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Prevailing wage stabilizes construction markets
Chris Fisher, president of ABC Michigan, might want to brush up on his history when stating “It’s an unfair law that has been entrenched on the books since 1965” in his Sept. 23 Grand Rapids Business Journal Guest Column (“Prevailing wage repeal: another step toward stable state economy”).
While it’s true Michigan’s prevailing wage law dates to that year, it is simply one of those state provisions often referred to as “little Bacon-Davis Acts” that are in effect in 32 states, including some, like Michigan, that are right-to-work states.
But actual prevailing wage laws date back to 1891 when Kansas established a “prevailing wage” for its public works projects.
These laws were enacted for several reasons, but arguably the best is that by taking wages and fringe benefits paid to workers out of the bidding equation, the competition for construction contracts would then be based on the quality of the work, the safety on the construction site and the efficiency of the workers/contractors.
It keeps the bidding process from becoming a race to the bottom line because contractors would underbid each other to secure the work. There are always contractors who will bid a job at the lowest possible rate and then, if they obtain the work, use substandard materials and/or workers who have little experience or are transient labor — often from out of state, or even out of the country.
Since prevailing wage could be defined as the usual wages and benefits (including overtime) paid to the majority of construction workers within a particular area, it should be viewed as a stabilizing force for the local, regional and state construction markets. Thus, even an ABC contractor’s employees benefit from the theory of prevailing wage.
Mr. Fisher bangs the drum loudly with all the usual hyperbole (“… allow the construction industry to set competitive, market-based wages …”), but other than that offers no substantial proof that prevailing wage does anything but perhaps allow local people to earn a fair wage for their labor.
Hugh Coward is president of West Michigan Construction Alliance.