Lansing, MICH. – A detailed new data-driven study shows that cutting Michigan worker pay by eliminating the state’s prevailing wage policies will not save Michigan taxpayers any money, but will attract out-of-state companies into Michigan, reducing employment for Michigan skilled trades workers and tossing thousands below the poverty line.
The report, “The Economic, Fiscal, and Social Impacts of State Prevailing Wage Laws: Choosing Between the High Road and the Low Road in the Construction Industry,” is based on data from the U.S. Census Bureau and the National Health Expenditures Survey. It is available at here and at http://www.michiganprevails.com/resources/.
Ending prevailing wage laws would result in lower pay for skilled construction workers and attract more out-of-state companies, the report says, bringing out-of-state workers, to take jobs being paid for by Michigan taxpayers. The report says ending prevailing wage laws will:
- Cut the number of Michigan construction jobs by 9,700, as out-of-state companies bring in workers from outside of Michigan to work
- Push 4,300 more construction workers below the official poverty line
- Increase the number of construction workers eligible for food stamps by 4,400
- Mean the loss of health insurance for 13,500.
- Decrease state tax revenue by $65 million.
The report, notes that 75 percent of peer reviews studies show that repealing or weakening prevailing wage laws and policies on public works projects do not affect construction costs – in other words, they don’t save taxpayers any money.
Despite the failure of an earlier petition drive due to widespread fraud and ineptitude by its managers, the secretive Michigan Freedom Fund is spending additional millions of dollars to purchase signatures to put an end to prevailing wage laws in Michigan before lawmakers. Legislative efforts to end prevailing wage laws floundered when Gov. Rick Snyder threatened a veto; an initiative petition campaign means the Legislature could impose the law without the governor’s signature or put it before voters.
Polling has consistently shown Michigan voters do not favor cutting the pay of state skilled trades workers or hurting small businesses who today can bid fairly against larger companies to provide services. Today, all companies have the chance to bid on equal footing for state and local construction work. Ending prevailing wage laws will mean many small companies will no longer be able to effectively bid.
“Weakening or repealing prevailing wages does not reduce construction costs, but increases poverty and decreases economic activity. In fact, weakening or repealing state-level prevailing wage laws in the 25 states that currently have strong or average wage policies would have negative economic, fiscal, and social impacts on the U.S. economy,” the report states. “Prevailing wage laws create a level playing field for all contractors by ensuring that public works expenditures maintain and support local area standards.”
“The data is clear – ending prevailing wage laws will hurt Michigan’s skilled construction workers and their families, enrich out-of-state and large constructors at the expense of small Michigan-based companies, and damage our state’s economy,” said Bart Carrigan, labor relations consultant of Associated General Contractors of Michigan. “That’s why virtually all state construction company organizations, including those representing electrical contractors, plumbing and mechanical contractors, general contractors and heavy equipment contractors are opposed to ending prevailing wage laws.”
Pat Devlin, secretary treasurer of the Michigan Building Trades Council, said the report’s data should raise questions about the motives of those looking to end prevailing wage policies in Michigan. “Our state’s skilled trades workers are just getting back on their feet after the Great Recession. Prevailing wage policies ensure they can meet their bills and contribute to their communities. Ending it will mean lower pay and reduced benefits for construction workers, who are the backbone of our state’s economy.”