Study finds Indiana common construction wage repeal reduced worker pay, didn’t save money on public works projects

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By Dan Carden
Jan 29, 2018

INDIANAPOLIS – When Gov. Mike Pence signed the 2015 repeal of Indiana’s common construction wage statute, the Republican proclaimed that eliminating county minimum pay rates for public works projects would save the state and local governments money without reducing the paychecks of Hoosier workers.

“Wages on public projects should be set by the marketplace and not by government bureaucracy,” Pence said at the time.

“By repealing the common construction wage, our state is putting hardworking taxpayers first, lessening the burden on cash-strapped local governments and schools, and opening doors of opportunity for small businesses across our state.”

Three years later, the first in-depth, non-partisan analysis of the impact of Indiana’s common construction wage repeal suggests that Pence was wrong.

The Midwest Economic Policy Institute, in a report provided exclusively to The Times, determined that following common wage repeal Hoosiers working in the construction industry are earning less than they were before, with no meaningful cost savings for Indiana taxpayers.

Worker pay, productivity decline

The institute used U.S. Department of Labor statistics for the four quarters preceding repeal of Indiana’s common wage, also known as the prevailing wage, and the four quarters after to determine how the policy enacted by the Republican-controlled General Assembly affected 10 market outcomes.

The study found that construction wages fell in Indiana by an average of 8.5 percent following repeal of the common construction wage, with the lowest-paid workers seeing their paychecks drop by 15 percent.

(Read More)

(See Full PDF of Study)

EDITORIAL: Construction wage repeal needs review

Posted by National Alliance for Fair Contracting on

The Times Editorial Board
Jan 30, 2018

From acts of Congress to local government ordinances, lawmakers from all levels should be willing to put their codified policies to the test.

In that vein, the Indiana Legislature should push for an empirical review of the General Assembly’s 2015 repeal of the common construction wage statute.

Whether the law remains off Indiana’s books or put back on, the decision should be made on statistical evidence and hard data, not political ideologies.

In a recent report provided to The Times, the Midwest Economic Policy Institute concluded that following the common wage repeal, Hoosier construction workers earned less than they did before, with no meaningful cost savings for Indiana taxpayers.
The law had been seen by proponents as a sort of guaranteed minimum wage for construction workers.

Opponents of the ultimately repealed law, including former Gov. Mike Pence, argued eliminating the county minimum pay rates for public works projects would save the state and local government agencies money without reducing construction workers’ paychecks. Drawing on U.S. Department of Labor statistics for the four quarters before and after the law was repealed, the institute concluded Hoosier construction wages fell by an average of 8.5 percent after the repeal.

The lowest-paid workers saw their paychecks fall by an average of 15 percent, according to the institute.

Construction wages in neighboring Illinois, Michigan and Ohio, meanwhile, grew a combined 2.8 percent.

The institute also reported the repeal didn’t contribute to more competition for public works projects, among other findings, and thus didn’t lead to measurable savings.

(Read More)

Contractor ordered to pay $100K in back wages for Hammond project (IN)

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Karen Caffarini – Post-Tribune
September 19, 2017, 8:55 pm

Back wages totaling $103,788 have been paid to 29 individuals who were underpaid while working on the Flagstone Village affordable housing project in Hammond, according to a federal agency.

Because the Flagstone Village was a U.S. Department of Housing and Urban Development project, the U.S. Department of Labor Wage and Hour Division said the prime contractor for the job, CRG Residential of Carmel, needed to incorporate the required Davis-Bacon and Related Acts and Contract Work Hours and Safety Standards Act stipulations into its subcontractors’s contracts.

According to a Department of Labor spokesman, Scott Allen, CRG was responsible for all violations and back wages owed because the subcontracts did not include these contract stipulations. Allen said subcontractors were not responsible for any wage violations on their part.

“Federal contractors owe it to taxpayers to comply with all applicable laws, including paying their workers fairly and fully,” said Wage and Hour District director Patricia Lewis, in Indianapolis. “Prevailing wage laws level the playing field for all contractors.”

Among those receiving additional compensation was a heavy equipment operator working for subcontractor Hubinger Landscaping in Crown Point, who was reportedly classified improperly, and thus paid at a lower rate than required, according to the Department of Labor.

The Wage and Hour Division also determined that CRG Residential failed to pay one employee for time spent transporting other workers to the job site at the start of the week and home from the job site at the end of the week. The company also classified the worker improperly and paid him a lower rate than required for his job classification when he was operating heavy equipment, according to the division.

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Weakening Prevailing Wage Hurts Local Contractors (IN)

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A case study from Southern Indiana demonstrates how weakening prevailing wage negatively impacts local contractors and local workers.

Published by Frank Manzo IV
JUNE 15, 2016

Out-of-state contractors benefited after Indiana weakened its prevailing wage law, according to a new Economic Commentary from the Midwest Economic Policy Institute.

Despite an emerging academic consensus that shows state prevailing wage laws have no discernible impact on project costs, lawmakers in Indiana weakened the state’s law – called Common Construction Wage – between 2012 and 2015. In 2013, the threshold for coverage was increased from $250,000 to $350,000, meaning that workers were no longer paid a prevailing wage rate on projects costing between $250,000 and $349,999.

Prior to raising its contract threshold to $350,000, hourly earnings for construction workers in Indiana were similar to all neighboring states except Kentucky. Economic research suggests that out-of-state contractors with lower-paid workers will flood the public construction market after a prevailing wage law is weakened. If true, the greatest threat to Indiana contractors would come from across its southern border in Kentucky, where construction workers earned $5 less per hour on average in July 2012.

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G.O.P. Expands Labor Battle to Laws Setting State Construction Wages

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By MONICA DAVEY | 

A bill that would end prescribed wages on public construction projects in Indiana awaits the signature of Gov. Mike Pence. And Henry Burks, a union electrician who lives near Indianapolis, is bracing.

Mr. Burks, 57, is putting off plans to build a patio at his house. He is delaying painting and landscaping, too. And he said he is worried about how to continue helping his grown children with college costs if his income drops, as he firmly expects.

“This is going to inhibit me from taking care of my family,” Mr. Burks, who makes about $60,000 a year, said the other day as he took a break from installing conduit inside a corn processing plant in Lafayette. “Our wages will go down. The contractors we work for won’t get as many jobs. Maybe I’ll have to find work outside of Indiana.”

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Officials warn of repeal ramifications

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By Karen Caffarini and Carrie Napoleon Post-Tribune
April, 17, 2015, 5:04 PM

 

Local elected and union officials and contractors are expressing concern about the area’s economy, quality of life for its residents and the safety of those using public roads and buildings if Gov. Mike Pence signs into law a bill repealing the common construction wage as expected.

The bill is on its way to Pence, who has strongly pushed for the measure and has touted the bill on social media.

Pence and other repeal supporters say the bill would save as much as 20 percent from the cost of public building projects by allowing more contractors to pay wages below union scale. Opponents dispute such savings will occur and argue the change will open the door for low-paying, out-of-state contractors.

New Study: ROAD AND BRIDGE CONSTRUCTION WORKERS IN THE MIDWEST

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Productive, High-Skilled, and Well-Paid

March 1, 2015

Road and Bridge Construction Workers in the Midwest was co-authored by Frank Manzo, Policy Director of the Midwest Economic Policy Institute, and Professor Robert Bruno of the University of Illinois School of Labor and Employment Relations.  It  looks at the economic and construction-related benefits of skilled workers in the Great Lakes region, which the study defined as Illinois, Indiana, Michigan, Ohio, and Wisconsin.

Executive Summary

Construction workers who specialize in road and bridge infrastructure projects are productive, high-skilled, and well-paid in America’s “Great Lakes” region- which comprises Illinois, Indiana, Michigan, Ohio, and Wisconsin.

Key findings from this report include:

  • Employment in construction jobs is expected to increase by 21.4 percent over the next decade, the second-fastest growing occupation. The majority of these new employment opportunities will require the completion of a three- to five-year apprenticeship program.
  • In 2013, three out of every five new construction jobs in the Great Lakes region were filled by a candidate with an associate’s or apprenticeship degree.
  •  Road and bridge construction workers each produce an average of $155,100 in economic value for the Great Lakes region, second only to their counterparts in the Far West states ($162,461 per worker). Wisconsin’s street, highway, and bridge construction workers were the most productive in the Great Lakes region, annually contributing an average of $184,592 to the economy.
  •  Construction workers in the Great Lakes region build highways in a cost-effective manner, constructing each lane-mile up to 43 percent cheaper than the national average.
  • The apprenticeship share- the ratio of active apprentices to total workers in construction occupations- is higher in states with a prevailing wage law (7.7 percent) than in states without a prevailing wage law (5.4 percent). Additionally, 10 percentage-point increase in a state’s construction industry unionization rate is associated with a 3.2 percentage-point average increase in its apprenticeship share.

Construction workers across the Great Lakes region are well-compensated and can support a middle-class family. Road and bridge construction workers receive significant training in the Great Lakes states and, in turn, translate their increased human capital into higher levels of productivity for employers. Unfortunately, there are threats across the Midwest to weaken the institutions that are statistically correlated with increased worker efficiency, including prevailing wage laws and trades unions. If the Great Lakes region is to remain one of the nation’s leaders in worker productivity on public construction projects, these institutions must be both defended and strengthened.

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Contractor Gets Probation in Prevailing Wage Case

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Indianapolis construction contractor David Roark was sentenced Wednesday in Marion County Court to two years of probation after he was accused of violating the state’s common wage law.

The owner of D. Roark Drywall LLC agreed in June to plead guilty to Class D felony theft to avoid more extensive charges for underpaying drywall installers for their work on the Barton Towers project in downtown Indianapolis.

Roark was taken into custody in February 2013 on two counts of forgery, one count of theft, and five misdemeanor counts of common construction wage violation.

As part of a plea agreement, Roark is also required to complete 200 hours of community service work and make $24,311 in restitution to two employees.

 (Read More)

With One Case Before State Supreme Court, 2nd IN Judge Rules “Right-to-Work” Unconstitutional

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An Indiana Judge has ruled that the state’s “Right-to-Work” law is unconstitutional, the second such blow to the legislation since its passage in 2012.

Lake County Circuit Judge George Paras decided against the state in United Steelworkers vs. Zoeller on July 17th, ruling that the law was “null and void in its entirety” and the state is “permanently enjoined” from enforcing it.  The law is already before the state Supreme Court as a result of a challenge from the International Union of Operating Engineers (IUOE) Local 150.  Oral arguments in that case are set to be heard on September 4th.

Following the decision, Indiana Attorney General Greg Zoeller said he would ask for a stay to prevent the decision from immediately taking effect.  He also argued that the law’s fate is still truly in the hands of the state Supreme Court.  From his statement:

“Strong opinions exist on both sides about involuntary union dues, but the attorney general’s office has a duty to defend the laws the legislature passes from legal challenges plaintiffs file.  If a trial court finds a law unconstitutional, then the appropriate action is to stay its ruling pending the appeal.”

The IUOE Local 150 case was originally decided last fall – in favor of the union – by Lake County Superior Court Judge John Sedia. He stayed the verdict to allow it to go to the Supreme Court.

(Read More)

The CCW is Common Sense Construction

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Today, the Midwest Economic Policy Institute released Common Sense Construction: The Economic Impacts of  Indiana’s Common Construction Wage with the University of Illinois School of Labor and Employment Relations and Smart Cities Prevail. The report finds that Indiana’s Common Construction Wage (CCW) promotes positive labor market outcomes for both construction workers and contractors.

Ten facts about the Indiana CCW:

1. The Common Construction Wage keeps Hoosier jobs local. (For more, see pages 5 and 11-13)

2. The Common Construction Wage does not increase total construction costs for public projects. (Pg. 4)

3. The Common Construction Wage promotes an upwardly-mobile, high-road economy for working families. (Pg. 5-8)

4. The Common Construction Wage supports almost 2,000 non-construction jobs and nearly $250 million in total worker income throughout the state. (Pg. 13-14)

5. The Common Construction Wage boosts the Indiana economy by about $700 million. (Pg. 13)

6. The Common Construction Wage increases tax revenues for all levels of government. (Pg. 15)

7. The Common Construction Wage fosters safer workplaces for Indiana construction workers. (Pg. 15-16)

8. The Common Construction Wage increases the benefits package paid to workers by around 20 percent. (Pg. 17)

9. The Common Construction Wage produces a highly-skilled, highly-productive workforce. (Pg. 18-19)

10. The Common Construction Wage does not favor union contractors over nonunion contractors. (Pg. 19-21)

(Copy of Report)

YouTube Video: Common Construction Wage Works!