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Prevailing wage repeal is Legislature’s first bill of 2015

Michigan taxpayers, public schools and universities will get a budget break this year if priority House and Senate legislation to repeal the “prevailing wage” law is finally passed.

“A repeal of the outdated law will mean school and university budgets, as well as all state government, will not be forced to overspend on construction, saving taxpayers as much as $250 million annually in the educational construction sector alone,” says Chris Fisher, Associated Builders and Contractors (ABC) of Michigan president. “The fact that the bills are the first introduced in the 2015 session indicates the importance of prevailing wage reform to easing the strain on state and education budgets.”

House Bills 4001-4003, sponsored by Rep. Amanda Price (R-Park Township), Rep. Brad Jacobsen (R-Oxford) and Rep. Aric Nesbitt (R-Lawton) would remove the stipulation that work and compensation rules on publicly funded construction projects be determined exclusively by union agreements.  Similar legislation in the Senate (Senate Bill 1), will be introduced by Senate Majority Leader Arlan Meekhof (R-West Olive), to mirror language in the House bills and would allow construction companies to pay current market rates found in the private sector rather than ones set by union contracts, which only cover a small slice of the Michigan construction workforce.  Senators Peter MacGregor (R-Rockford), and Dave Robertson (R-Grand Blanc), will be sponsors of Senate Bills 2 and 3 in the package to complete the repeal.

The non-partisan Anderson Economic Group says $2.25 billion could have been saved over the past decade for public school and university construction alone, according to its analysis conducted in 2013. Although the State of Michigan reports that the average free market construction wage is already higher than most other professions at a healthy $47,000 annually, prevailing wage drives the rates up to artificial levels as much as 60 percent higher for some trades when performing governmental construction work.

“Nearly every peer-reviewed study concludes that prevailing wage is a job killer and tax dollar waster,” Fisher explains.  Far from ‘prevailing,’ the current law dictates that unions, which represent only 18 percent of the construction workforce, set wage rates and determine inefficient trade classifications for the rest of the industry.  Such decisions are not subject to any oversight or negotiation and vary from trade to trade and from locality to locality, creating a red tape nightmare for contractors, who must monitor tens of thousands of wage scenarios annually.

“Because construction is such a key jobs provider in Michigan’s economy,” says Fisher, “prevailing wage repeal will help create more good paying jobs and help the industry compete with more than 44 other states that have no such artificial mandates or that base wage rates on more accurate and reliable measures.  Michigan is currently tied for worst in the US because it is one of just six states that has a prevailing wage exclusively determined by union classifications.”

“Prevailing wage repeal is simply good public policy,” says Chris Beckering, vice president of strategic business operations at Pioneer Construction in Grand Rapids. “Michigan taxpayers should not be paying inflated prices on public construction projects.  Michigan citizens deserve the additional job opportunities and fiscal accountability that will result by eliminating this antiquated mandate. It’s time for repeal.”

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ABC of Michigan is a statewide trade association representing the commercial and industrial construction industries. Dedicated to open competition, equal opportunity and accountability in construction, ABC members develop people, win work and deliver that work safely, ethically, profitably and for the betterment of the communities in which ABC and its members work.