"The prevailing wage law increases the cost of construction by 10 percent to 15 percent, and the additional costs are passed along to Michigan taxpayers." - Paul Kersey, The Mackinac Center for Public Policy, Aug. 27, 2007.

"Prevailing wage" does not mean a fair-market wage, but one artificially inflated by 40 percent to 60 percent and arbitrarily determined by an ever-shrinking minority of the construction workforce."

- Guest opinion, Chris Fisher, Oakland Business Review, Oct. 12, 2007.

LANSING - Opponents of Michigan's prevailing wage law - and they're coming out of the woodwork in droves with our state's slumping economy - claim that repealing the law will save taxpayers anywhere from 10 percent to 60 percent off the cost of a construction project.

The savings won't happen - and the estimates of how much will be saved vary wildly because they're based on false premises. So said Utah Professor Peter Phillips, who spoke at an Oct. 24 seminar sponsored by the Michigan Association for Responsible Contracting. Phillips is a labor and industrial relations economist and one of the nation's most respected presenters on prevailing wage laws.

"We can't find a statistical difference in costs," Phillips said, when it comes to measuring the absence or presence of prevailing wage laws on taxpayer-funded construction in various states.

Phillips studied the absence and presence of prevailing wage laws for school construction in three states. Kentucky adopted a prevailing wage law for school construction in 1996. Ohio repealed its prevailing wage law for public school construction in 1997.

"And then we have Michigan, the poster child," Phillips said. "They had it, they got rid of it. And then they took it back. What more could a social scientist ask? Thank you Michigan." A ruling by a federal judge revoked Michigan's Prevailing Wage Act of 1965 for nearly three years before it was reinstated by an appeals court in 1997.

"A study of the construction of 391 schools in these three states, half built under prevailing wage laws and half not, found no meaningful or statistically significant difference in the cost of construction based on regulation," Phillips wrote. Furthermore, he said construction at 4,000 schools across the nation were examined, and he got the same result: no statistical difference in costs.

"Opponents of prevailing wage laws say that these laws significantly increase public construction costs - often by 25 percent or more," Phillips wrote in his study. "Conceptually, these are doubtful claims."

The reason: on average, labor costs are only about 25 percent of total construction costs. "So if you are going to save 25 percent on total costs by eliminating prevailing wage laws, then everybody would have to work for free," Phillips said.

Often overlooked by the repeal prevailing wage crowd, Phillips said, is the value provided by higher paid workers in the form of added productivity. "Opponents of prevailing wage laws assume that cheap labor and low-skilled labor is just as productive as more expensive, skilled workers. This is just not true," Phillips wrote.

Other factors, he said, include:

• Lower cost workers place more of a strain on society because they don't pay as much in taxes, and don't enjoy a good level of benefits.
• The long-term needs of the construction industry entail training the next generation of workers, keeping this generation healthy and providing for the old age of the last generation of workers. Prevailing wage regulations force bidders on public works to include all these costs in their bids.
• Prevailing wage regulations, by considering the future and remembering the past, allows for the creation of construction careers and retention of experienced workers in an inherently unstable and casual industry.

"In short," Phillips wrote, "prevailing wage regulations encourages the creation of a skilled workforce that can afford to be members of the middle class with all that means for social cohesion and economic growth. This benefits construction and it benefits the communities in which construction workers live."