Every year, those seeking to lower wages make the claim that construction workers’ wages are the single largest contributing factor to construction costs; and, every year, advocates for labor and workers expend a tremendous amount of effort debunking this myth.
The prevailing wage, the minimum wage set for highly skilled and trained construction workers on public construction projects, appears to be an easy target. Instead of talking about other factors that contribute to increased construction costs, workers in the construction industry, which is just starting to recover from the Great Recession, are constantly under attack.
Soft costs on construction can account for more than a third of all construction costs and include things like, architects, engineers, program managers, owners’ reps, construction managers and contingency funds. Very few, if any, of these are subject to public bidding or lowest responsible bidder statutes. These soft costs are rarely shared with the public; instead, it is the workers and their wages that are singled out.
Some claim the prevailing wage drives up construction costs. However, the research and evidence surrounding that claim is unsubstantiated and shaky at best. The Ohio LSC report, research cited by proponents of weakening the prevailing wage, notes that it could not be confidently stated how much the prevailing wage exemption had to do with cost savings.
In fact, research by Professor Herbert Weisberg of Ohio University found that “prevailing wage legislation is found to be statistically insignificant in this [LSC report] analysis, meaning that it did NOT increase project costs.”
Others argue that reporting on projects creates an administrative burden that drives up costs; yet, this is unsubstantiated as well, since requiring accurate record keeping is consistent on both private and public construction projects. Taxpayers are spending good money on public construction projects, and they have a right to know how that money is being spent.
As we grapple with how to improve the economy and institute costs savings, we must realize that eliminating the prevailing wage would accomplish a number of things. It would lead to lost tax revenue to the state and municipalities. It would lead to more workers being eligible for public assistance benefits. And it would lead to a weakening of the middle class.
Let’s remember that prevailing wage laws were enacted as a way to protect states from the importation of unskilled, cheap labor. Weakening this law will undoubtedly further open the floodgates for out-of-state companies to under-bid projects, bus in their own out-of-state workers, and pay them a low wage with no health insurance. And once the project is complete, they will head back to their state to spend that money at home.
The prevailing wage not only stabilizes the market for competitive bidding on public construction projects, it also provides good paying jobs for highly skilled and trained construction workers. Prevailing wage is a means of investing in our economy and our future. We must keep our construction workers, both union and non-union, earning the wage they deserve.
Lori J. Pelletier is the Executive Secretary Treasurer of the Connecticut AFL-CIO
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