Prevailing wage repeal: a con job

By Frank Manzo IV

(EDITOR’S NOTE: Among the first in a series of attacks on unions in the upcoming legislative session this month besides the phony so-called “right-to-work” is the expected repeal attempt of the state’s long-standing prevailing wage law. Legislators should understand that what a similar effort will do in Kentucky will also happen here. The issue: who do legislators care more about: workers or their big-money funders promoting repeal?)

The dictionary defines a “con job” as an act of “swindling or duping” to get one’s way.

Kentucky voted overwhelmingly to elect Donald Trump president, along with historic GOP majorities in both houses of the Legislature.  To win, Trump and Kentucky Republicans campaigned on a lot of promises — including to “create jobs,” and “lift the wages” of working people.

This month, the Kentucky Legislature is expected to do just the opposite, by repealing the state’s prevailing wage law.

Prevailing Wage is the minimum wage for skilled construction work on state-funded projects. There are over 82,000 Kentuckians working in occupations affected by its state prevailing wage — carpentry, plumbing, electrical, pavers, roofers, painters and more. A repeal of prevailing wage would be a state-mandated pay cut for these workers.

DISASTROUS IMPACT OF REPEAL

Recent research by the Midwest Economic Policy Institute and renown Economist Dr. Kevin Duncan shows that prevailing wage repeal will cost 1,800 of these workers their jobs, drive almost 6,000 into poverty and onto public assistance, cost another 6,000 their employer-sponsored health insurance, and will eliminate pension plans for another 10,000 workers.

And because lower wages translates to lower spending by workers in their communities, prevailing wage repeal will cost Kentucky another 1,100 jobs across other economic sectors.

LOCAL JOBS LOST TO OUTSTATE WORKERS

But there’s more.

By establishing Kentucky standards for construction paid for with Kentucky tax dollars, prevailing wage promotes more local hiring on local jobs, and promotes minimum standards of training and workmanship so taxpayers can be assured that these jobs are done right. Absent these standards, more of Kentucky’s construction work and jobs will go to out of state firms — about $354 million worth.

The reason we know this will happen is because it already has.

When Indiana weakened its prevailing wage law in 2013, it helped Kentucky, which had a lower wage standard at the time. As a result, Kentucky gained 800 heavy construction jobs in counties bordering Indiana — while Indiana lost a commensurate number of jobs in just one year.

IMPACT ON VETERANS

Legislators would also be well served to consider the impact on veterans.  Military veterans work at higher rates in the construction trades than non-veterans.  And our research shows they will feel an outsized share of the impact of the Legislature’s planned wage cut — to the tune of about and $80 million per year in income.

The research is unambiguous.

Prevailing wage repeal is not about creating jobs or lifting wages in Kentucky.  It will have the opposite effect:

• It will disproportionately hurt military veterans.
• It will shrink the economy.
• It will mean lower safety standards on projects, and by extension, more injuries.
• It will starve the apprenticeship programs funded by prevailing wages that train Kentuckians for the skilled construction jobs of tomorrow.

WON’T SAVE MONEY EITHER

And it won’t save money either.

Wages and benefits are only about 20 percent of the total cost of a construction project.

When you replace skilled local workers with less skilled workers from out of town, research clearly shows that any savings on wages are more than consumed by lower labor productivity and increased spending on materials, fuels, and… wait for it… retained earnings (profits) for the low road contractors who help fund political campaigns for Kentucky’s new legislative majority.

IT’S A ‘CON JOB’

Because this majority was elected on a promise to lift wages and create jobs, prevailing wage repeal must be seen for what it is—essentially a con job that will benefit a few well-connected contributors at the expense of taxpayers, workers and the state’s economy as a whole.

But there is still time to stop it.  I would encourage every Kentuckian to call their Legislator and make it clear that you are not on board with this scam.  Tell them to keep their promise to working Kentuckians, and to protect prevailing wage. (EDITOR’S NOTE: Missourians take note. Contact your legislator and protest any change in Missouri’s prevailing wage law.)

(Frank Manzo IV, MPP, is the Policy Director for the Midwest Economic Policy Institute in La Grange, Illinois. Reprint from Louisville Courier Journal. Source: Pro-Union St. Louis Facebook page.)