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.