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Top five misconceptions about prevailing wage

John Mielke

John Mielke is President of Associated Builders and Contractors of Wisconsin. Established in 1972, ABC-Wisconsin is a trade association of nearly 800 construction employers.

There is a great deal of information swirling around the repeal of prevailing wage, but not all of it is true. Here are five falsehoods that I hear almost every day and that we can help put to rest.

Inaccuracy #1: Prevailing wage is an average of all wage rates paid.

Wisconsin’s prevailing wage is either the union package or the weighted average of only the top half of wages reported from a survey of contractors. Right around 75 percent of Wisconsin’s construction workforce is not unionized, so it is difficult to argue that union wages and benefits prevail.

Inaccuracy #2: Prevailing wage protects local small businesses.

Prevailing wage provides an unfair advantage for big city and out-of-state contractors at the expense of local employers. When prevailing wage mandates a wage far above a community’s market value, larger, non-local shops gain an advantage because it makes more sense for them to bid and work on projects when wage rates are inflated to their levels. Also, the prevailing-wage paperwork burden discourages small businesses from bidding on projects.

Inaccuracy #3: Repealing prevailing wage will result in dangerous work sites, and unsafe construction.

Virtually every private-sector construction project is built without prevailing wage regulations, including the following Daily Reporter 2014 Top Projects: Schreiber Foods Home Office in Green Bay, the SentryWorld Renovation in Stevens Point, and the Pfister Hotel Tower room renovations in Milwaukee. There is absolutely no difference – in construction standards, or health and workplace safety requirements, or enforcement – between prevailing wage and non-prevailing wage projects.

Inaccuracy #4: Without prevailing wage, contractors will make more money at the expense of the construction unions.

Contractors who are required by law to pay prevailing wage simply build that cost into their bid. Nothing gained and nothing lost for the contractor that pays prevailing wage, and the same would be true without prevailing wage. Union construction workers will continue to receive their collectively-bargained rate independent of prevailing wage.

Inaccuracy #5: Prevailing wage repeal does not have meaningful support and is never going to happen.

Prevailing wage repeal has been cosponsored by nearly half of current Republican legislators, and many more have indicated their support. Senate Majority Leader Fitzgerald has been quoted in the Daily Reporter saying that repealing prevailing wage will save money on road projects and vertical construction.

The Wisconsin Association of School Boards, the Wisconsin Counties Association, the Municipal Electric Utilities of Wisconsin, the Outagamie County Board of Supervisors, and the Wisconsin Rural Water Association are supporting the repeal of prevailing wage because they know that it will allow both state and local units of government to stretch their construction tax dollars farther. If Wisconsin repealed prevailing wage, it would join 18 other states — Iowa, Colorado, New Hampshire, Kansas, Virginia, North Dakota, South Dakota, Utah, Idaho, North Carolina, Oklahoma, Arizona, Louisiana, Alabama, Mississippi, Georgia, South Carolina, and Florida.

Currently, West Virginia, Nevada, Indiana, and Michigan legislators are considering either reforming or repealing their state’s prevailing wage laws, and Illinois Gov. Rauner called for ending prevailing wage in his Feb. 2 State of the State address.

5 comments

  1. Inaccuracy #2: Prevailing wage protects local small businesses.

    Your assessment of #2 is completely wrong.

    Prevailing Wage is a mandated wage rate that employers are required to pay their workers for their specific trade. It is designed to help employees get a fair wage for the work they do.

    If a small union shop wants to bid work in an area outside their own, there is usually no chance of getting this work. Since there is 75% non-union and only 25% union there must be an advantage that non-union companies have causing them to flourish! It is the fact that the projects within non-unions’ areas does not have prevailing wage.

    By leveling the playing field with a pre-set based wage for the state, this will allow for fairness in the bidding process for everyone! When I say “fair” I am using this loosely. Non-union companies still have an advantage bidding on prevailing wage jobs. They are not required to pay the same heath care and pension that union companies pay for their employees. This allows them to still have a lower wage burden in the bidding process.

    John, it is clear that you have no idea what you are talking about or you’re deliberately missing leading people in order to please the 75% of the companies that are members of The Associated Builders and Contractors of Wisconsin. Is The Associated Builders and Contractors of Wisconsin a union for companies? Do you require membership dues? I think Scott Walker needs to do something about your union!!!!

  2. Inaccuracy #6

    Everything about this is wrong. Prevailing wage makes everyone pay. Repealing let’s contractors pay what they want. Less money for us and more for the rich.

  3. His article is a bit deceiving. Inaccuracy #4 contradicts inaccuracy #2. The cost of prevailing wages (pw) in built into the bid. No matter if the company is local or not. So the pw ensures bidding by all. Not just out of town companies.

  4. A few things, first dealing with your #2:
    firstly you assume wages are low in an area where the project is. (assumption?) then you go on to assume that “non-local” shops will be coming in to do the work. Here again you are assuming that there are no local union contractors.
    You also apparently have no idea how union contractors work jobs such as these. The contractor himself may or may not be local but he is going to employ local union employees to do the work. (yes John, there are local union workers, probably your neighbors, who work locally on these projects) This keeps GOOD PAYING JOBS in the communities.
    You also mention here about the paperwork being a burden? seriously? If they cannot handle filling some forms then they probably aren’t able to handle the paperwork and payroll workload associated with building a school or bridge or a highway in a timely and efficient manner that guarantees the safety of the completed project.
    Do you seriously think your local small employers, the “mom and pop” builders could handle a project like a school or bridge? I didn’t think so, you just like the emotion it brings to the argument hoping the uninformed will believe you.

    on to #4…
    you present a nice “cherry picked” example on safety but your myopic view here could cost peoples lives. The state of CT did a study and I urge all to read the entire document but I will post her a snippet: Over the 2004-2007 period, in comparison with no-law
    states, construction sector fatalities were lower in prevailing wage law states by 15%.
    In states where the laws are more rigorous, the difference was as high as 25%. In
    states with laws of medium strength (including Connecticut), fatalities were on
    average 15% lower than no-law states….
    safety is also impacted by RTW legislation although that ship appears to have sailed, its supporters as well, may be costing peoples lives.
    http://irlee.umich.edu/Publications/Docs/RightToWorkLawsAndFatalitiesInConstruction.pdf

    I am really disappointed by the people who are supporting this change in absence of knowledge of the truth. I can understand you,John, being in support because non-union contractors are salivating at the thought of being able to bid public projects just below the prevailing wage. That will allow them to fatten their wallets while ******** the workers out of money they would have been paid under prevailing wage laws. Instead the contractor will keep the money, pay low wages and hopefully not get anyone hurt or killed in the process. (remind me again how that helps the local economy?)
    Please people, get informed on this issue. Guys like John here are trying to skew the argument with lies and emotion. This change WILL hurt workers and not only those “nasty union workers”. Your friends and neighbors will feel the pinch whether through lost wages, decreased safety or loss of efficiency on these projects…

  5. Correcting A Veliz who said:

    “Prevailing Wage is a mandated wage rate that employers are required to pay their workers for their specific trade. It is designed to help employees get a fair wage for the work they do. ”

    The fair wage is the meeting point between how much the employer will pay and how little the employee will take. The value of the prevailing wage does not take this into account at all. It is in fact designed to overpay employees.

    That is never a good idea. Especially if they are being overpaid with money forcibly taken from taxpayers.

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