repeal. Advocates argued the repeal would lower building costs and increase competition for public construction projects.
Whitmer is attempting to step into the void left by the 2018 repeal through her administrative powers over state contracting decisions. The Department of Technology, Management and Budget will "require" prevailing wage under "its authority to develop the terms of state contracts," Whitmer's announcement said.
The director of the Department of Technology, Management and Budget generally has discretion over how to award contracts in the best interest of the state, said Steve Liedel, a government policy attorney with the firm Dykema and former Gov. Jennifer Granholm's chief legal counsel.
"All of the initiated legislation did was repeal a particular statute," Liedel said.
Granholm used her power to issue a directive giving preference to Michigan-based businesses in procurement decisions, he noted.
Under current state law, Whitmer's administration has broad authority to define how officials determine which contracts bring the "best value" for the state, said Peter Ruddell, a partner at the Honigman firm. The State Administrative Board and the Department of Technology, Management and Budget can issue the procedures, Ruddell said.
"I think she has the power to do this," he said.
Asked Thursday what the new policy will cost the state financially, Whitmer said it will depend on the outcomes of individual contracts. When the state doesn't pay a prevailing wage, she argued, there is also a cost.
“We don’t ensure we get the best-qualified people on the job,” Whitmer said. "We don't ensure that we get the outcome that taxpayers should expect."
Labor leaders weigh in
Union leaders said Thursday that the prevailing wage policy will allow contractors to employ skilled Michigan workers and will require them to pay fair compensation. Steve Claywell, president of the Michigan Building and Construction Trades Council, labeled Whitmer's action "brave."
Representatives of the International Union of Painters and the Michigan Regional Council of Carpenters and Millwrights were also in attendance. Tom Lutz, executive secretary-treasurer of the carpenters union, acknowledged the directive wouldn't bring all of the construction projects into the fold of the prevailing wage that were lost because of the broader 2018 repeal that affected projects funded by state dollars. The directive impacts "state-owned projects," Lutz said.
"I don't think we can overstate the importance of a policy that says working people will be respected and paid the area prevailing wage," he added.
On whether opponents of the prevailing wage could challenge the new policy in court, Lutz said he's "sure" they will.
Requiring a prevailing wage to be paid in state contracting means safe, quality construction projects completed by highly skilled workers, said Ron Bieber, president of the Michigan AFL-CIO.
"It means working women and men getting paid a decent wage that can support a family," Bieber said. "It means no more race to the bottom to find the cheapest labor while companies pad their bottom line. It also means a fair competitive bidding process for contractors."
On Tuesday, Whitmer appeared at an event with President Joe Biden at an Operating Engineers training facility in Howell.
Building trades unions have been major supporters of Whitmer's campaigns. The Operating Engineers Local 324 and the Michigan Regional Council of Carpenters both gave maximum contributions of $68,000 to Whitmer's 2018 bid for governor.
Federal policies already require local prevailing wages be paid on projects through federally funded or assisted contracts in excess of $2,000 for the construction, alteration or repair of public buildings or public works, according to the U.S. Department of Labor.
The Michigan Department of Transportation "awards relatively few construction contracts that are not funded, at least in part, with federal aid," according to the 2018 analysis by the House Fiscal Agency. The 2018 repeal of the prevailing wage law appeared to "have a minimal fiscal impact on MDOT construction contracts," the agency said.
Gustavo Portela, communications director for the Michigan Republican Party, accused Whitmer of unilaterally trying to change rules she doesn't agree with.
"This is another reckless and out-of-touch power grab by a governor who is losing approval points by the day," Portela said in a statement.