Opinion: Michigan's prevailing wage repeal will hurt workers
Michigan’s Mackinac Center for Public Policy keeps promoting the Michigan Legislature’s repeal of prevailing wage protections without considering the latest facts. One of Mackinac’s recent articles calls on the federal government to take a cue from Michigan and advance an effort to repeal federal prevailing wage protections.
Prioritizing ideology over evidence, it doesn’t cite the most advanced economic research on prevailing wage laws, fails to include industry experts, and, even worse, ignores the accounts of construction workers, the building trades unions and high-road contractors who readily pay prevailing wages — the people most impacted by the Legislature’s decision.
If Mackinac had done its research, it would find that there is no statistical relationship between prevailing wage laws and contract costs. In any industry, an employer can reduce labor costs by reducing turnover and using competitive, fair wages to attract and retain the industry’s most productive workers.
Mackinac claims that cutting “inflated wages” for blue-collar construction workers saves taxpayer dollars or lowers costs on a given project, but this obscures the fact that the money will simply be absorbed by other white-collar participants in that same construction project — whether it be the architect, engineer, Wall Street financiers, insurance carriers or project suppliers. Interestingly, these other participants’ wages are never accused of being unfair or inflated.
Construction labor accounts for about 20 percent of a typical project’s overall cost, and Mackinac says the repeal will cut project costs by 15-20 percent. So, following Mackinac’s logic, the construction workforce would work for nothing.
Without prevailing wage protections, responsible contractors must increasingly compete against "low road" contractors who frequently fail to invest in meaningful training and do not offer health and retirement benefits for their workers. The reckless market this creates diminishes incentive, in the form of investments in wages, benefits and training, for both the building of human capital in the construction industry and the retention of human capital over the long run.
Ultimately, this leads to the erosion of community wage and benefit standards, shoddy work and unsafe work sites, and less young people, women, communities of color and veterans joining the skilled trades.
Numerous studies find that prevailing wage laws protect the standard of living of construction workers, reduce poverty, improve workplace safety, promote a skilled workforce by incentivizing apprenticeship programs, and stimulate the economy by increasing tax revenues for state and local governments.
Our industry sees the strong competition among union and non-union trades with prevailing wage protections benefiting projects in terms of quality and pricing. Our industry also sees that, without them, increased potential to reduce competition, especially with a lack of available skilled trades people. Because with less competition for bids, there are fewer bids — and fewer bids typically lead to higher costs.
It is not surprising that studies have found no state with a prevailing wage law repealed realizing any discernible savings. In West Virginia, for example, a school construction study conducted last year found that wage savings resulting from the repeal did not translate to overall cost savings. After Indiana’s repeal in 2015, no cost savings occurred, just lower wages for construction workers and slower public-sector construction growth.
Indiana Republican State Rep. Ed Soliday put it best this year when he testified that, "[w]e got rid of prevailing wage and so far it hasn’t saved a penny." The same thing happened in Michigan when its prevailing wage laws were suspended in the 1990s.
Michigan needs to realize and remember that this repeal is anti-jobs, anti-competition, anti-worker and anti-American Dream. While implementing this repeal, we strongly urge the Michigan legislature and the Mackinac center to consult with experts, our industry, and the communities being impacted by these decisions.
Sean McGarvey is president of North America’s Building Trades Unions, an alliance of 14 national and international unions that collectively represent over 3 million skilled-craft professionals in the United States and Canada.
Doug Maibach is chairman of Barton Malow Enterprises and executive vice president of Barton Malow Company, a top performing North American general contractor and construction manager headquartered in Southfield, Michigan.