Monday, April 13, 2009

Prevailing Wages

Some folks are raising the alarm bells about the consequences of Governor Doyle’s prevailing wage provision in his budget. 

Volunteers would find it nearly impossible to help build playgrounds or improve school athletic facilities if lawmakers require that workers on some publicly financed construction projects be paid prevailing union wages, opponents of the proposal say.

“No civic projects will ever get done since you would have to pay volunteers for a municipal project that costs more than $2,000,” Port Washington City Administrator Mark Grams wrote in a recent memo to aldermen. “That’s INSANE!”

“However unreasonable it may sound, that may be the outcome,” said Dan Thompson, executive director of the Wisconsin League of Municipalities.

Under the provision that was included in the budget Gov. Jim Doyle submitted last month to the Legislature, workers on projects that receive at least $2,000 in financing assistance from local governments would be barred from undercutting prevailing wages.

The legislation is backed by the state’s labor unions.

“The whole point here is to hire union people,” Thompson said. “What could be more threatening than free labor?”

But is gets even worse.  According to this study from the George Mason University’s John M. Olin Institute for Employment Practice and Policy, the unions have been intentionally inflating the “prevailing wage” through the use of job targeting.

The wage rate required to be paid on the vast majority of public construction projects is known as the “prevailing wage.” In the majority of instances, the prevailing wage rates are the wage rates that unions claim their members are being paid. However, because of market recovery/job targeting programs, there can be a significant difference between what unions may claim an employer is paying and what is actually being paid.

Market recovery/job targeting programs enable unions to assert that a higher wage is being paid than what an employer is paying out of its own pockets. Unions are able to do this by claiming that the
wage rate being paid is the combination of the lower rate the employer is actually paying and the amount of the union’s wage subsidy, which they then represent to be the “prevailing wage.” Their claim is pure fiction.

The true wage rate being paid is the amount that the employer is actually paying out of its own pocket, without the addition of the union’s wage subsidy. As such, the wage rates the unions claim are being paid will always be an inflated and inaccurate amount whenever market recovery/job targeting payments are involved.

With the practice of job targeting, the prevailing wages that employers are required to pay on virtually all federal, state and local public construction projects can be considerably higher than they should be. As a result, the public is unknowingly paying a much higher cost to build fire and police stations, schools, roads, libraries, sports arenas, water treatment plants, and the numerous other publicly funded construction projects. In many cases, the public is being prevented from building much‐needed projects due to the inflated cost.

Just remember, “prevailing wage” laws are not about making sure people are paid fairly.  It’s about making sure that non-union labor - including volunteers - doesn’t have a competitive advantage through lower prices.  In the end, it just means more money out of the pockets of taxpayers transfered into the pockets of the unions.  And because of the higher cost of labor, fewer projects will be completed.

(1) Comments
Posted by Owen at 1208 hrs
Economy + Politics + Politics - Wisconsin

  1. does this only apply to construction projects?
    what about volunteer firefighters? if this could be applied to volunteer firefighters, the budgets of many communities would be completely destroyed.

    Posted by .(JavaScript must be enabled to view this email address) on April 14, 2009 at 1144 hrs


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