Prevailing Wage laws – which govern the wage rates paid to construction workers on government-funded public works projects, set by county – have been studied before by advocates opposed to and supportive of the mandate. However, this is the first national study on the economic, social and project cost impacts of the laws.
In Illinois, Gov. Bruce Rauner has repeatedly called for the state’s Prevailing Wage law to be overturned. Illinois first passed its Prevailing Wage law in 1931, and through the decades it’s had bipartisan support.
ILEPI researchers, in collaboration with Colorado State University-Pueblo and the nonprofit think tank Smart Cities Prevail, bolster labor’s position that the laws don ‘t hinder economic growth, but help it.
The ILEPI report considered research on both sides of the issue related to the impact of Prevailing Wage policies on overall project costs and made a distinction between rigorous research that underwent peer review, and studies that didn’t. The authors concluded that 75 percent of recent peer-reviewed studies find that construction costs are not affected by Prevailing Wages.
Key findings:
* Prevailing Wage Laws have no impact on total construction costs.
* Prevailing Wage repeals hurt local contractors and local economies.
* Prevailing Wage laws help veterans, close racial gaps, and reduce income inequality.
* A Prevailing Wage repeal would cost taxpayers money
“Construction workers in states with Prevailing Wage laws are 8 percent more likely to have health insurance and 4 percent more likely to have a retirement plan,” the report says “Adequate prevailing wage laws decrease the probability that a construction worker will earn a poverty-level income by 3 percent.
“Prevailing Wage laws reduce reliance on public assistance,” it continues. “States with weak or no Prevailing Wage Laws spend $367 million more per year on food stamps and Earned Income Tax Credits for construction workers than states with average/strong PWL.
“Prevailing Wage Laws increase income tax contributions,” researchers show. “Construction workers in states with strong/average Prevailing Wage Laws contribute over $5.3 billion more in federal income taxes per year than their counterparts in weak/no law states. [And] if all 25 states with strong/average Prevailing Wage Laws weakened or repealed their policies, the loss in federal income taxes and added public assistance expenditures would cost American taxpayers at least $4 billion more every year.”
Study co-author Alex Lantsberg adds, “Our research shows that the debate around the cost impact of Prevailing Wage policies, in many ways, mirrors the debate on policy questions like climate change – where some policymakers rely on ideological bias or an incomplete understanding of an industry to promote conclusions that are simply not supported by academic consensus. We found that the non-peer reviewed studies that suggest cost savings from Prevailing Wage repeal tend to focus exclusively on wage differences, which ignore the fact that Prevailing Wage standards dramatically reduce material and fuel expenditures and reliance on taxpayer-funded welfare assistance, while increasing worksite productivity.”
His colleague Kevin Duncan, an economist at Colorado State, said, “Our study confirms that states without Prevailing Wage laws not only undermine workmanship, productivity and workforce development programs that promote construction career pathways for racial minorities and veterans, but millions more is spent in these states on food stamps, Earned Income Tax Credit, and public forms of insurance for low-income, blue-collar construction workers, with smaller overall economic output, higher income inequality, and millions less in tax revenue.
“If all the states with Prevailing Wage Laws were to repeal, they could expect to see 400,000 lost jobs, a $65 billion reduction in our national economy, and a loss of $8 billion in tax revenue,” Duncan added.
Another member of the research team, Frank Manzo IV, summarized the positive judgment of the impartial study.
“To be sure, there are financially motivated interests on both sides of this issue,” Manzo said, “but the facts clearly argue for Prevailing Wage policies as the best bet for taxpayers, workers, businesses and the economy as a whole.”
[PICTURED: Graphic from sandiegofreepress.org.]
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