By Guy Snyder

LANSING - Opponents attack prevailing wage laws from many angles, promising huge savings. Such claims, however, are at best distortions with typically no basis in fact. This appeared to be the quickly drawn conclusion from presentations made March 28 at the Michigan Prevailing Wage Symposium.

This year's symposium, subtitled "The Real Facts on Prevailing Wage," was held at the Lansing Center. It packed a meeting hall with more than 170 representatives from labor, project owners, government, and construction contractors.

An impressive roster of speakers extolled the history, development, advantages, and current application of prevailing wage laws. Included were:

• Bob Patzer, executive vice president of the Michigan Infrastructure & Transportation Association.
• Dr. Peter Phillips, professor at the University of Utah, nationally known labor and industrial relations economist, considered a top authority in prevailing wage and related labor issues.
• Peter Cockshaw, publisher of Cockshaw's Construction Labor News & Opinion, one of the nation's most-quoted authorities on the subject.
• Dr. Dale Belman, a Michigan State University professor in Labor & Industrial Relations, and a nationally known researcher on labor market trends and statistics.
• Pat Devlin, secretary/treasurer of the Michigan State Building & Construction Trades Council.
• Bart Carrigan, executive vice president of the Michigan Chapter, Associated General Contractors of America.

All the speakers agreed that those who condemn prevailing wages always say their abolishment will result in impressive construction project savings. These "pre-construction estimates" have gone as high as 30%, though more often they fall within the 6% to 12% range.

According to Phillips the savings forecast never add up. His research - especially his 2001 study of the elimination or temporary suspension of prevailing wage laws for school projects in the states of Kentucky, Ohio, and Michigan during the late 1990s, found no meaningful statistical differences.

The developments in the three states, Phillips said, provided an ideal experimental setting to determine what happens when prevailing wage laws are suspended and what happens when they're re-instituted. In either case, the impact on construction cost per-square foot was unnoticeable. It didn't matter if the project was built by union or open shop contractors. Construction costs, when adjusted for inflation, essentially were stable.

Returning to the same topic in 2002 with two other researchers - Hamid Azari-Rad and Mark Prus - he looked at more than 4,000 new school projects built throughout the U.S. during the same period.

"Again, we found no practical or statistically significant cost savings associated with prevailing wage law repeals," Philips said. "Considerable savings were found when schools were built during construction downturns. Breaking ground in the winter also raised costs." But wages paid to construction workers didn't make a difference.

A major reason for this, both Philips and Cockshaw agreed, is that claims of double-digit project savings due to the lower wages and benefits paid by open shop contractors simply are unrealistic.

Their research, as well as the research of others, document the labor component of construction ranging from 20-25%, depending on the nature of individual projects. To claim, as Gary Johnson, governor of New Mexico did back in 1996, that repeal of that state's prevailing wage law would achieve 25-33% savings in the cost of building schools, would mean the open shop contractors would have had to pay their labor absolutely nothing.

Most people have no idea how much labor it takes to build anything, much less its relationship to the cost of materials, equipment, design, and administration. Opponents to prevailing wage laws, the speakers agree, successfully take advantage of most people's ignorance about blue-collar work as well as the construction industry's economic and technological peculiarities. Philips termed this the "bucket & shovel brigade" mentality.

"You can build a dam with million dollar pieces of equipment and a few skilled, high-paid workers," he said. "Or you can build a dam with an army of low-wage labor using buckets and shovels. Lower wage rates and the absence of benefits does not necessarily imply lower total costs."

For this reason, an open shop contractor, not having enough skilled journeymen or lacking certain pieces of equipment, may try to make up for it by hiring more people with lower skills. But there's a problem with this. One can't assume, as Philips put it, that "blue collar wages can fall substantially without a corresponding fall in labor productivity."

When prevailing wages are abolished, he observed, it's unrealistic to expect "the same people to show up, with the same education, experience, and equipment, even though they're now being paid half of their normal wage."

These realities can motivate open shop contractors to recruit from the bottom of the labor barrel trying to substitute people in a futile attempt to match the higher levels of productivity and quality achieved by experienced, rigorously trained, and skilled union journeymen.

When you focus in on just this one aspect of the prevailing wage issue, Cockshaw said, and run through the math to show how foolish the assumptions of prevailing wage opponents are, it should be easy to obliterate their public credibility. The problem, however, is too often the organized construction industry sits on its hands with its mouth shut.

"You allow your opponents to make these outrageous claims over and over," he charged. "And when you don't refute them, they become accepted as fact."

Perhaps just as bad, in situations where they're required prevailing wages often are not effectively enforced. Workers are denied wage scales and benefits they're entitled to because of employer misclassification, with little remedy or means of appeal. Worse, fraud is committed, especially when workers are mistakenly classified as independent contractors.

Presently this situation is being made even worse by a literal flood of undocumented workers in America, Devlin added. It's estimated they currently make up about 5% of our country's total workforce and, in many instances, are being ruthlessly exploited by their employers.

"It's not a stretch to assume that the wages earned by those undocumented workers - as low as they are - won't be invested back into the community," Devlin said.