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IPPSR Forum: Prevailing Wage and Workforce Diversity, Cost and Safety

The Institute of Public Policy and Social Research focused on Michigan’s Prevailing Wage Law and its impact on highly skilled trade jobs during a policy forum held in Lansing on Wednesday, October 17. Listen to an audio recording of the Public Policy Forum.

Dr. Dale Belman, Professor in the School of Human Resources & Labor Relations at Michigan State University, began the forum by explaining what prevailing wage is and why Michigan has it. Michigan’s Prevailing Wage Law requires wages and benefits, which are set by union agreements, to be provided to employees in skilled trades who are tasked to work on publically funded construction projects. Dr. Belman stated the importance of the Prevailing Wage Law is to level the playing field for all contractors. He presented three arguments regarding prevailing wage in Michigan to help attendees understand the importance of the law. First, there is no body of evidence that suggests prevailing wage causes project costs to rise. Second, the law helps the quality of work in the labor force. Lastly, the law promotes workforce diversity. D. Belman said prevailing wage laws advance apprenticeship programs and encourages training of the skilled trades. Essentially, prevailing wage promotes the next generation of workers.

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Neil Parish, an Assistant Manager at the National Electrical Contractors Association (NECA), highlighted the role of prevailing wage in aiding in the quality of work and benefits for employees and employers. Parish shared that prevailing wage prevents workers from struggling to pay their share of taxes and lowers employer taxes. Taxes are a major part in causing prices for bids to be higher for jobs.

Mr. Parish pointed to misconceptions of the prevailing wage law. One misconception is that prevailing wage causes jobs to cost more. “This may be, but workers are being paid fairly, he said. “Higher wages allow worker productivity to be higher, and that potentially offsets costs.” Parish cautioned that the repealing of the prevailing wage will decrease productivity in workers, which would then make projects cost more, lower quality expectations, and reduce employee benefits. See his presentation.

See biographical sketches of panelists.

The State Director of the Associated Builders and Contractors (ABC) of Michigan, Jeff Wiggins, informed the audience that twenty-four states do not have prevailing wage. Michigan is one of only six states that have local union wages. Wiggins emphasized how lopsided the input is when the prevailing wage is set because union members are the only ones at the table debating prices. He pointed out that more than 80% of the construction workforce are not affiliated with a union. Speaking on behalf of the ABC, he said prevailing wages limit the voices of a large majority of high-skilled workers on their wages and benefits. “Prevailing wage has limited competition in a free and fair open market and has inflated wages,” said Wiggins.

Both Mr. Wiggins and Professor Belman referenced studies that contradict one another regarding the impact of prevailing wage on work quality and employee. The two also viewed at least one of the studies differently, reflecting their perspective on the study results.

The forum discussion reinforced the sense that the debate on prevailing wage will not come to an end soon, particularly when considering work quality, costs, and employee diversity.

Hannah Sweeney is an IPPSR Policy Fellow working toward a Masters Degree in Public Policy at Michigan State University.