Prevailing Wages Remain in Play in Heartland
On July 1, state prevailing wages in Indiana pass into history, following repeal by state lawmakers in April. Michigan, Wisconsin and Illinois are the next states where repeal is possible, provided the political chips fall into place.
How much of a catalyst Indiana will be for repeal elsewhere remains unclear. The state's open-shop contractors are looking forward to bidding on projects they believe they had no chance on before, said Catrona Lanctot, north-central council manager for the Associated Builders and Contractors of Indiana/Kentucky.
"It's not about paying workers less," Lanctot said. "By eliminating the prevailing wage on public works projects, [Indiana's repeal] grows the market and it helps nonunion contractors to participate and compete. …Taxpayers are getting more bang for their buck."
But Indiana contractors that work union are less than thrilled, even those who don't rely exclusively on prevailing wage government contracts. Brian Acton, chief executive of Indianapolis-based BMWC Constructors, which performs industrial construction and maintenance, says he anticipates an influx of nonunion contractors and is focusing on new work in more union-friendly Ohio and other states. "It is going to create more competition for us once these contractors come in from out of state," Acton says. "It's just going to be tough for us. We are a union contractor. We can't lower wages."
Wisconsin, once seen as the next most likely state to repeal, no longer can be considered a slam dunk. Despite Republican control of the legislature and support by Gov. Scott Walker (R), a repeal bill is stalled in the state Assembly.
Efforts in Michigan
Michigan could be the next state to repeal its prevailing wage laws. The state Senate passed a repeal bill and House Republicans say they also are in favor of repeal.
An open-shop-funded study by consultant Anderson Economic Group has helped stir debate. The report estimates Michigan schools and universities overpay to the tune of $224 million a year due to the state's prevailing wage law.
"It was truly a law put into place to protect union's piece of the pie, nothing more," says Mike Houseman, president of general contractor Wolverine Building Group's North America division. "It doesn't do anything to help protect the little guy."
Complying with different rates in different locations and for different trades is a big problem. Houseman has two employees on staff just to do the paperwork on prevailing-wage jobs, with each month's invoice an inch thick. "It's an administrative nightmare," he said.
But Michigan Gov. Rick Snyder, a Republican, has emerged as an unlikely opponent, saying he is worried about the effect on wages and the economy.
That has given Patrick "Shorty" Gleason, legislative director for the Michigan Building and Construction Trades Council, a glimmer of hope as he scrambles to try and slow the repeal bill's legislative momentum. "It's like dealing with a runaway train," Gleason said, noting the speed with which state lawmakers worked on the proposed repeal and "eliminated 50 years of law." Still, repeal supporters are now preparing an end-run around Michigan's governor, with plans for a statewide referendum to settle the issue.
Illinois, the Unlikely Prize
Union-oriented Illinois would be a major prize for prevailing-wage opponents and Gov. Bruce Rauner, a Republican, is squarely on the side of repeal. Facing opposition in the state legislature, Rauner has been urging local cities and towns to pass resolutions calling for an end to the wage rules. He's backed by the state's open-shop contractors.
But Illinois' unions are rallying members and meeting with lawmakers to make their case, and few believe a repeal is possible this year. "Our union density in Illinois is a lot higher than in any Midwestern state," said Steve Conrad, president of the Illinois Valley Building Trades Council. "I imagine that is why we are the prize on the top shelf."
