Indiana Prevailing-Wage Repeal Has Not Cut Project Costs
Repeal of prevailing wage laws in Indiana, enacted in 2015 by then-Gov. Mike Pence (R), has shrunk wages but not construction project costs, says a new report by the Midwest Economic Policy Institute and Colorado State University.
Based on available economic and census data, the report says craft-worker wages fell 8.5%, on average. Turnover in the heavy-highway sector rose 1.2%, and productivity growth was 5.3% less in Indiana than in nearby states.
Repeal of the state’s so-called Common Construction Wage also did not favor union contractors, with no change in their share of northern Indiana’s public-works market, researchers say. Repeal also did not generate any statistical drop in the average cost of 335 regional public school projects analyzed.
“Wages and benefits only account for around 20% of total project costs. It is simply not mathematically possible to wage-cut your way to the project savings that were promised,” said Frank Manzo IV, institute policy director.
Wisconsin, West Virginia and Kentucky also have repealed prevailing wage rules, with Michigan and Missouri now weighing such action.