Thanks to a new order from Michigan Gov. Gretchen Whitmer, prevailing wage has been reinstated on certain state-funded construction projects, a move that largely undoes a Republican-led repeal of the wage standard in 2018.
"By reinstating prevailing wage, we are ensuring working people can earn a decent standard of living, saving taxpayers money and time on crucial infrastructure projects, and offering Michigan a highly-trained workforce to rely on as we build up our roads and bridges, replace lead pipes, install high-speed internet and more," Whitmer said in statement on Oct. 7. "As governor, I am proud to stand shoulder to shoulder with working people and unions who built the middle class."
The order reverses a Republican-driven effort from three years ago to remove the requirement that workers are paid a prevailing wage on state-funded construction projects. In 2018, the GOP-controlled Legislature voted to undo the fair wage standard in a little-used maneuver that didn't allow for a governor's veto. At the time, then-Governor Rick Snyder, also a Republican, supported prevailing wage.
"The action of Gov. Whitmer means a lot to our IBEW members," said Sixth District International Representative Joe Davis. "Prevailing wage for state projects is huge for our members because it levels the playing field for securing work through our signatory contractors."
Without prevailing wage laws, large government-funded projects can be a race to the bottom, with low bids from unqualified and low-wage nonunion contractors considered on equal footing with higher bids from reputable, established contractors who use local workers and pay fair wages and benefits.
The order only applies to projects that go through the state's Department of Management, Technology and Budget, which does not include certain projects like those bid out by local school districts. Still, it's a significant move in the right direction, Davis said.
"Schools and public buildings throughout the state will have projects that will pass through the DTMB. This means those projects will need to be bid by companies and contractors that submit their bids using prevailing wages, thus leveling the playing field for our contractors," Davis said. "As the state looks to modernize its infrastructure the DTMB will play a major role. The electrification of roads and rest areas is just the tip of the iceberg."
Numerous studies have shown the benefits of prevailing wage, as well as the negative consequences of removing it. A study in West Virginia found that a repeal of the state's prevailing wage law in 2016 led to lower wages, no cost savings and a 26% increase in on-the-job injuries. According to an Economic Policy Institute report, in states without prevailing wage, median wages are almost 22% lower than those with one.
"The removal of prevailing wage forces wages to circle the drain, yet the cost to the customer often remains the same or even increases at some point," Davis said, alluding to the fact that poorly done work by the lowest bidder often has to be redone, increasing the overall project cost.
Conversely, as the Center for American Progress noted, prevailing wages not only provide solid middle-class wages, they also expand health insurance coverage and increase the share of workers with pension plans. They also promote quality work and help to close racial pay gaps.
A study from the Illinois Economic Policy Institute found that prevailing wages also promote homeownership. According to the study, the policies extended homeownership to more than 61,000 blue-collar construction workers and boosted the value of those homes by more than $42 billion.
"The actions that have been taken … restore confidence by workers and employers alike," said Michigan Building and Construction Trades Council President Steve Claywell, who is also a member of Battle Creek Local 445. "The restoring of prevailing wage provides a fair and equal bidding process allowing for highly trained men and women to be paid a good wage. We appreciate the courage of this governor and stand ready to build Michigan with her."
Michigan's Associated Builders and Contractors, an anti-prevailing wage organization that was behind the 2018 repeal, has already pledged to fight Whitmer's order in court.
"The ABC and other groups suing in the courts is to be expected," Davis said. "The hill that they and others have to climb is how does this harm their contractors? Paying the prevailing wage to your employees does not harm a healthy and responsible contractor, union or nonunion. It only affects employers that survive by underpaying those that work for them every day and actually do the work."
While Whitmer's order is undoubtedly a positive move, Davis warned that the fight is not over.
"It's a good start but there are a lot of groups that will fight this effort and attempt to tie it up in the courts for years. The best way to fully and more permanently institute prevailing wage is to make the order a law," Davis said. "And the only way to make this a law is to vote for candidates that support workers and unions."