My column for the West Bend Daily News is online. Here you go:
Repealing Wisconsin’s prevailing wage laws would be one of the most beneficial and impactful actions that the legislature could possibly take this session, but it looks like it might not happen.
The prevailing wage laws were first enacted in Wisconsin during the Great Depression as a means of protecting local workers from losing work to migrant workers who might do the work for cheaper. It was one of many protectionist laws passed during that era. The law essentially requires any the businesses that work on any public project of a given size to pay the prevailing wages for the area in which the work will take place.
In practice, the prevailing wage laws mean that taxpayers must spend a lot more than necessary to get work done. The Wisconsin Department of Workforce Development sets the prevailing wage for an area by means of an annual survey. As the Wisconsin Taxpayers Alliance recently pointed out in a study, the survey is hopelessly flawed. Only about 10 percent of the surveys are completed and returned, and 87 percent of the respondents are union, as compared to only about 25 percent of the industry. In short, the “prevailing wage,” according to the DWD, is not representative of the actual wages being paid in that area. In fact, they are about 45 percent higher than the actual market rates.
While the same study says that the prevailing wage laws cost Wisconsin taxpayers as much as $300 million per year in unnecessary costs, let us see what that looks like in local terms. West Bend Mayor Kraig Sadownikow points out that West Bend does about $1 million per year in road maintenance. Most of that work is subject to the prevailing wage law. The end result is that West Bend can improve about 25 percent fewer road miles than it could if the taxpayers were allowed to pay the actual market labor price for those projects. Another way to look at the math is that with the same amount of money, West Bend could improve fully 33 percent more roads every year for the same money if the prevailing wage laws were not in effect. That’s a huge difference.
In another example cited by Sadownikow, the prevailing wage laws also apply to public projects that are not funded by taxpayers. In West Bend, private donations from local corporations and citizens were used to fund 100 percent of the improvements for the stage, pavilion and concession stand in Regner Park. Even though no taxpayer dollars were used, the prevailing wage laws meant that every dollar donated only purchased 75 percent of the products and services that they would have if the projects were on private property.
These two examples alone represent hundreds of thousands of wasted dollars for just one community. The prevailing wage laws are costing all Wisconsinites real money, and yet the Republicans in the legislature are seemingly unable to garner the votes to repeal them. Why? The excuse given for public consumption is that repealing the prevailing wage laws would harm the workers who are currently being paid the inflated wages, and that would harm Wisconsin’s economy. That is an incomplete picture. The money to pay for those inflated wages comes from somewhere — the wages of other Wisconsin workers. And the above-market wages being paid for public projects means that fewer projects are being done than could be. That means fewer people being employed to work on those projects.
But the real reason that some Republicans are opposing the repeal of the prevailing wage laws is the one that they won’t put in a press release. Many of the people who oppose the repeal are the owners and bigwigs of the large contractors that do most of those public projects. The large contractors love the prevailing wage laws because they artificially inflate the cost of labor and prevent newer, hungrier, companies from underbidding them. The law protects their business and their profits. And many of them are large political donors to Republicans.
In the end, we have the most basic of political calculations. The argument in favor of repealing the prevailing wage laws is a simple one of principle. The argument opposed is one of base political cronyism.
Sadownikow said it best. The laws of supply and demand work far better than the prevailing wage laws. Wisconsin’s legislative Republicans should remember that.
(Owen Robinson is a West Bend resident.)