After months of debate the state Senate passed the controversial Hire Michigan First package of bills, but without language that that would debar contractors from future work.
ABC gathered support among business groups to eliminate key components of Hire Michigan First that involve prevailing wage and union hiring preferences, including the elimination of a provision that debarred any contractor with more than one violation of the state prevailing wage act, even if it was a minor technical violation that was immediately corrected. The other amended provision was eliminating a mandate that requires contractors to employ a 100 percent Michigan-based workforce, unless their company is signatory to a collective bargaining agreement.
Organized labor and its legislative allies attempted to restore the prevailing wage and union hiring bias on the Senate floor, but were unsuccessful.
ABC Michigan and other businesses joined to oppose acceptance of a one-time payment from the federal government in exchange for a massive, permanent expansion of the state’s 100 percent employer-financed unemployment system – and the increased payroll taxes on job providers to pay for it.
The concern relates to $138.9 million in one-time “incentive payments” the state would receive if it were to enact permanent changes to our unemployment laws by the close of the federal fiscal year 2011. The federal mandate calls upon the Legislature to approve two of four possible provisions.
Currently, the Legislature is considering bills that will permit former part-time workers to seek part-time work and be eligible for unemployment benefits (HB 4786, SB 445), and a bill that extends benefits to unemployment recipients who have exhausted benefits, but are making “satisfactory progress” in a state-approved job training program (HB 4785, SB 444).
ABC Michigan is strongly opposed to all four proposals, which are not cost effective and could result in a tax increase for businesses. In fact, it is possible in as soon as a year, the costs of enacting any two of the proposals would outweigh the benefits because employers would be forced to pick up additional costs in the form of higher SUTA and FUTA payroll taxes.
Rep. Tom McMillin (R-Rochester) introduced House Bill 4968, which would eliminate road and school construction from prevailing wage requirements.
With the support of ABC, the bill will follow what other states have done to ensure that uncompetitive prevailing wage mandates do not siphon away tax dollars from other vital areas.
Numerous studies from think tanks, academic institutions, state and federal governments and other sources have demonstrated a significant increase in construction costs because of prevailing wage requirements.
Michigan’s prevailing wage law requires that contractors on state-supported construction projects pay union wages. Passed at a time when union workers probably constituted a majority of Michigan’s construction work force — they represented just 22.1 percent in 2006 — the "prevailing wage" now forces contractors to pay wages that average 40 to 60 percent higher than those found in the marketplace. The need for the wage boost is dubious. On average, construction workers in Michigan, union and nonunion receive a median wage (excluding fringe benefits) well above the median wage for all Michigan workers.
The prevailing wage law increases the cost of construction by 10 to 15 percent and additional costs are passed along to Michigan taxpayers. Repeal of the state prevailing wage law would have saved taxpayers an estimated $216 million in 2002, while the repeal of local prevailing wage laws could have saved another $16 million. (These figures represent $250 million and $19 million in 2007 dollars.) Exempting just the public school districts from the law would have saved $109 million in 2002, or $126 million in 2007 dollars.
Repeal of prevailing wage will help ensure essential state interests such as safe roads and quality schools.
State Representatives Joel Sheltrown (D-West Branch) and Douglas Geiss (D-Taylor) and House Education Committee Chair Tim Melton (D-Pontiac) toured the ABC Southeastern Michigan Chapter’s training facility in an effort to highlight ABC training programs and the need to develop in-demand career training for high school students through a career technical pathway toward graduation. The pathway would be available in addition to the current liberal arts curriculum.
Following the tour, ABC hosted a town hall meeting with all three members of the House Education Committee, Dr. Derrick Fries from Eastern Michigan University, Brindley Byrd of the Capital Area Construction Council, ABC Southeastern Michigan Chapter CET Director Carol Eberhardt and ABC Southeastern Michigan Chapter Executive Director Mark Sawyer.
The panel spoke before a capacity audience on the need for passage of House Bill 4410, sponsored by Sheltrown, that will provide students with a career technical pathway to graduation.
“Our students need high quality skills to be ready for college and careers,” says Sheltrown. “Studying advanced academic classes can help, but students getting National Career Readiness Certifications in CTE programs are developing skills they can use to get good jobs or continue training in community college. Our job market is not one-sized-fits-all, so our training opportunities need to reflect that.”
From left, Reps. Geiss, Sheltrown and Melton at the ABC Southeastern Michigan Chapter town hall meeting.