Saginaw County officials have quietly buried a previously scheduled vote to repeal its “prevailing wage” ordinance for construction projects costing more than $50,000. Prevailing wage laws prohibit granting a government contract to the lowest bidder unless the company pays above-market, “union-scale” wages. In addition to state and federal prevailing wage laws, around 30 local governments across Michigan have their own version.
A vote on repeal last November resulted in a 3-3 tie, and the county controller said then they would try again in January, according to the Saginaw News. But Capitol Confidential has learned that the board’s executive committee in effect vetoed taking a vote by choosing not to place the item on the agenda for the board meeting scheduled Jan. 11.
Past research indicates that prevailing wage issues laws increase the cost of taxpayer-funded construction projects by 10 percent to 15 percent. In Saginaw some had hoped to repeal the county prevailing wage ordinance in time to save money on scheduled county building work.
Like most governments Saginaw County has been strapped for cash. In June the county’s controller recommended lay-offs of 51 employees to help close a $6 million deficit, but commissioners chose instead to balance the books by dipping into reserve funds for $4,471,000.
In 2007, Labor Policy Director Paul Kersey completed a study titled “The Effects of Michigan’s Prevailing Wage Law.” It found that prevailing wage mandates can force contractors to pay wages that average 40 percent to 60 percent more than are found in a more competitive marketplace and that repeal of the state’s prevailing wage law could have saved taxpayers $250 million. Repealing local prevailing wage laws then might have saved taxpayers another $19 million.
Jimmy Greene, Associated Builders and Contractors CEO and President, believes that prevailing wage and other labor-related laws may be the biggest public policy issues facing this state in 2011: “Michigan has shouted to the rest of the country ‘we’re changing … we’re a great place to do business,' but are we walking that talk? It’s imperative that we show the rest of the country that we’re not doing business as usual by hurting commerce with unnecessary and expensive prevailing wage laws at the state and local levels of government.”