LANSING - A coalition of statewide union construction industry organizations recently organized their first-ever prevailing wage orientation session for state legislators entitled, "Don't be fooled by the newest shell game in town" to deliver the facts surrounding the current debate over the merits of Michigan's prevailing wage law.

The session was conducted by Dr. Dale Belman, associate professor with Michigan State University's School of Labor and Industrial Relations.

"Any immediate savings from the repeal of prevailing wage to the State of Michigan is likely to be small," Belman said. "But the long-term cost to Michigan taxpayers in terms of higher maintenance costs, medical expenses for uninsured workers and having a less-skilled, less productive workforce take away the advantages of any savings."

This prevailing wage orientation session highlighted the positive aspects of Michigan's prevailing wage policy, which is frequently a part of budgeting discussions.

This session was built on a highly successful prevailing wage orientation seminar in 1999. Led by the Michigan Building Trades Council, that seminar brought in prevailing wage researchers to Lansing and received national attention in a leading construction industry newsletter as "textbook" example of the right way to bring the issue before legislators.

In organizing this year's session, several union construction industry organizations communicated to Michigan legislators that the state's prevailing wage law works. Legislators need to hear this message regularly because of the high turnover among lawmakers, brought on by term limits.

"On a net basis, repeal of the prevailing wage law is likely to cost the state rather than save revenue," said Mike Crawford, executive director of the National Electrical Contractors Association - Michigan Chapter. "Professor Belman's careful analysis suggests that repeal of Michigan's prevailing wage law would be a textbook example of an ill-considered policy."

Enacted in 1965, Michigan's prevailing wage law (Public Act 166) states that state-funded construction projects are required to pay prevailing wage and fringe benefit rates. Prevailing wage rates are the average hourly rates of pay provided to different classifications of building trades workers in a particular region.

Bellman began the session by presenting academic research derived from a variety of economic studies from several states. His own analysis of that research revealed that if Michigan's prevailing wage law were repealed, direct cost savings resulting from repeal would fall between zero percent and 3.4 percent, and will most likely fall within the bottom of that range.

Bellman presented other statistical analyses that support the institution of prevailing wage laws, such as:

• A study that found federal Davis-Bacon wage rates exceed average wages by four percent on commercial construction. If labor costs accounted for 35 percent of construction costs, this would result in an overall construction-cost increase of only 1.4 percent on commercial projects.
• A study by Armaund Thieblot, a well-known opponent of prevailing wage laws, which found that repeal of Michigan's prevailing wage law would reduce construction costs by only 0.6 percent.
• A study by Cihan Bilginsoy of Economic Inquiry found that repeal of British Columbia's prevailing wage law resulted in higher rather than lower school construction costs.
• Professor Peter Phillips and his associates at the University of Utah have conducted a number of studies concerning the effect of prevailing wage laws on the costs of public construction, including such costs in Ohio, Michigan and Kentucky. None of these studies found that prevailing wage laws increased the costs of construction.

"Most savings claims," Phillips said, "can't stand up to scrutiny."

Contrast the above studies with a report from the conservative Mackinac Center for Public Policy, which claims that repealing Michigan's prevailing wage law would result in $421 million - or 10 percent - in construction cost savings to the state. But they offer little hard evidence.

The simplistic Mackinac Center study also made the wild claim that when a federal court invalidated Michigan's prevailing wage law for a 30-month period beginning in December 1994, "more than 11,000 new jobs were created as a consequence of the law's invalidation." The Mackinac Center failed to mention that one of the greatest economic booms in our nation's history was also taking place during that time.

Prevailing wage repeal efforts also usually fail to take into account the increased efficiency of higher-paid, higher-skilled workers, increased maintenance costs brought on by lower-quality work, the cost to society in terms of the greater number of uninsured workers, and the shifting of training costs to the public sector.