Conservative legislators are targeting prevailing wage statutes, now on the books in 31 states, that require paying the local wage and benefit rate — usually union scale — on government construction projects such as building schools, fire stations and local roads.
They say the wage laws inflate costs and make it harder for nonunion contractors to compete by making lower bids.
The Indiana Legislature repealed the state’s 80-year-old prevailing wage law last month, becoming the first legislature to do so in 27 years. Similar proposals are now before lawmakers in Michigan and Wisconsin. Those three GOP-led states dealt a financial blow to labor in recent years by passing right-to-work laws that bar unions from collecting fees from non-members.
“There’s a national agenda coming after the building trades unions,” said Patrick Gleason, legislative director for the nearly 100,000-member Michigan Building and Construction Trades Council union. “They do it under a false pretense that they’re going to save hundreds of millions of dollars for the taxpayers. It’s a race to the bottom that’s going to end up nowhere.”
Government construction projects are estimated at $281 billion, or 28 percent, of all construction spending nationwide this year, according to the U.S. Census Bureau. While no breakdown of winning contractors is available, industry groups say that union contractors tend to win a higher percentage of large government infrastructure projects covered by the wage laws while nonunion contractors go after private jobs.
Having to track all the local union wage rates for public contracts makes many contractors “wash their hands” of making bids, said Chris Fisher, president of the Associated Builders and Contractors of Michigan.
Many states passed prevailing wage laws around the Depression to prevent out-of-state companies from underbidding local employers on public jobs. The federal government has a similar wage law that covers federal projects.
As the GOP won control of more state capitols in recent years, conservative and pro-business groups, including Americans for Prosperity, began pushing to repeal the state laws. Repeal supporters spent $357,000 on TV ads in Indiana and are likely to air some in Michigan, too.
While conservative lawmakers are enthusiastic, some governors have been skeptical.
Michigan’s Republican Gov. Rick Snyder has complained that repealing the state’s law would hamper his effort to bolster blue-collar jobs.
“Our great skilled tradespeople quite often get into unions … and I think it’s best to be working in a collaborative, cooperative fashion with them,” Snyder said.
But Senate Majority Leader Arlan Meekhof, who has made repeal legislation a priority, estimates that labor costs are between 40 and 60 percent higher on prevailing wage projects. Union construction workers average $28 an hour, $10 more than nonunion members, according to the U.S. Bureau of Labor Statistics.
“A less expensive price tag for construction means our communities are financing less, will be financing less, saving taxpayers money over the life of the entire asset,” said Meekhof, who was a sponsor of Michigan’s right-to-work law that passed in 2012. Repeal supporters hope to end the wage law through a petition drive if Snyder will not sign the legislation.
National studies on the impact of prevailing wage laws on project costs have drawn mixed conclusions because of the number of factors included.
In Wisconsin, Republicans are grappling with the prevailing wage statute as part of budget negotiations. Gov. Scott Walker has pledged to sign repeal legislation. West Virginia and Nevada have scaled back their laws.
Defenders of prevailing wage laws, including some Republicans, say they prevent governments from awarding contracts solely based on which bidders pay their workers less.
“It will encourage out-of-state companies to come in, underbid, steal business from Michigan contractors and steal jobs from Michigan workers,” said Sen. David Knezek, a Democrat. The state now has several major projects underway, including a Capitol dome restoration and construction of a new hockey arena for the Detroit Red Wings.
Organized labor, battling membership declines, is struggling to bolster trade unions that represent its third-largest non-government membership category, behind manufacturing and health care workers. About one-fifth of Michigan’s construction workforce is unionized.
Some workers worry that more cost cutting on public jobs will squeeze the training programs and other benefits union contractors now offer.
John DeLine, 35, an Army veteran who lives in the Hudson community southwest of Detroit, credits Michigan’s law for his training as a carpenter apprentice and worries about having to get a second job if his wages drop.
“What kind of life is that?” he said, after serving three tours in Iraq and Afghanistan away from his family.