The Building Tradesman Newspaper

Friday, January 23, 2015

Repeal of state's prevailing wage law: Top of the priority list for state Republicans

By Marty Mulcahy, Editor

LANSING - Pundits predicted after last November's elections that the makeup of the state Legislature would get more conservative, more pro-Tea Party, and even more anti-union than the group that adopted right-to-work in Michigan.

Newly sworn-in Senate Majority Leader Arlan Meekhof (R-West Olive) wasted little time in the new legislative session making that prediction a reality. He announced on Jan. 15 that prevailing wage repeal is "a priority." For emphasis, he made repeal of the law "Senate Bill 1," and said the bill would show up on lawmakers' docket the following week. For good measure, Senate Bills 2 and 3 will also involve prevailing wage repeal, and similar "priority" legislation for bill numbers 1-3 are expected in the state House.

“Since my days as a township official, I have viewed prevailing wage laws as an unnecessary burden on our schools and local communities,” said Meekhof. “It does not make sense that our taxpayers should have to pay more for improvements to our school and municipal buildings. The extra cost of prevailing wage laws siphons money away from other community priorities.”

The Michigan Building and Construction Trades Council held a prevailing wage symposium last year in Lansing for lawmakers, with ample academic and real-world examples of how prevailing wage does not increase costs to taxpayers.

Passage of prevailing wage, even more than right-to-work, would be a wage-killer for the entire construction industry in Michigan, both union and nonunion. Minus a statewide prevailing wage law, there is no limit on how low contractors can bid, and win, contracts to build taxpayer-funded construction projects. And those low bids will be made possible directly from the lower wages paid to construction workers.

Despite overwhelming majorities of Republicans in both the state House and Senate, passage of prevailing wage repeal is not a slam-dunk. There is some GOP support for prevailing wage among lawmakers, and Gov. Rick Snyder was a little more emphatic than he has been in the past about not signing prevailing wage repeal if it reaches his desk.

"I didn’t support it in the first four years, and I’m not going to support it in the next four years,” Snyder said at a bill-signing ceremony last week.

"Repealing the Michigan Prevailing Wage Act has been in the crosshairs of some in the state Legislature since the law was adopted 50 years ago," said Michigan Building and Construction Trades Council President Zane Walker. "But there's a reason prevailing wage has survived and has always had bipartisan support: the law works. Numerous academic studies have shown that removing Michigan's prevailing wage law simply does not lower construction costs. Removing the prevailing wage does not result in lower bids by contractors - it simply results in lower wages for workers. And that means workers are less able to re-circulate their incomes into the community, and are less able to pay taxes, their rent, and eat at local restaurants.

"The state's prevailing wage law also helps make sure that construction projects using state tax dollars are more likely to result in the hiring of local contractors, using local tradespeople. Prevailing wage takes away much of the incentive for out-of-state companies to win state contracts by importing underpaid, out-of-state, or even foreign workers to under-bid local contractors.

"The argument against Michigan's Prevailing Wage Act nearly always centers on cost savings. But when the courts temporarily suspended the act from 1995 to 1997, studies on school construction during that period show that Michigan's taxpayers didn't save a dime. And there are numerous studies of other states' prevailing wage laws that show the same thing: prevailing wage repeal reduces workers' wages, but doesn't save tax dollars."