New study: prevailing wage laws close income gaps for African-Americans in construction

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PREVAILING WAGE LAWS lift the incomes of African-American construction workers by an average of 24 percent, and close the income gap with white workers from 26 percent to just 12 percent, a new study by the Illinois Economic Policy Institute (ILEPI) and the University of Illinois at Urbana-Champaign’s Project for Middle Class Renewal found.

La Grange, IL – Prevailing wage laws reduce income inequality between African-American and white construction workers by as much as 53 percent and help more blue-collar workers reach the middle class, according to new research by the Illinois Economic Policy Institute (ILEPI) and the University of Illinois at Urbana-Champaign’s Project for Middle Class Renewal.

“While prior research has concluded that there is no relationship between prevailing wage laws and the racial composition of the construction workforce, the data clearly shows that these laws help eliminate income disparities between black and white construction workers,” said study co-author and University of Illinois Professor Robert Bruno. “African-Americans employed as laborers, plumbers, pipefitters, electricians and heavy equipment operators see the largest gains.”

Utilizing publicly-available data from the American Community Survey, the study examined construction worker earnings by race and trade, comparing the results between states with prevailing wage laws and those without.

CLOSES INCOME GAP

Overall, the researchers found that prevailing wage laws lift the incomes of African-American construction workers by an average of 24 percent, and close the income gap with white workers from 26 percent to just 12 percent.

Controlling for other observable factors, the study found that states which currently do not have a prevailing wage law could reduce income inequality for African-American construction workers by at least seven percent if they implemented one.   

Based on surveys of local construction employers, prevailing wage laws establish local-market minimum wages for publicly funded construction projects like roads, bridges, and schools. These projects represent roughly one-third of all output in America’s fourth largest industry, which employs roughly 6.5 million workers.

BENEFITS ALL WORKERS

“A stable minimum wage floor benefits all workers, regardless of race or construction trade,” added study co-author Jill Manzo. “By ensuring similarly skilled workers performing identical jobs with the same equipment are paid the same, prevailing wage promotes the concept of equal pay for equal work.”

The national Davis-Bacon Act applies prevailing wage standards to most federally funded construction projects, but projects funded exclusively by state and local governments are not affected unless a state prevailing wage law is also on the books.  Currently, 27 U.S. states have these laws.

Republicans in the Missouri Legislature are currently considering a variety of bills to repeal or dramatically curb Missouri’s prevailing wage laws.

The study also used American Community Survey data to track average take-home incomes for the 10 largest skilled construction crafts, and compares those figures against the average annual salary of all U.S. workers ($47,258).

STATES WITHOUT PREVAILING WAGE FALL BEHIND

In states without prevailing wage laws, not a single average skilled craft salary reaches the nationwide average. With prevailing wage, at least two crafts exceed this threshold (operating engineers and electricians), while one other falls just short (plumbers, pipefitters, and related occupations).

“For the largest skilled construction crafts, prevailing wage laws improve incomes by between $1,800 and $12,000 per year,” added study co-author and Illinois Economic Policy Institute Policy Director Frank Manzo IV.

“These laws clearly have the effect of reducing poverty and giving more blue-collar workers of all races a chance to join the middle class.”

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Prevailing wage laws help grow incomes across the racial spectrum,
help more workers access middle class

State prevailing wage laws are an important solution to racial inequality and overall inequality, boosting take-home incomes while having no negative impact on employment opportunities for underprivileged groups. A new study by the Illinois Economic Policy Institute (ILEPI) and the University of Illinois at Urbana-Champaign’s Project for Middle Class Renewal found that:

STATE PREVAILING WAGE LAWS BENEFIT AFRICAN-AMERICAN CONSTRUCTION WORKERS

• Prevailing wage has no empirical effect on African-American participation and employment in the construction trades.

• African Americans experience a 24 percent increase in annual take-home pay, on average, due to prevailing wage –– larger than the effect on their white counterparts (17 percent).

• An African-American worker in blue-collar construction work earns 74 cents, on average, for every dollar earned by a comparable white (non-Latino) construction worker in states without prevailing wage laws and 88 cents, on average, in states with prevailing wage laws.

• The income gap between African-American construction workers and white construction workers is 53 percent lower in states with prevailing wage laws (12 cents on the dollar) than in states without prevailing wage laws (26 cents on the dollar).

• Prevailing wage reduces the income gap between white construction workers and African-American construction workers by about seven percentage points.

PREVAILING WAGE LAWS HELP CONSTRUCTION WORKERS EARN MIDDLE-CLASS INCOME

• Prevailing wage increases annual incomes by 31 percent for ironworkers, 25 percent for operating engineers, 19 percent for electricians, and 17 percent for plumbers and pipefitters.

• Construction workers in states with prevailing wage laws earn between $1,800 and $12,000 more per year than similar workers in states without prevailing wage laws.

• State prevailing wage laws improve annual blue-collar construction worker incomes by between four and 25 percent, relative to the average middle-class income in the U.S. economy.

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