News Story

City Spends $300,000 Extra On Construction Projects To Pay Union Wages

Michigan eliminated prevailing wage law but Royal Oak wants to pay more

Nearly a year after Michigan repealed its law mandating union wages on public construction projects, some local governments are still requiring them. In Royal Oak, the city government is spending at least hundreds of thousands of dollars in extra taxpayer money because it favors unions.

In 2018, the Michigan Legislature approved an initiative petition to repeal a statute, more than half a century old, which required workers on state and local public construction projects be paid at “prevailing wage” (union level) rates.

The move was backed by taxpayer and nonunion contractor groups and bitterly opposed by organized labor. Despite the legislative action, the break from the prevailing wage requirement has not been entirely clean.

In Royal Oak, for instance, city officials and construction supervisors on a series of projects have continued to request that prospective contractors use union labor or compensate workers at prevailing union rates.

According to documents the Mackinac Center for Public Policy obtained through a Freedom of Information Act request, Royal Oak officials have repeatedly discussed a preference for contractors who adhered to union-level wage scales. They also required prospective bidders to specify whether their workforce was unionized.

When Michigan was debating the repeal of mandated prevailing wages, unions and their allies repeatedly asserted that it would not save money. But a review of bid documents in Royal Oak shows that the city purposely chose to pay higher costs with no assumption that it would get a better product or service as a result.

The city also rejected several low bids — including one in February that would have shaved nearly $313,000 off the cost of concrete for a new police station — from firms which submitted proposals using nonunion labor.

City Attorney David Gillam, responding to a request for comment from Royal Oak City Manager Donald Johnson, said in an email that the repeal of the prevailing wage law applied only to state-funded or sponsored projects.

“The City Commission may still consider prevailing wage in reviewing bids on city-financed or sponsored construction projects. The city’s goal is to award a contract to the bidder that will provide the best overall value for the city and its residents,” Gillam said.

But Royal Oak City Commissioner Randy LeVasseur said invoking a state requirement that no longer exists may not be in the best interest of city taxpayers.

“I believe the City Commission owes a duty to taxpayers, as the people who will be paying the bill,” LeVasseur said. “And if we’re going to add millions to the cost of the projects, we should be out in the open about it.”

The documents the city provided are far from clear about whether prevailing wage or unionized workers are required of contractors seeking to participate in construction projects.

In a memorandum to the Commission about contracts for a new city hall, for instance, the city’s economic development director said two bids were not accepted “due to the City Commission’s stated preference for union firms whose wages adhere to the Davis-Bacon Act.” Accepting those bids would have saved the city $32,900. But Development Director Todd Fenton said “city staff believes the savings ... would be eliminated by the costs ... (of) bringing another firm on board to audit payrolls” to ensure compliance with the union preference.

Fenton did not respond to multiple requests for comment.