News Story

Is Repeal In The Cards For Michigan's Prevailing Wage Law?

Issue is on the legislative agenda

If Chris Fisher is right, there's a good chance that the Michigan Legislature will pass a bill to repeal the state's prevailing wage law.

"I believe the votes are there in both the House and Senate to do it," Fisher, the president of the Associated Builders and Contractors of Michigan, told Capitol Confidential. "We just need to make sure we get all three pegs of the stool — the Governor, the House Speaker, and the Senate Majority Leader.”

Michigan's prevailing wage law mandates that union-scale wages be paid on construction work funded by taxpayer dollars, regardless of the winning bidder on a contract. Typically, universities and public school districts are where the bulk of such projects take place.

"We're very encouraged," said Fisher, whose group has opposed the prevailing wage law for years. "The legislation (Senate Bills 157, 158 and 159) that was introduced in the Senate already has 15 cosponsors. In the House of Representatives, the action plan issued by the Republican caucus at the start of the year included repealing the prevailing wage law. Usually, that sort of thing mentions appointing a blue ribbon panel to look into it, or something along those lines. But this year it was a very strongly worded statement about doing it."

At the bottom of page 16 of the House Republican action plan it states: "We will repeal Michigan’s Prevailing Wage Law to save the state and local units of government almost $250 million every year."

The Senate package of bills was introduced by Senate Majority Floor Leader Arlan Meekhof, R-West Olive. In the House, a three bill package has been introduced. House Bill 4172, sponsored by Rep. Amanda Price, R-Holland, would repeal the law statewide. House Bill 4173, sponsored by Rep. Peter MacGregor, R-Rockford, is a technical bill to facilitate the repeal. House Bill 4174, sponsored by Rep. Brad Jacobsen, R-Oxford, would exempt schools from the prevailing wage requirement.

"It hasn't come up in committee yet,” Rep. Price said of her bill. “A lot of my colleagues are in support of it. Studies have shown that the prevailing wage adds from 10 to 15 percent to the cost of a project. In this era, when we're trying to save taxpayer dollars, keeping the prevailing wage law just doesn't make sense.”

Sen. Meekhof could not be reached for comment.

Fisher's organization cites a state of Michigan report that shows the average construction wage in the state is $23 an hour when the prevailing wage is not applied. When a project is subject to the prevailing wage law, the wages can go up by as much as 60 percent or more for some trades.

"In 43 other states there either isn't a prevailing wage law or the prevailing wage is based on the average of all construction workers," Fisher said. "But in Michigan, under this stupid law, it is based on the 18 percent (who are in unions).

“Believe it or not, Michigan's prevailing wage was signed into law in 1965 by former Gov. George Romney," Fisher added. "But it was almost a completely different world back then — a much higher percentage of the workers were in unions. Now, overwhelmingly, non-union construction employees prevail in Michigan."

Gov. Rick Snyder's current position regarding a repeal of the prevailing wage law is reminiscent of his former position on right-to-work.

"This is not at all an issue we are looking at or working on," said Kurt Weiss, a spokesman for the governor's office.

The Senate bills have been assigned to the Senate Committee on Government Operations, which is chaired by Senate Majority Leader Randy Richardville, R-Monroe. The House bills have been assigned to the House Commerce Committee, which is chaired by Rep. Frank Foster, R-Pellston.

Groups that support keeping Michigan's prevailing wage law, such as the Michigan Building and Construction Trades Council, say the law doesn't really add to the cost of projects.

F. Vincent Vernuccio, director of Labor Policy at the Mackinac Center for Public Policy, said an abundance of studies have clearly demonstrated that the prevailing wage makes projects more expensive.

"The fact is that a prevailing wage contract costs more and those added costs come right out of taxpayers' pockets," Vernuccio said.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.