Prevailing Wage Laws: What Do We Know?

Posted by National Alliance for Fair Contracting on

Institute for Construction Economics Research (ICERES)

In recent years, states and municipalities have been increasingly engaged in heated, often partisan, debates over the future of prevailing wage laws. In addition to the repeal of state prevailing wage laws in West Virginia and Kentucky, there have been high-profile political challenges in several states including Wisconsin and Nevada. Numerous city councils and county commissioners have been concurrently engaged in similar debates regarding local prevailing wage ordinances. References to economic studies often accompany these calls for legislative action, as advocates on both sides of the debate can point to papers supporting their position. The lack of consensus among researchers, however, is mostly attributable to differences in empirical methodology and scientific rigor. To improve the clarity of future public policy debates on prevailing wage laws, this paper summarizes the current state of research on these policies, highlighting recent academic findings and identifying empirical shortcomings inherent in a number of oft-cited non-academic studies.

(See full PDF of Study here)

Weakening a prevailing wage law by raising coverage thresholds has negative impacts on local contractors, construction workers, and economies, according to a new study

Posted by National Alliance for Fair Contracting on

(ILEPI Report) Prevailing Wage Thresholds Lower the Bar in Public Construction

 
Posted by Frank Manzo IV
4/5/2016

The report, An Analysis of the Impact of Prevailing Wage Thresholds On Public Construction: Implications for Illinois, was conducted jointly by the Illinois Economic Policy Institute (ILEPI) and the Project for Middle Class Renewal (PMCR) at the University of Illinois at Urbana Champaign.

It is the first study to focus specifically on prevailing wage thresholds.

A prevailing wage threshold is the minimum cost of a public project at which point workers must be paid prevailing wage rates. Publicly-funded projects below the threshold are exempt from the law, while those above are covered. Contract thresholds vary by state, from those with no threshold (such as Illinois) up to $500,000 in Maryland.

Although the study forecasts effects on Illinois if the state were to introduce a prevailing wage threshold, the report is applicable to any state that is considering raising a contract threshold.

(Read More)

(PDF of Study)

New Study: Prevailing Wage Law Would Boost New Hampshire Jobs, the State Economy, and In-State Contractors

Posted by National Alliance for Fair Contracting on

January 14, 2016
A new study released today by leading national researchers on the construction industry finds that a proposed New Hampshire prevailing wage law would boost the state economy by at least $300 million, create several thousand jobs, and increase state and local tax revenue by up to $17 million.

The report, published by the Keystone Research Center (KRC), an independent non-partisan economic policy group, was released in advance of hearings in Concord next week on the proposed prevailing wage law. New Hampshire is the only state in New England and the Northeast that does not have such a law.

The study uses a growing body of peer reviewed research, data from the Economic Census of Construction, and industry-standard IMPLAN software to analyze the impact of prevailing wage standards for skilled construction industry trades on the New Hampshire economy as a whole and on construction workers’ wages, benefits and reliance on taxpayer-funded public benefit programs.

(PDF of Press Release)

(PDF Copy of Full Study)

Study shows wage theft rampant in construction industry

Posted by National Alliance for Fair Contracting on

By Katie Johnston GLOBE STAFF MAY 12, 2015
 

For more than three years, workers doing asbestos removal and demolition jobs for several Woburn companies were paid in cash, resulting in more than $700,000 in unreported wages, federal prosecutors charged in an indictment last week.

Meanwhile, construction workers around the state – particularly immigrants hired by subcontractors – say they sometimes go for weeks without pay. When they do get paid, it can be less than promised, and overtime pay is virtually nonexistent.

Many of them are hired as independent contractors, without the job protections or tax deductions of a traditional employment relationship.

The practice, known as wage theft, “has reached epidemic levels” in Massachusetts, namely in the booming residential construction industry, according to research from the University of Massachusetts Amherst.

In the past 18 months, the state attorney general’s office has issued more wage violation citations against employers in the construction industry than in any other sector – 253 citations in all, resulting in more than $1.6 million being recovered in penalties and unpaid wages. The attorney general’s office said cracking down on wage theft continues to be a priority.

New Study: ROAD AND BRIDGE CONSTRUCTION WORKERS IN THE MIDWEST

Posted by National Alliance for Fair Contracting on

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.

(Read More)

DU Launches Study on How Wage Theft Occurs in Construction Industry

Posted by National Alliance for Fair Contracting on

By: Anna Boiko-Weyrauch

March 4, 2015

 

A new study seeks to collect detailed information about how wage theft occurs in the construction industry in Colorado. The project, organized by the University of Denver will also extend legal services to research participants who have not received the wages they are owed.

DU students and law professor Raja Raghunath have already been answering legal questions at informal, street-side gatherings in Denver and Aurora where day-laborers assemble to find work.

Researchers expect to interview approximately 75 day-laborers by the time the project is completed next June, University of Denver anthropologist Rebecca Galemba said.

(Read More)

New Misclassification Study Shows Impact in California

Posted by National Alliance for Fair Contracting on

By Jim Kollaer on Wed, 10/15/2014 – 10:30am 

In a September 2014 study entitled Sinking Underground: The Growing Informal Economy in California Construction, misclassification of more than 39,800 construction workers is a key reason that the underground economy in construction is contributing to the low wages, difficulty in recruiting qualified craft workers and loss of wages and taxes in the State of California.

According to the study, released by the Economic Roundtable, a non profit research organization based in Los Angeles, in 2011 more than 143,900 construction jobs in the state were “informal” – code for off the books, misclassified as independent contractors or unreported by employers.

The study looked at wages and construction jobs from 1972 to 2012 and found that the number of construction workers that were unreported or misclassified increased by 400% during that period.

The study cites that, “Specialty trades, such as drywall, have the highest level of informality with over 25% employed informally in 2012.  Building Construction was next, with 20% estimated to be informal.”The major impact on the industry is that those construction companies in California who are “doing it right” have costs that are 30% higher that the “off the books and misclass” contractors.  Imagine what that disparity does to the bidding process.  The report cites several personal stories to illustrate its points.

Repeal of prevailing wage law would result in a weakened economy, University researchers say

Posted by National Alliance for Fair Contracting on

Pressure from increasing state budget deficits, as well as debt from underfunded pensions, have caused critics to call for the repeal of Illinois’ prevailing wage law for government construction projects.

However, according to new research co-authored by a University labor expert, Illinois’ prevailing wage law creates many positive economic and social impacts, and repealing it would not result in any considerable savings for taxpayers or the state.

“We have a strong prevailing wage law in Illinois,” said Robert Bruno, professor of labor and employment relations. “It’s better than most states in that it assures public projects are done efficiently and on time with the best results possible.”

(Read More)

(Full PDF Copy of Study)