Indiana Republican’s shocking revelation: Prevailing Wage repeal hasn’t saved money

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THE TRUTH FINALLY COMES OUT: Indiana Republican state Representative Ed Soliday (left), assistant majority leader, and Georgia Transportation Alliance Executive Director Seth Millican pour cold water on Republican efforts in Wisconsin to kill prevailing wages… at, of all places, an economic meeting sponsored by business… by telling the group that Indiana saved NO money after repealing its prevailing wage law, but did lose construction jobs. – Photo capture from video shot at the meeting

Missouri was spared this legislative session, but Gov. Greitens could still call lawmakers back to address repeal

By ED FINKELSTEIN
Publisher

Tasked by Missouri Governor Eric Greitens with killing workers’ wages, the Republican-controlled Legislature considered a law this past session that would end prevailing wages. Although workers were spared this session, Greitens could still call legislators back this summer to address repeal. Even if he doesn’t, Republican lawmakers are expected to take it up again next session.

Before they do, they should first listen to the experience of Republican legislators in Indiana, where a similar law passed in 2015 blows up their phony justification for passing such a law: it does not save money on construction projects.

In a business-sponsored Economic Forum held April 24 in Milwaukee, WI, trying to bolster Republican efforts to destroy prevailing wages there, Wisconsin business leaders got it right between the eyes; Instead of getting the support they thought they would from fellow Republicans in Indiana, they got the shock of their lives.

PREVAILING WAGE REPEAL ‘HASN’T SAVED A PENNY’

Indiana House Assistant Majority Leader Ed Soliday (R) admitted publicly that the prevailing wage repeal in his state didn’t save a penny.

“We got rid of prevailing wage and so far, it hasn’t saved a penny. Probably the people most upset with us repealing (prevailing) wage were the local (residents). Because the locals, quite frankly, like to pay local contractors and they like local contractors to go to the dentist in their own town.

“The exaggerations in those hearings (to kill prevailing wage) were that we were going save 22 percent. Well, total labor costs right now in road construction is about 22 percent, and I haven’t noticed anyone who’s going to work for free. … It’s rhetoric.

“So far, I haven’t seen a dime of savings out of it. What we try to do in our group is not run down rabbit trails.”

‘OVERBLOWN RHETORICAL DEVICE’

And providing corroboration of the phony money-saving contention was Seth Millican, executive director, Georgia Transportation Alliance: “I agree…it’s a vastly overblown rhetorical device…”

The Republican-led Wisconsin state Senate is discussing a bill to repeal prevailing wage laws for public works projects. As with most such attacks on working people in the United States, the arguments advanced in service of stripping rights from workers fall flat under even the slightest scrutiny.

Analysis of the Wisconsin legislation shows that $1.2 billion will be lost annually if the bill passes because of reduced economic activity. Study of the Indiana repeal shows that the state lost jobs because of it.

DEVASTATING MISSOURI IMPACT

A study last year by the University of Missouri-Kansas City (UMKC), its second one in the past 10 years, examined more than 150,000 construction projects in 12 Midwestern states, including Missouri, from 2003 to 2010.

In comparing prevailing wage and non-prevailing wage states, it concluded there are no benefits in repealing the state’s prevailing wage law. In fact, there are serious negative impacts on Missouri’s workers.

Among the UMKC findings, the repeal of the current prevailing wage statute would mean:

• A huge economic loss of income and revenue between $225.3 million and $360.7 million annually.

• Lost wages for workers and their families of between $216.5 million and $346.6 million.

• Lost sales taxes between $2.3 million and $3.7 million annually.

• Lost income taxes of between $6.5 million and $10.4 million annually.

• Drastic reductions or elimination of health and retirement benefits, thus creating more dependence on taxpayer-funded state welfare.

NO COST SAVINGS

And the report exposes the lie in the basic reasoning Republicans are using to push repeal: cost savings are not there.

• For the period 2011-2015, the mean square foot cost of construction in prevailing wage states that were studied was $132.10. For non-prevailing wage states, the mean square foot cost of construction was higher at $180.77.

• There is no statistical difference in the mean square foot costs of public construction in prevailing and non-prevailing wage states.

• The repeal of the prevailing wage statute in Missouri will not result in any cost savings in school construction costs as alleged.

BENEFITS OF PREVAILING WAGE

When you consider that the construction industry is facing a shocking shortage of skilled workers in the near future, the report has more bad news for repeal proponents:

• In terms of the total number of on the job training (OJT) and apprenticeship programs, six of the eight prevailing wage states in the region (Indiana, Wisconsin, Michigan, Ohio, Missouri and Minnesota) were ranked in the top ten. 

• Productivity is higher in prevailing wage states than non-prevailing wage states. The value added per worker in the prevailing wage states in the North Central States Region is 16.2 percent higher than in the non-prevailing wage states.

The study concludes that having a prevailing wage law provides for:

• Better compensation packages for construction workers and their families.

• A safer working environment that results in less injuries and fatalities.

• A more productive workforce.

• More efficient outcomes in the construction sector.

REAL OUTCOME OF REPEAL

Repeal would flood the state with unskilled/unsafe construction workers, significantly increasing overall construction costs and risk management issues while exporting wages out of the state.

* Information for this story from the Council for Promoting American Business, the St. Louis Construction Cooperative and the AFL-CIO Blog.

(EDITOR’S NOTE: Yet with all the solid information available that clearly demonstrates the terrible impact prevailing wage repeal would have on Missouri workers, Gov. Greitens continues to promote the destruction of workers’ wages. He hasn’t the political courage to fight for what’s right for workers because the business interests he hopes will fund his campaign for president don’t want that. Those interests are already funding his dark-money group promoting his anti-Missouri, pro-Big Business agenda. The shame of it – many of our union families believed his rhetoric about supporting working families. They voted for him, and they will be the ones most hurt. TRAGIC. By his actions, Gov. Greitens has earned our admonition: POLITICAL COWARD.)

 

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