Michigan’s outdated prevailing wage law is not only a special interest handout that costs taxpayers hundreds of millions of dollars, it is also a red tape nightmare. The prevailing wage law requires any contractor that is hired by the state to provide their employees (who are working on the project at hand) with union scale salaries and benefits. State funded construction projects such as schools, hospitals, prisons, and roads are required to comply with the law regardless of their position on unions. Oftentimes, the associated wages are considerably steeper than the standard market rates. Unfortunately, the costs associated with the prevailing wage law wind up costing taxpayers more in the end. Now is the time for the construction industry to take a stand in order to repeal this counter-productive wage law.
Chris Fisher, President of the Associated Builders and Contractors of Michigan, hit the nail on the head when he said, “It’s time to end the special deal between the government and big construction unions that costs taxpayers millions, shuts out too many small businesses, and shortchanges our kids and schools.” He continued, “Let’s level the playing field to allow every worker to compete based on the best price and quality. No more special deals for special interests.” Michigan needs to do everything it can to support small businesses and provide quality educational opportunities for children—the prevailing wage law does the exact opposite.
A shocking statistic that many repeal proponents frequently cite is a 2013 report by the Anderson Economic Group; the report estimated the prevailing wage costs for state and local governments amount to an extra 224-million dollars a year on education-related construction projects between 2002 and 2011. What remains taboo for owners of construction firms is the fact that no other industry in Michigan is governed by the prevailing wage law. The state of Michigan should not subject the construction industry to these costly regulations that do not apply to any other industry.
What most people don’t understand about the prevailing wage law is that it isn’t like the minimum wage regulations. It is a red tape nightmare that forces the construction industry to monitor more than 350,000 different wage classifications. That is more wage classifications than there are construction workers in all of Michigan.
Moreover, many counties and school districts in Michigan have different wage schedules within their own territories. For example, say an electrician is working in the city of Brighton on Monday, and then on Thursday he is working in the city of Howell. Due to the prevailing wage law, he will be paid at a different rate for those days even though he is doing the same job in two cities that are only a few miles apart, and are in the same county.
Though supporters of the law claim it has a direct relationship to safety or quality, this belief is simply untrue. Safety standards are primarily overseen by the Michigan Occupational Safety and Health Administration and quality is overseen by the Bureau of Construction Codes. In turn, construction safety and quality standards are identical regardless of whether work is subject to prevailing wage or not.
Looking at the bigger picture, outside of Michigan, forty-three states either have no prevailing wage law or at least attempt to determine wages based on more consistent and accurate methods. What’s more surprising is that even the federal government has more accurate methods than Michigan. It’s no wonder Michigan sinks to the bottom of the scale when it comes to fair and consistent wage compensation.
