A brutally lopsided editorial has been published in Pennsylvania which provides a blueprint for the anti-worker argument in favor of eliminating the Prevailing Wage.
The opinion piece, written by the Patriot News editorial board, makes claims without evidence opting instead for vague semi-assertions such as:
It adds an extra 5 percent to 30 percent onto the costs of public school, municipal and state building projects compared with private sector costs, according to many studies nationwide.
Which studies might these be? I suppose it's not important. They are, if nothing else, "many."
What matters most is of course that other states have done it, regardless of the outcome, right?
Nine states have repealed their prevailing-wage laws entirely.
Then there’s Oklahoma, where the law was challenged to the state’s Supreme Court and ruled unconstitutional. The Sooner state has not enforced the rule since.
Other states such as Ohio have exempted public school building projects from the law and have seen considerable savings since the change was made.
Eureka! The hard facts come out. Savings for Ohio schools have been "considerable," thus shedding Ohioans of their sleepless nights.
But what do actual studies say about the prevailing wage? A brand new one, "The Benefits of State Prevailing Wage Laws: Better Jobs and More Productive Competition in the Construction Industry," released October 3rd, 2011 by actual human beings named Mark Price and Stephen Herzenberg, runs completely counter to the wild claims of the Patriot News editorial board. Not only do prevailing wages NOT raise construction costs according to Price and Herzenberg, they ensure higher quality work and safety standards, among other benefits. From their paper's brief:
This year, about 20 different proposals for weakening prevailing wage laws have been introduced into the Pennsylvania Legislature. This briefing paper reviews the economic research on prevailing wage laws so that legislators and members of the public can determine their position on these laws based on evidence rather than ideology.
Consistent with the original rationale for establishing prevailing laws, a rigorous body of economic research shows that efforts to repeal these laws lead to:
-less workforce training;
-a younger, less educated and less experienced workforce;
-higher injury rates;
-lower wages; and
-lower health and pension coverage.
Research also reveals that prevailing wage laws do not raise costs, suggesting that the positive effect of higher wages on productivity compensates for higher labor costs:
Comparing school construction costs before and after Michigan’s suspension of its prevailing wage law revealed no difference in costs. National analysis of data on school construction costs reveals that prevailing wage laws do not have a statistically significant impact on cost. By far, the biggest impact on school construction costs is whether that construction takes place at times of low unemployment, when construction demand and prices are high, or at times of higher unemployment. Schools built at times of higher unemployment, when construction bids are much lower, can cost more than 20% less per square foot than schools built during times of high demand. Consistent with this estimate, in and immediately after the recent “Great Recession,” Pennsylvania was able to finance 28% more projects with American Recovery and Reinvestment Act dollars than initially estimated.
Claims by opponents that prevailing wage laws raise costs by 30% ignore research based on real-world experience and “natural experiments” in states that have repealed prevailing wage laws. These claims are based not on actual experience but on hypothetical calculations that assume, implausibly, when wages and benefits go up, worker skill levels, productivity and other factors remain unchanged. In the construction industry, as in the professions and other skilled occupations, “you get what you pay for”—lower wages and benefits mean a less qualified workforce. Since labor compensation in Pennsylvania accounts for only 29% of total costs (less on many capital-intensive public projects), the claim that prevailing wage laws raise costs by 30% is completely implausible. To generate savings of 30 percent would require employees to work for free in the absence of a prevailing wage law, while also achieving the same level of productivity.
The Price/Herzenberg study is available in its entirety HERE. The paper's FACT SHEET appears below.
KRC PA Prevailing Wage Fact Sheet