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The Case for Prevailing Wage

November 6, 2013

The federal Davis-Bacon Act – along with its state and local counterparts — helps keep construction jobs good jobs and maintain high standards in the industry by requiring contractors receiving public funds to pay the local prevailing wage.

But prevailing wages laws are increasingly under political attack throughout the country, including in Pennsylvania, where Gov. Tom Corbett is calling for weakening state regulations.

Opponents of Davis-Bacon like Corbett claims it drives up costs and is unfair to nonunion contractors. But as Williamsport, Pa., Local 821 Business Manager Jim Beamer writes in a letter to the Williamsport Sun-Gazette, the cost of letting contractors drive down wages ends up driving down skills and quality as well.

Higher wages attract better craftsmen – union or nonunion. Who do we want to build our schools and roads? Skilled craftworkers or anyone who can hold a hammer? … Do we want to take the low road all the time? If you were on trial and facing prison, would you seek out the cheapest attorney? Do you price shop your cardiologist?

Beamer also questions the assertion that eliminating prevailing wage reduces taxpayers’ costs.

“The facts from other states show that the cost savings never materializes when prevailing wage laws are eliminated. Wages go down, reworks increase, safety slides and projects experience delays,” he writes. “What evidence has anyone presented where a state has repealed prevailing wage and actually achieved the projected savings?”

Many economic researchers agree with Beamer.

“A growing body of economic analysis finds that prevailing wage regulations do not inflate the costs of government construction contracts,” wrote Economic Policy Institute researcher Nooshin Mahalia in 2008.

She points to the following reasons:

• Contractors often already pay prevailing wage
• Labor costs are usually only 20-30 percent of construction contracts – not enough to dramatically impact the total cost of the project.
• By attracting more skilled workers, higher wages are often offset by higher productivity

She also points to research showing that prevailing wage projects have higher safety rates, with construction-related fatalities 25 percent lower in prevailing wage states.

Click here to read the whole report.

And Pennsylvania residents click here to tell you lawmaker to protect prevailing wage.

Photo used under a Creative Commons license from Flickr user WisconsinJobsNow