The Building Tradesman Newspaper

Friday, February 21, 2020

Prevailing wage still drives road work in Michigan

By Marty Mulcahy, Editor

LANSING - Michigan's prevailing wage law was repealed in June 2018, and the Republican-backed move was intended to lower building trades worker wages, de-fund the state's construction unions, and allegedly save taxpayers money.

Overall, with a short sample size time-wise, there isn't much to glean yet about the effect of repeal on the construction industry or on state government. With the exception, that is, of state road work. It was revealed by a Feb. 3 MIRS News Service report that of the 710 road contracts that were awarded in 2019 by the Michigan Department of Transportation, 83 percent still involved the payment of prevailing wages. 

When a road and/or bridge repair contract in excess of $2,000 - or any other project that mingles spending with federal and state money, the federal expenditure triggers the payment of prevailing wages.

"I wasn't sure what the percentage of state road work uses federal money," said Dan McKernan, a spokesman for Operating Engineers Local 324, whose members and contractors directly benefit from prevailing wage laws Michigan - as do all trades, both union and nonunion. "But I know that a substantial portion uses federal dollars, and that just points to the importance of having the federal Davis-Bacon Act in place to help support wages. 

It also is an opportunity to point out the huge mistake that was made when Michigan's prevailing wage law was repealed."

The federal prevailing wage law was made possible by the 1930s-era Davis-Bacon Act, which sought to assure that local contractors bidding on local projects are not under-bid by out-of-area contractors using underpaid labor. The Davis-Bacon Act also applies to the spending of federal dollars on a variety of projects, such as education buildings, civic facilities and various types of infrastructure.

A significant case history from Michigan and elsewhere suggests that when a state loses its prevailing wage law, workers' wages eventually fall, experienced workers go elsewhere in search of higher wages, and safety and productivity is negatively impacted on construction sites. A court order (that was later overturned) resulted in the two-and-a-half year repeal of Michigan's prevailing wage law beginning in 1994. 

"We witnessed drastic reductions in experience levels of trades that could adequately man projects, obtain the right productivity to meet schedules and do it in a safe and effective manner," said Barton Malow Vice President Michael Stobak, when the debate was raging over the fate of prevailing wage. "Bidding public work became all about how cheap can I do the work, it became all about price. As a result, we witnessed an exodus of qualified contractors that for many, many years, had participated in the public arena."

McKernan said he expects history to repeat itself. "Lower wages, not vetting workers and contractors, more accidents - that's just not a healthy way to conduct business," he said. "And without a state prevailing wage law, you're just going to see more of that in Michigan as time goes by."