Republicans Put Repeal of Prevailing Wages on Front Burner
Union dominance of state-funded public works faces its most serious challenge in decades, with Republican governors and lawmakers campaigning to topple or pare long-standing prevailing wage laws.
The Midwest is a particular hot spot, as it has been in the past, but the wage contests are playing out from Nevada to New York, where Democrats also are divided.
In New York City, a program that provides financial benefits to affordable housing is the heart of an apparent disagreement between Mayor Bill DeBlasio and Governor Andrew Cuomo, both Democrats. DeBlasio wants to exempt such housing from prevailing wages while Cuomo seems not to.
In some states, lawmakers debated full or partial repeals. Nevada lawmakers recently reversed a decision made earlier in the legislative session and made school construction subject to prevailing wages, but at 90% of the rate of other public works. Previously, lawmakers had passed a measure completely exempting schools, according to the Associated Press.
In West Virginia, lawmakers took another tack by trying to fine-tune the way the wages are calculated. West Virginia is coming up with a system that uses improved surveying, reduces trade categories from 48 to 28 and eliminates county-by-county determinations in favor or seven basic regions.
Federal prevailing wage rules remain unchanged. For now, however, the number of states with prevailing wage laws is 31.
Indiana Gov. Mike Pence’s recent signing of a repeal of the state’s 80-year-old prevailing wage statute has given a boost to similar efforts across the Midwest, long a union stronghold.
The repeal chills the atmosphere even for union contractors that don't rely on public works prevailing-wage work.
Brian Acton, chief executive of Indianapolis-based BMWC Constructors, which mainly performs industrial construction and maintenance, says he anticipates an influx of nonunion contractors to Indiana 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."
Michigan and Wisconsin are edging closer to scuttling their public construction wage rules, while Illinois Gov. Bruce Rauner is pushing hard to scrap his state’s wage law despite strong pushback by labor groups.
Prevailing wages are calculated differently in every state, but the practical reality is that they make it almost impossible for open-shop contractors to win the work. In many places the fringe benefits required make the biggest difference. In others nonunion firms must comply with work rules that they prefer not to work under. And compliance and record-keeping is complicated.
Open-shop contractors and other repeal supporters contend prevailing wage laws effectively guarantee more expensive union pay rates, driving up the cost of public construction projects while limiting the range of contractors able to bid on the work.
But construction unions aren’t going down without a fight. Labor leaders argue that axing the laws will result in low-ball bids, shuttered apprentice training programs and a flood of cheap labor from other parts of the country. Backing the construction unions are an array of contractors who have long worked closely with organized labor and who fear being undercut by new and lower cost competitors.
High Stakes and Media Campaigns
The one thing both sides agree on is that the stakes are high, with union officials and their contractor allies on one side and open-shop employers on the other furiously lobbying lawmakers and taking to the airwaves and Internet to make their case in ads and other appeals.
The issue is especially resonant in that concerns about standards-of-living and pay inequality have helped trigger increases in local minimum wages, Los Angeles most recently.
A different dynamic has applied in public works in some states.
To a greater extent than anyone recalls, Republicans looking to repeal prevailing wage laws have made use of advertising paid for by political action committees. For example, a not-for-profit organization called the Indiana Opportunity Fund, registered in 2011, had originally dealt with right-to-work issues but more recently turned to prevailing wages. Based in the office of attorney James Bopp, it purchased several hundred thousand dollars worth of ads on Indiana broadcast stations.
The recent changes in the Midwest are a continuation of a long-embattled subject.
In Ohio in 2011, a newly elected Republic governor worked to a extend an earlier ban on prevailing wages in K-12 schools to universities. In Indiana, Republicans worked to raise the threshold at which the state's prevailing wage law kicked in.
And in 2015 the issue of a threshold became moot in Indiana with the repeal.
This story was updated June 5, 2015 to include the quoted comments from Brian Acton of BMWC Constructors.