I knew the prevailing wage law was expensive, but I didn’t think it was this bad. The numbers here are stunning. From the Wisconsin Taxpayers Alliance:
Wisconsin’s prevailing package rates are, on average, about 45% higher than market rates.
In 2014, state and local governments requested prevailing wage determinations for about $1.9 billion in building or heavy construction projects. Estimated labor costs on these projects range from 20% to 30% of the total. Those figures can be used to estimate that state and local governments could have saved between $199.7 million (9.0% of total costs) and $299.5 million (13.5%) on these projects if market averages, rather than prevailing wages, were used.
And not only is a prevailing wage law fairly stupid on their face – the taxpayers should be seeking the best value for services instead of setting an arbitrary labor price – but Wisconsin’s implementation of it is deeply flawed.
Method. Wisconsin surveys construction contractors annually to get information on wages and benefits paid to workers on private construction projects. That information is then used to calculate, by county, hourly prevailing wage and benefit rates for public construction projects.
Unfortunately, only about 10% of surveys are completed correctly and returned, a dramatically lower response rate than achieved by the federal government survey of the same employers. One result of this low return rate is that
the union/nonunion split in hours reported in the survey do not reflect the overall construction industry. Approximately 25% of the industry is unionized in Wisconsin, but 87% of the hours reported are covered under union contracts. This tends to raise prevailing wage rates above market rates.
Just imagine what the taxpayers could do with an extra $300 million a year. Why, that would eliminate the need to cut anything from UW.