Small Business Says Time to Repeal Prevailing Wage Law

Date: May 13, 2015

Wednesday, May 13, 2015 (Lansing) –Taxpayers can no longer afford Michigan’s outdated and wasteful Prevailing Wage Law according to testimony today by the National Federation of Independent Business (NFIB) before the Senate Committee on Competitiveness. The committee held a hearing on Senate Bills 1, 2 and 3 that would end Michigan’s Prevailing Wage Law.

“All Michigan citizens share the concerns of the Senate Members on this committee with regard to the adequate funding of our schools and infrastructure in the face of challenging budgets,” said NFIB State Director Charlie Owens. “While state and local governments are looking for ways to stretch resources and be good stewards of the taxpayer’s dollars, we would be remiss if we did not examine the impact of Michigan’s outdated and wasteful prevailing wage law on the cost of construction projects financed with state taxpayer dollars”.

Michigan’s prevailing wage law, passed in 1965, requires that contractors on state funded projects pay the wages and fringe benefits according to the union scale regardless of whether the builder in question has union or non-union employees on the job. Michigan is one of only six states in the nation that require union wages be paid on state funded construction projects. Estimates are that the law results in $224 million in extra costs per year on school construction alone.

“The law requires all contractors on state funded projects to pay the union scale wages and fringe benefits which are almost always higher than what local labor market conditions would dictate”, said Owens. “As a result, taxpayers are overcharged anywhere between 10 and 15 percent more than what a competitively bid job would cost without the mandated union wage requirement.”

Owens went on to cite examples in other states and in Michigan (during the 30 month period a court case suspended Michigan’s prevailing wage law) where the absence of a union prevailing wage requirement resulted in cost savings on projects with no decline in safety or quality of construction. Owens said that the Bureau of Labor Statistics indicates that the vast majority of construction workers are non-union with only about 18 percent belonging to a labor union.

“We are missing the opportunity to increase the buying power of the state, school districts and local governments without any new taxes or increased state spending,” said Owens. “We are here today to ask your support for Senate Bills 1, 2 and 3 that would end Michigan’s antiquated and unnecessary Prevailing Wage Law.”

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Related Content: Small Business News | Michigan

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