Here's How Much Michigan's 'Prevailing Wage' Law Costs Your School District
Taxpayers paying hundreds of millions extra
Michigan’s “prevailing wage” law costs residents more than $224 million each year, according to the Anderson Economic Group. Now there’s a website that brings the impact of that even closer to home.
Created by the Associated Builders and Contractors (ABC) of Michigan, the new site, www.TimeForRepeal.com/waste-calculator/, lets people learn the cost of prevailing wage mandates for individual school districts. ABC of Michigan, which represents commercial, governmental and industrial construction industries, has consistently advocated for eliminating the state’s prevailing wage law, which essentially requires construction firms doing work for the government to pay union scale wages and follow union work rules.
“Unlike 44 other states that either have no prevailing wage or that attempt to use more market-driven practices found in the private sector, Michigan’s prevailing wage law mandates that union agreements supersede all other work rules and wage classifications on government construction,” ABC Michigan President Chris Fisher said. “Repealing the prevailing wage seems to be taking the region by storm. Indiana has repealed the prevailing wage and its governor Mike Pence is about to sign the repeal into law. Ohio has already gotten rid of the prevailing wage on school construction and in Wisconsin Scott Walker is expected to include some sort of action on prevailing wage in his legislative agenda.”
In Michigan, House Bill 4001, sponsored by Rep. Amanda Price, R-Holland, would repeal the law and on the Senate side Senate Bill 3, sponsored by Sen. David Robertson, R-Grand Blanc, would do the same. There are also numerous bills sponsored by other lawmakers that address various aspects of the issue. Senate Majority Leader Arlan Meekhof, R-West Olive, has announced that Senate hearings on repealing the prevailing wage will begin soon.
As part of negotiations that led to Proposal 1 being placed on the May 5 ballot, Gov. Rick Snyder reportedly pledged not to sign any bill that would repeal the prevailing wage requirement. The extent to which that commitment remains in force now that Proposal 1 has been rejected by the voters is unclear.
Michigan Capitol Confidential asked Fisher to comment on Snyder’s pledge.
“We think repealing the prevailing wage is an issue the Legislature should be taking up and deserves to be under discussion,” Fisher said. “Lansing is definitely in search of solutions right now.”
Fisher said the data used by the new website are from the Michigan Department of Treasury.
“Treasury keeps track every time school districts go to the voters asking for construction,” Fisher said. “Their records go back to 1996. From 7 percent to 7.5 percent of the costs are due to prevailing wage, so it is a very straightforward calculation to be able to find out the costs for every school district in the state from Alpena to Zeeland.”
“By the way, Zeeland passed a millage proposal for a project last night (May 5),” Fisher continued. “If not for the prevailing wage, that $106 million project would have cost $98 million, which would have saved taxpayers $8 million. Last night overall, in districts that approved millage increases, the prevailing wage cost taxpayers over $25 million.”
The new website includes a “waste calculator” that compares construction costs each district pays to what their costs would be if they were allowed to follow private sector standards.
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.