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Study: Repealing prevailing wage will hurt Michigan

Jun 29, 2015

Credit Christopher Peplin / Flickr

One new study suggests repealing Michigan’s prevailing wage law is a bad idea.

Smart Cities Prevail and the Midwest Economic Policy Institute — two groups that support union-level pay and benefits for workers on publicly-funded construction projects — say their research shows overturning the prevailing wage would have “quite profound impacts” on Michigan’s economy.

And those impacts aren’t good: according to the study, which is based on U.S. Census economic data, it would result in the loss of 11,000 jobs, $1.7 billion in state GDP, and $700 million in new construction investment moving out of state.

Smart Cities Prevail researcher Alex Lentsberg says getting rid of prevailing wage touches off a negative “domino effect … that reduces productivity in the construction industry."

“It would actually have a rather large impact on the state’s economy overall, not just for the construction sector,” Lentsberg adds.

The Midwest Economic Institute’s Frank Manzo, another study co-author, says higher-paid workers “get the job done quicker.”

“The research shows that workers are anywhere between 11-30% more productive in states that have prevailing wage laws,” Manzo says.

Lower wages result in lower tax revenues and less in-state spending, the study’s authors argue. They also say that non-prevailing wage states contract significantly more construction work out-of-state.

Opponents say prevailing wage drives up taxpayer-funded construction costs. But the study’s authors point to data showing that public construction costs are roughly the same in prevailing wage states and non-prevailing wage states.

Legislation to repeal Michigan’s prevailing wage law passed the GOP-controlled state Senate this month, but appears stalled in the House.

Gov. Snyder says he opposes those bills, fearing they will hurt his efforts to boost the skilled trades workforce in Michigan.

But a petition drive to repeal it is also underway. If successful, the bills would only need to be approved by the state Legislature.