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Rolling back laws that set minimum wages for construction workers meant pay shrunk, jobs got more dangerous, and workers had to rely more on public assistance

Posted by National Alliance for Fair Contracting on

BUSINESS INSIDER | Juliana Kaplan – Jan 16, 2023

  • A new study looks at the impact of rolling back prevailing wage laws on wages and workers.
  • Prevailing wage laws set pay standards for government contract workers, particularly construction workers.
  • Rolling back the laws led to lower wage growth, and increased worker fatalities.

It turns out that getting rid of some minimum wage controls left workers earning less, being less productive, relying more on public assistance, and even facing a higher risk of dying on the job.

That’s according to a new study from the Illinois Economic Policy Institute (ILEPI) and Project for Middle Class Renewal (PMCR) at the University of Illinois at Urbana-Champaign. Researchers Frank Manzo, Robert Bruno, and Larissa Petrucci examine the impact of repealing prevailing wage laws — laws that essentially set minimum wages for construction workers on government contracts.

With the bipartisan infrastructure bill pouring billions of dollars into construction projects across the nation, the findings show that contractors in states that have repealed prevailing wage laws may face problems staffing up. Historically, prevailing wage laws have helped plug labor shortages, and contractors could have trouble competing with higher-paying competitors across the country.

Indiana, West Virginia, Kentucky, Arkansas, Wisconsin, and Michigan all repealed their prevailing wage laws between 2015 and 2018. Using data from the US Census Bureau and Department of Labor, the researchers looked at how construction workers fared as those laws were rolled back.

Those states saw their wages for construction workers drop. In Indiana, West Virginia, and Kentucky — the three states that fully repealed prevailing wage laws — average construction hourly wages were $23.94 before the laws were rolled back. By 2017, the average hourly wage was $23.77. Meanwhile, states with the laws in place saw wages grow by 12.2% in the same period.

“What prevailing wage does, it kind of standardizes and stabilizes the industry of a local market,” Petrucci said. “When you repeal that, what you have is contractors who are able to undercut wages and pay workers far below the training that they have developed to get these kinds of jobs. Naturally, you’re gonna see wages decrease.”

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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.

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

Posted by National Alliance for Fair Contracting on

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.”

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