University study shows benefits of prevailing wage law


[frame src=”” width=”250″ height=”150″ align=”left” style=”2″ linkstyle=”none” title=”GIVING LIE to the assertion that Missouri’s prevailing wage law increases construction costs was the largest road project in the state’s history — the two-year rebuilding of Interstate 64 (Highway 40) — which came in a month ahead of schedule and $11 million under budget. It is only one of many, many union-built projects completed under budget and ahead of schedule.”]The effort by Republicans in the Missouri Legislature to repeal the state’s prevailing wage laws could cost workers in the St. Louis region between $133 and $201 million annually in lost wages, a new study by University of Missouri economists reveals. The loss of overall economic activity to the St. Louis area would be another $136 to $204 million.

Republican leaders of the Missouri Senate and House of Representatives are moving quickly to pass a law repealing the state’s prevailing wage law. At the same time Republican leaders in the state senate this week began debating a law to adopt a so-called right-to-work (for less) law. (See article on page 1.)

The House of Representatives was scheduled this week to hold a second hearing on repealing the prevailing wage law. The first hearing was a week earlier.

Meanwhile, the Department of Economics at the University of Missouri –Kansas City released a study refuting many of the claims made by Republican proponents about the state’s prevailing wage law.

The 173 page study completed in December for the period of 2008 – 2010, states:“Missouri’s prevailing wage laws do not raise the cost of construction.”

Prevailing wage laws “both the short and long-term….show positive and substantial impacts on construction workers, their families, other industry participants and their families and state, county and local revenue streams.”

Several contractors testified against the repeal efforts at the House and Senate hearings.

“I think legislators were a bit shell shocked that construction management is solidly against any repeal simply because it levels the playing field for contractor’s to bid projects and ensures that private or public dollars are spent effectively and efficiently,” said Jeff Aboussie, executive secretary-treasurer of the St. Louis Building & Construction Trades Council.


The study, funded by the Council for Promoting American Business, made the following points:

• Repeal would cost Missouri residents between $300 and $452 million annually in lost wages;

• Repeal would cost Missouri between $5.8 and $8.7 million annually in lost sales taxes;

• Repeal would cost Missouri between $18 and $27 million annually in lost income tax revenues;

• Repeal would create a total economic loss to the state of between $324 and $488 million annually, $134-$204 million of that in the St. Louis area.


A second argument supporters of repeal make is that prevailing wage laws drive up public construction costs by 10 to 30 percent. The report refutes that charge as well.

Using F.W. Dodge Company data on 150,482 projects across 13 different kinds of structures built between 2003 – 2010 in 12 states called the North Center Region (which includes Missouri) where there are eight prevailing wage states and four non-prevailing wage states, the findings were:

• The mean square foot cost of construction was higher in non-prevailing wage states: $160.11 in the “non” states compared to $150.37 in the prevailing wage states.

• The costs of public construction are overall higher than private construction in both prevailing and non-prevailing wage states.

• The claim of 15-30 percent savings without prevailing wages laws “is not possible,” the study says.


The effort to exempt school construction from the prevailing wage statutes is accompanied by Republican propaganda that school districts could build four schools for the price of three. The findings refute that as well:

• Elementary schools: “There is no statistical difference in the mean square food costs in Missouri versus the non-prevailing wage states….”

• Secondary schools: the costs are lower in prevailing wage states; mean square foot of $175.96 as compared to the $185.31 mean square foot cost in non-prevailing wage states.

• It’s cheaper by $13.35 per square food to build a secondary school in Missouri that in non-prevailing wage states in the region. That is “statistically significant” says the report.

“The repeal of the prevailing wage statute in Missouri will not result in any cost savings (for school construction) as alleged by the opponents of prevailing wage,” the report concludes.


Supporters of repeal argue that prevailing wage laws decrease minority and women participation on on-the-job training (OJT) and apprenticeship programs. The report says that too is not true:

• Four of the eight prevailing wage states in this region are ranked in the top ten in the U.S. for their percentage increases in participation in OJT and apprenticeship programs by women and minorities. None of the non-prevailing wage states is the region ranked in the top ten.

• In terms of the numbers of OJT and apprenticeship training programs available, six of the eight prevailing wage states in this region ranked in the top ten in the U.S. (Missouri included) while none of the non-prevailing wage states ranked in the top ten.

In this area, the report notes that Missouri has created a workforce development and training program – the Missouri Model – that has become the national model for such efforts.


The report not only focuses on the fiscal benefits of prevailing wages, but highlights the fact that there are other major benefits that impact people

• Less reliance on public assistance because workers are paid better and can afford health care and other essential needs, thus taking additional pressures off taxpayers;

• Fewer injuries and fatalities. In 2010, for example, Missouri reported one of the low injury rates of all the states in the North Central Region;

• Higher productivity – 16.2 percent higher – in the region’s prevailing wage states as compared to the non-prevailing wage states.

“The prevailing wage statute provides for better compensation for construction workers and their families, a safer working environment that results in less injuries and fatalities and a more productive workforce,” the study concludes, adding a plus for the buyers of construction, “This results (of the prevailing wage statutes) in more efficient outcomes in the construction sector.”


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