OPINION:
Earlier this month, Michigan became the sixth state since 2015 to repeal its “prevailing wage” mandate, which requires that publicly funded construction projects pay wages determined by the government that are anything but “prevailing.”
In practice, prevailing wages mean union-scale wages. For the taxpayers funding the projects, that means needlessly higher costs.
It was those costs that led to the citizen-inspired Michigan repeal of prevailing wage and helped spur successful drives to repeal similar mandates in Indiana (2015), West Virginia (2016), Kentucky (2017), Arkansas (2017), and Wisconsin (locally in 2015, statewide in 2017).
Those who defend prevailing wage laws argue that repeal will mean lower quality work on public construction projects. Unfortunately for those making this argument, there isn’t a shred of evidence to support it.
Driving from state to state, motorists would be hard-pressed to tell whether they were in a prevailing wage state based on the condition of the roads and bridges. The alleged shoddy workmanship in the 24 states without a prevailing wage law is not causing bridges to crumble.
On the contrary, one motivation for repealing Michigan’s law was to get more bang for the buck on road projects, precisely because the state’s highways are in such bad condition. Five decades of prevailing wage mandates didn’t seem to make our roads pothole-proof.
But, while repealing state prevailing wage laws is a huge step in the right direction, the federal Davis-Bacon Act remains a huge problem because it applies to just about any project that takes federal dollars, and that covers most highway construction. So if taxpayers are to get the most bang for their buck, Congress has to follow suit and repeal Davis-Bacon.
The real reason the 26 state prevailing wage laws and the federal Davis-Bacon Act exist is to shield construction unions from competition. They are a legal price-fixing scheme created to benefit the well-connected cronies of certain politicians at the expense of taxpayers.
Suppose you were putting an addition on your house. Would you limit yourself to union companies that would cost you more, or would you look for the lowest bid from any qualified contractor? If you answered, “I’d choose the more expensive option,” there could be a job for you in government.
Make no mistake, the cost to taxpayers is substantial. A 2015 study by the Anderson Economic Group looked at school construction in Michigan and estimated that the prevailing wage requirement cost almost $1.3 billion over 10 years.
That money could have been returned to taxpayers, used to build and maintain more schools, spend in the classroom or fix our roads and bridges.
As the Anderson Economic Group study noted, “sometimes paying someone more is just paying someone more,” particularly in government contracting, when pay is rarely linked to performance. Michigan taxpayers, parents and students paid more and got less.
And they aren’t the only ones who pay.
A study conducted in the wake of President Barack Obama’s failed economic stimulus plan showed that just suspending Davis-Bacon would have created an additional 160,000 jobs and more projects could have been completed without spending a dime more.
Born in racism — the original goal was to protect white workers in the North from the competition of migrating Southern blacks who would work for less — the federal Davis-Bacon prevailing wage law has been with us since 1931. It has long since outlived its dubious usefulness.
It’s time to kill this vestige of the Great Depression and to open public works projects to the kind of competition and cost constraints that less well-connected contractors have to deal with every day in the private sector.
Congress should follow the lead of Michigan and many other states and repeal the federal prevailing wage mandate.
• Akash Chougule is policy director at Americans for Prosperity. Pete Lund is Michigan state director for AFP.
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