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9/3/2007
Prevailing wage rates - a menace to municipalities
The Davis-Bacon Act was enacted in 1931 in the midst of the depression – and in the midst of a racist America wanting to preserve northern construction jobs for white union men, preventing southern African-American labor from working those same jobs for possibly lower wages.
Davis-Bacon (federal projects) and prevailing wage rate laws (state, local and school projects) mandate artificially high hourly rates be paid on construction projects. Different researchers point to costs being 5 to 38 percent higher when prevailing wage rates are mandated.
Wisconsin’s prevailing wage rate law (a “mini” Davis-Bacon) mandates all contractors, including the 80% of construction workers in Wisconsin who work for merit shop (non-union) contractors, that workers be paid according to union bargained agreements and according to union-negotiated work practices and conditions. (18 states, recognizing their high cost to taxpayers, do not have prevailing wage rate laws, and must deal only with Davis-Bacon for federally funded projects.)
The argument to continue mandated wage rates
The folks at the Institute for Wisconsin’s Future (IWF), and of course their AFL-CIO compatriots, lobby heavily for retention of prevailing wage rate laws. They claim that the decrease in wages with the loss of the law would result in a $23M loss of tax revenue, which would be greater than the savings in construction costs. That’s hard to figure – that the taxes on the wage reduction are greater than the wage reduction itself. Hmmm. Additional arguments IWF makes in favor of Davis-Bacon/prevailing wage laws include: - Increased project costs due to increased occupational injuries
- Increased costs associated with low-wage workers
- Threatened stability of apprenticeship training system.
The argument to repeal prevailing wage rate laws
The primary supporter of Davis-Bacon repeal is Associated Builders and Contractors (ABC), a national association of “more than 24,000 merit shop construction and construction-related firms in 78 chapters across the United States.” If you’re interested, here’s a good, basic piece (3 pages, pretty straightforward) refuting the claims of a union-funded report dealing with the effects of repeal of prevailing wage laws in nine states.
And here’s the bottom line for me. When federal block grants are used to build affordable housing, when those block grants are used to make home repairs in Appleton’s Neighborhood Revitalization program, when a school is built, when the county or city or state contracts to build a road, we taxpayers are paying inflated labor rates to get those projects done. 5% or 10% or 38% - whatever the savings – certainly our state budget could dearly use those bucks. And our municipal budgets. And our county budgets. And our school budgets. Prevailing wage rate laws are a huge drain on public project spending in Wisconsin. The argument is a slam-dunk.
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