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Editorial: Wages are low enough (IN)

Posted by National Alliance for Fair Contracting on

Kokomo Tribune
Oct 13, 2019

Many of us are earning what we made last year, maybe even the year before that.

By many measures the economy is improving: the unemployment rate continues to edge down to historic levels while job growth is up. But one stubborn indicator of recovery remains stagnant: Wages in the U.S. have been low and relatively flat since 2009.

Workers’ share of corporate income has plummeted dismally in the past 25 years, according to the Economic Policy Institute, a nonprofit, nonpartisan think tank dedicated to economic policy discussions. The Great Recession, from 2007 through 2012, put significant downward pressure on pay.

Yet in 2015, the Indiana Legislature ended the common construction wage. The Republican-led initiative did away with a state law setting the minimum wage that contractors working on public projects must pay.

Supporters suggested the local boards that determine the wage were artificially inflating wages and said elimination of the provision would lower project costs and save taxpayer money.

A study released only last year indicates the opposite is true.

A Midwest Economic Policy Institute study released in January 2018 said repeal of the prevailing-wage law in Indiana “has failed to produce any taxpayer savings on school construction projects and has had a negative effect on wages, job growth, productivity and other economic and industry indicators.”

The study, which included the work of Colorado State University-Pueblo economics professor Kevin Duncan, found:

* An 8.5% drop in wages in blue-collar construction jobs.

* A 15.1% drop in wages for the lowest-paid construction workers.

* A 5.3% slower rate of productivity compared to neighboring Midwest states with prevailing wage laws.

* A 1.5% slower rate of job growth in public works than neighboring Midwest states.

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GUEST COMMENTARY: Reviewing Indiana’s common construction wage law (IN)

Posted by National Alliance for Fair Contracting on

Dewey Pearman
Sept. 2, 2018

Interesting data is now becoming available to test the pro and con arguments made in 2015 in the debate on legislation in the Indiana General Assembly to repeal Indiana Common Construction Wage law. That law was repealed in reaction to arguments that repeal would accomplish two objectives. First, repeal would increase competition in bidding among building contractors seeking to do work for public agencies. And, the cost of construction projects paid for by taxpayers would decrease. Opponents of repealing the law asserted that not only would these results fail to be realized but that repeal would result in, among other outcomes lower wages for workers.

Indiana’s common construction wage law, like similar laws in other states and at the federal level are intended to insure that when government spends money in a given labor market it does not inadvertently impact wages normally, or commonly paid in that market for similar type of work. That is, if as an example a carpenter in a given area is typically paid $25.00 an hour in wages and received $10.00 an hour in fringe benefits workers on public projects should not be paid more or less than those amounts for the same work. Doing so would interfere in the private labor market by providing an upward or downward pressure on local wages. The law required all contractors bidding on a public project to pay the wages and benefits customarily paid in that area. The law provided for an objective process by which wage and benefit rates were determined and also provided for public input into the determination.

On the issue of lower costs to taxpayers a 2018 study released by the Midwest Economic Policy Institute, The Effects of Repealing Common Construction Wage In Indiana, Impacts on Ten Construction Market Outcomes, finds that the average cost of school construction projects did not decrease after repeal but actually increased. The study focused on school projects because they tend to be more homogeneous than other types of public construction projects. The study, written by Kevin Duncan, Ph.D. Colorado State University-Pueblo and Frank Manzo IV, MPP, Midwest Economic Policy Institute looked at 146 school projects awarded before and 189 projects awarded after repeal of the law. The average project cost before repeal was $1.42 million and $1.48 million after the repeal. Contrary to arguments for taxpayer savings the average cost of school projects went up $60,000 after repeal. These findings are consistent with similar studies in many other states.

…

In the end, what Indiana got with the repeal of the common construction wage law is an increase in taxpayer costs and lower wages for blue collar construction workers. While, the Indiana Department of Labor is required to submit a report on the effects of repeal of the common construction wage before July 2021 the early evidence suggest it is already time for the Indiana General Assembly to put this law back on the book.

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Minnesota Wage Growth Exceeds Neighbors & Rest of United States (MN)

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Date: September 12, 2018
Author: Frank Manzo IV

Chicago: A trio of new research studies shows that more people are joining unions in Minnesota and that wages in the Gopher State are growing faster than the neighboring states of Illinois and Wisconsin, as well as in the rest of the United States.

Produced by the Midwest Economic Policy Institute with researchers from the University of Illinois at Urbana-Champaign, University of Minnesota, University of Wisconsin-Madison, and University of California-Irvine, the annual State of the Unions Research series profiles unionization rates and hourly wages in Minnesota, Illinois, and Wisconsin.

Based on data from the U.S. Department of Labor and U.S. Census Bureau, the studies offer a comparative window into the economic effects of different state-level approaches to labor and economic policy.

“While the rise of right-to-work laws and other national economic trends are no doubt impacting unionization and wage growth, differences in state-level policymaking can either accelerate or blunt these broader trends,” said Midwest Economic Policy Institute Policy Director Frank Manzo IV. “The data shows that Wisconsin’s model has produced lower wages and slower wage growth, while Minnesota’s has had the opposite effect.”

…

The reports highlight economic data over the last decade, at a time when Wisconsin opted for more austerity and weakened labor standards- specifically placing limits on collective bargaining (Act 10), repealing prevailing wage, and enacting a so-called “right-to-work” law.

Despite a budget crisis and efforts by its Governor to pursue an agenda similar to Wisconsin’s, the authors note that Illinois has largely maintained a status quo, augmented by the City of Chicago’s decision to raise its minimum wage.

(Read More)

(Report: State of the Unions – Minnesota)

(Report: State of the Unions – Wisconsin)

(Report: State of the Unions – Illinois)

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A warning for Missouri: Repealing the prevailing wage on construction jobs hurts workers and the economy

Posted by National Alliance for Fair Contracting on

BY MARC POULOS
Special to The Star
February 20, 2018 08:30 PM

Out of all the dubious and downright absurd ideas that some state politicians have been trying to sell taxpayers in recent years, one stands out above the rest: the suggestion that the cost of building schools, highways and other critical infrastructure could be trimmed by 20 percent by eliminating the local minimum wage – or prevailing wage – on government-funded construction projects.

Setting aside the political lunacy of essentially advocating middle-class wage cuts during an era of stagnation and rising inequality, what makes this canard especially ridiculous is that construction labor represents only a little over 20 percent of the total cost of building these projects – and it’s declining.

But that didn’t stop politicians in Indiana, Wisconsin, West Virginia and Kentucky from throwing caution and basic math to the wind. Beginning with Indiana in 2015, all four states have now repealed their prevailing wage laws. Other states, including Michigan and Missouri, are now considering following suit.

New research out of Indiana is providing even more reasons why they shouldn’t.

The Midwest Economic Policy Institute and Colorado State University-Pueblo Economist Kevin Duncan have just completed the first impact study analyzing what has happened since repeal in the Hoosier State.

(Read More)

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.

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Report: Republicans Did Not Consider Social Costs of Prevailing Wage Law Repeal

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By Jim Lundstrom, Peninsula Pulse
June 30th, 2017

Republican lawmakers have set their sights on repealing the state’s prevailing wage law for public projects as a way to save taxpayer money on infrastructure costs, but opponents say it is an attack on the middle-class, blue-collar worker.

The bill would end all prevailing wage laws for state-funded construction projects, and Senate sponsor Leah Vukmir (R-Brookfield) claims it will save taxpayers hundreds of millions of dollars. Yet the nonpartisan Legislative Fiscal Bureau recently reported “existing research on the impact of prevailing wage laws on construction costs is mixed and inconclusive.”

A report released June 19 by the Midwest Economic Policy Institute say advocates for repeal have not considered the social costs of such a move.

“The worst-case potential social costs of repealing prevailing wage range from $224 million to $337 million every year,” the report states. “When worker wages are cut, they contribute less in state and federal income taxes. At the same time, more workers qualify for and rely on government assistance. This results in less money in the state economy and less money in the pockets of hardworking citizens.”

The report goes on to say “between four and 12 percent of construction workers in Wisconsin would newly qualify for government assistance if prevailing wage were repealed, depending on the severity of the wage cut. This is in addition to the 14.5 percent who already qualify for government assistance in the state.”

…

In April, Gumieny and others in the construction business attended the 3rd Annual Construction Workers’ Memorial Service in Madison to recognize individuals who lost their lives in construction accidents in the state. As the memorial procession walked from Monona Terrace to St. Patrick’s Church for a memorial service, Gumieny said they passed four infrastructure construction projects near the state Capitol, and three of those were being done by out-of-state outfits.

“Since January of this year, we’ve lost 53 percent of that work that used to be here for Wisconsinites,” Gumieny said. “The study was from January through last month. Fifty-three percent of that work went to out-of-state contractors. It will not benefit anybody for that loss of work here for Wisconsinites in the construction industry. For what this legislation is doing, it’s unfair to the people of Wisconsin. The only time you see fair government is when you put them in gridlock and have equal Republican to Democrats. At that point the only thing that really comes out are things that are truly good for the people.”

(Read More)

Prevailing wage repeal will hurt taxpayers, workers

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Beth Meyers represents the 74th Assembly District of Wisconsin

Jun 26, 2017

MADISON- The citizens of Wisconsin have seen their fair share of legislative proposals this year that could dramatically change the status quo for our state. From changes to how the Wisconsin Department of Natural Resources addresses high capacity wells to new limits on campus free speech, there are always controversial issues being brought up and debated in Madison. While, the biennial budget is still being discussed and negotiated with Majority Party leaders in both houses, important issues such as transportation funding and K-12 education funding need to be negotiated before the budget comes to the Assembly floor.

However, there is another plot being hatched in Madison which has significant implications not only for Wisconsin’s skilled workers but for taxpayers as well. Just this week, I stood beside my colleagues, laborers, and construction groups for a press conference which focused on a new report from the Midwest Economic Policy Institute. This report considered the potential repeal of the state’s prevailing wage law, and its impact on our state’s workforce and on taxpayers’ pocketbooks. Prevailing wage laws require that construction workers on state projects be paid the wages and benefits prevailing for similar work in the surrounding area. This prevailing wage rate helps prevent a race to the bottom that could lead to a less productive workforce and inferior construction practices.

In 2015, the Legislature ended prevailing wage for local construction projects, and the impact was disastrous for Wisconsin’s workers. Since the repeal came into effect, there has been a 50 percent increase in construction projects going to out-of-state contractors. Now, Republican legislators want to repeal prevailing wage for state projects as well.

According to the Midwest Economic Policy Institute’s research, a construction worker would see their average yearly salary of $51,000 be cut to $29,500, under a prevailing wage repeal. That is a 44 percent cut in pay! This hard-earned income is not only taken away from workers who receive prevailing wage – it has a far-reaching negative multiplier effect for all Wisconsinites. We all know that the economy is interconnected, and cutting income for workers in one area has an impact on all of us. Northern Wisconsin can’t endure a 44 percent wage loss for workers who want to buy homes, raise families, and support local businesses in our communities.

Our workforce is at a crossroads. Now more than ever, we need to protect Wisconsin’s workers and make sure there is ample opportunity for them to succeed in highly skilled trades.

(Read More)

Prevailing Wage Repeal Would Hurt Kentucky’s Economy

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Repealing Kentucky’s prevailing wage law would weaken the state’s economy, according to a new study.

Eliminating prevailing wage would cause a pay cut for middle-class workers, qualify more workers for public assistance, slash apprenticeship training, and result in more of Kentucky’s tax dollars going to out-of-state or foreign contractors. Veterans, who populate construction trades at a higher rate than non-veterans, would be particularly impacted if Kentucky were to repeal its prevailing wage standards.

DECEMBER 16, 2016

The report was authored by economics professor Kevin Duncan, PhD and Frank Manzo IV, MPP- Policy Director of the Midwest Economic Policy Institute, a division of the Illinois Economic Policy Institute.

Full Report: The Economic, Fiscal, and Social Effects of Kentucky’s Prevailing Wage Law.

Fact Sheet #1: One-page summary of the report.

Fact Sheet #2: One-page summary – version 2.

The preponderance of peer-reviewed economic research finds that prevailing wage laws do not increase construction costs, including three-fourths of all studies over the past two decades. This finding directly disputes the claims of those who advocate for repealing Kentucky’s 76-year-old prevailing wage law. Unfortunately, some prevailing wage opponents are either really bad at math, or they expect the people of Kentucky to work for poverty-level wages.

(Read More)

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.

(Read More)