Anti-union politicians have been targeting prevailing wage laws, one of the most effective tools for ensuring fair wages for public construction projects, for years, with six states repealing theirs in the past decade.
A new study shows just how harmful the campaign against these laws has been, with consequences for working families, businesses and communities.
"Construction worker wages, benefits, and productivity fall behind, on-the-job fatalities increase, reliance on government assistance programs worsens, and fewer projects are completed by local contractors — all without saving taxpayers any money," the study's authors wrote.
The report, from the Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign, compared states that repealed prevailing wage laws to those that maintained them. The repeal states are Indiana, West Virginia, Kentucky, Arkansas, Wisconsin and Michigan, all of which repealed their laws between 2015 and 2018. Since the report's release in January, however, Michigan has since reinstated its prevailing wage law.
It found profound benefits for the workers in states with prevailing wage, highlighted by 5% to 16% higher wages.
Prevailing wage laws establish a minimum wage for construction workers on public projects that aligns with similar work in the area. These laws level the playing field for contractors bidding on the work and are intended to prevent a race to the bottom where workers would end up making less than the local prevailing wage. And by paying the prevailing wage, the projects are more likely to attract the skilled workers that are needed to complete the job on time and on budget.
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Prevailing wage laws have been associated with a number of positive outcomes, like increased wages and benefits,
while also decreasing reliance on public assistance.
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The findings back up previous research that showed the benefits of having a prevailing wage. It's also the experience of IBEW members.
"A prevailing wage ultimately leads to good IBEW signatory contractors being able to compete against contractors who otherwise would lowball bid these public projects by paying substandard wages and benefits," said IBEW Construction Department Director Matt Paules. "Prevailing wage laws lead to more IBEW projects and more hours for IBEW members."
That level playing field helps local contractors in particular. According to research cited in the report, in-state contractors are 8% more likely to be awarded federal highway projects that pay Davis-Bacon prevailing wages compared to similar projects that do not. Davis-Bacon refers to the law that covers contracts with the federal government. Local contractors also account for a 10% higher market share when prevailing wages are paid on public school projects, while county-resident contractors account for a 16% higher market share when such wages are paid on library construction projects.
"By keeping tax dollars in the local economy, more labor income and consumer spending remain in communities with prevailing wage policies," the authors wrote.
Apprentices also benefit from prevailing wage laws. According to the study, construction apprenticeship enrollments are up to 8% higher and apprentices complete their on-the-job and classroom training faster in states that have these laws.
"These higher apprenticeship rates result in better-trained, safer and more productive electrical workers," Paules said.
Paules also noted that in states with a prevailing wage, safety training is a higher priority for journeymen and apprentices. This coincides with what the report found, which is that the on-the-job fatality rate was 14% higher in states that repealed their laws.
The study also noted that even elected officials in some of the states that repealed their prevailing wage laws have since acknowledged that the repeal did not deliver the outcomes they claimed it would. In 2017, Indiana state Rep. Ed Soliday, a Republican, lamented: "We got rid of prevailing wage and, so far, it hasn't saved us a penny."
Likewise, in 2021, West Virginia Gov. Jim Justice, also a Republican, said, "We've run to the windows — and they haven't come," referring to the fantasy of low-wage, high-quality local contractors. What did happen, the authors stated, was that the share of construction work performed by in-state contractors has fallen by 8% since the repeal.
By contrast, the Biden administration has embraced prevailing wage, including tax incentives that depend on paying such wages in the Inflation Reduction Act, a first in U.S. history. According to the law, projects that use prevailing wage and apprentices from certified programs will get five times the benefit of ones that don't.
With so much data supporting prevailing wage, the study authors concluded with a recommendation to either expand these laws or implement new ones, and to reverse repeals.
"As our members can attest, prevailing wage laws support good wages and benefits, apprenticeship training, safety and good work sites, and they help create family-sustaining careers in the construction industry," Paules said. "These are all things that attract people to our industry, and a prevailing wage helps make it all possible."