Michigan’s prevailing wage law dictates that wages and other benefits on taxpayer-supported construction projects be determined exclusively by union agreements. This is especially disconcerting because 84 percent of Michigan’s construction workers choose not to belong to a labor union. In Michigan, “prevailing wage” does not mean a fair-market wage. Rather, it’s one artificially inflated by 40- 60 percent and arbitrarily determined by an ever-shrinking minority of the construction work force.
Instead of costly special interest handouts and wages determined exclusively by labor unions, Michigan citizens deserve reform that will improve the state’s business climate and guarantee fiscal accountability. Repealing Michigan’s prevailing wage law is a common-sense way to save jobs and taxpayer dollars.
Prevailing wage is a taxpayer rip off. According to a 2007 study by the Mackinac Center for Public Policy, Michigan’s prevailing wage law needlessly cost taxpayers an additional 10 percent above private sector prices – half of which is on school construction. Moreover, a 2015 study by the non-partisan Anderson Economic Group found that in the education sector alone, Michigan is losing $127 million annually to the cost of prevailing wage. Over the past decade Michigan could have built more than 150 brand new, average sized elementary schools with the money that was lost to prevailing wage.
Prevailing wage only exists inside the bubble of government construction and is found virtually nowhere else in the construction industry. The best “real world” example of why there is no need for prevailing wage mandates is the real world itself. The vast majority of large and small construction projects are not subject to prevailing wage, yet Michigan runs contrary to the best practices and fiscal accountability found elsewhere.
Prevailing wage is a regulatory nightmare. There are over 300,000 different wage classifications and rates for prevailing wage work in Michigan. That number even exceeds the total number of construction workers in the state! Work rules mandate unrealistic staffing scenarios, inconsistent wage rates throughout the state, and expensive state agencies to attempt to enforce the requirements.
Prevailing wage mandates result in indistinguishable wages. Many of these are nearly impossible to distinguish from one classification to another. For example, a Carpet and Resilient Floor Layer prevailing wage rate does not include installation of prefabricated formica & parquet flooring, which is to be paid carpenter rate, even though formica and parquet are both types of flooring.
Prevailing wage is wildly inconsistent and differs from location to location. There are different wages all over the state resulting in inconsistent rates around Michigan. For Example, an electrician in Ann Arbor is paid differently than one in Brighton. Wages are not fixed because the rates in each jurisdiction can change several times throughout the course of the year making it confusing, burdensome, and difficult to monitor.
Prevailing Wage Kills Jobs. When Michigan’s prevailing wage requirement was suspended from December 1994 to June 1997 as a result of a federal district court ruling, 11,000 more construction jobs were created.
Reform is needed in Michigan that repeals Michigan’s Prevailing Wage Act. Unlike 44 other states that either have no prevailing wage, or that at least attempt to calculate prevailing wages based on an accurate sampling of all construction wages, Michigan’s so-called prevailing wage law is among the worse. The fact that the wage is not even “prevailing” results in a special-interest driven wage monopoly that runs contrary to the best interests of Michigan citizens, communities and construction employment. Moreover, Michigan construction wages absent of prevailing wage are already higher than most wages in the state. Yet, special interests have fought to mandate a prevailing wage for the construction industry, even though there is no requirement for other industries. Michigan needs to follow the best practice of other states that do not to have a prevailing wage mandate. Unaccountable and inflated construction costs mean fewer jobs and result in limited state budgets that deter investment in education, healthcare, roads and other priorities. It’s time for repeal.