Michigan taxpayers have a reason to celebrate. The state Legislature recently moved to repeal the state’s burdensome and antiquated prevailing wage law. The move supports the free market in setting wages, and makes Michigan the 23rd state to free itself of the costly mandate.
Gov. Rick Snyder, who has been ambivalent on the prevailing wage, won’ be able to veto the measure because it was initiated as a petition drive spearheaded by Protecting Michigan Taxpayers.
The petitions went to the Board of State Canvassers, but the Democrats on the board attempted to stall them, despite the recommendation of the Bureau of Elections to certify the petitions and send them on to the Legislature. The two Democrats allowed partisanship to get in the way, claiming there were concerns about the validity of some addresses on the petitions, but the measure eventually made it to state lawmakers.
Prevailing wage requires construction workers on state-funded projects to be paid the going union rate, regardless of whether they belong to a union. This restricted local governments in charge of public construction projects (think schools) from picking and choosing from various contractors and finding competitive rates.
“Local governments can now do a fair bidding process that will allow them to choose the contractor they think is most qualified,” says Jarrett Skorup, director of marketing and communications at the Mackinac Center for Public Policy.
Supporters of prevailing wage argue it ensures quality work for schools, roads and other public building projects, but this simply isn’t the case. Competition in the market instead helps produce higher quality work. Besides, it is not the government’s job to show favoritism to unions and their wage rates when using taxpayer funding for public projects.
A study published on the Michigan Building and Construction Trades Council website argues prevailing wage is a major benefit for construction workers who otherwise might be paid lower than the union rate.
That might be true, but it doesn’t justify artificially hiking the costs of big-ticket projects. Taxpayers will be saving an estimated $400 million a year after the repeal. And this doesn’t mean local governments can’t hire contractors that pay union rate; they can and do hire contractors who pay even more than that.
Another claim is that without prevailing wage contractors can underbid quality businesses by using workers with low job skills. However, because officials now have the freedom to choose contractors they deem most qualified for a certain job, the likelihood of bringing in low-skill labor is small.
Jeff Wiggins, president of Protecting Michigan Taxpayers, says that there are a host of other considerations local governments must look at beyond the hourly wage for construction employees. The repeal is not getting rid of those mandates. It only removes the mandated prevailing wage. Public project managers will still be required to make sure of quality construction.
"Just look to the real world,” Wiggins says. “Ninety percent of construction in the state is private. Public construction projects in Michigan will now do the same thing private construction companies have always done.”
The Legislature did Michigan taxpayers a big favor in repealing prevailing wage.