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Anti-Union Assoc. Builders & Contractors Release Dubious Study Supporting WI Prevailing Wage Repeal


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With “Right-to-Work” in the rear view, Wisconsin Republicans are winding up to repeal the prevailing wage — the law that ensures fair pay for construction workers — and a newly released report from the anti-union Associated Builders and Contractors (ABC) and the Wisconsin Taxpayers Alliance (WTA) could factor mightily in their wage-crushing campaign.  The report suggests that in 2014 Wisconsin could have saved $299 million if the prevailing wage was determined in a different manner.

A review of the work from University of Utah professor Peter Phillips, however, suggests the report’s findings are dubious. Phillips notes that most studies show prevailing wage repeal produces no cost-savings for taxpayers:

“Existing research on the impact of prevailing wage laws on construction costs is mixed and inconclusive. Excluding studies which assume that the entirety of any increase in wages is passed
on to the government in higher contract costs (wage differential), the evidence on prevailing wage effects generally range from relatively small effects to no statistically significant effects (cross sectional and time series). These findings echo a 2007 report prepared by the nonpartisan Minnesota Office of the Legislative Auditor which, in a review of the literature that measured the relationship between prevailing wage laws and the cost of construction, concluded that while some studies found a small impact on costs, more comprehensive studies have found that the impact is not statistically significant. These findings are further corroborated in a comprehensive review of research related to prevailing wages and government contracting costs by Mahalia (2008). The report concluded that a growing body of economic studies finds that prevailing wage regulations do not inflate the cost of government construction contracts. The report indicates that a basic premise is that prevailing wage laws raise costs for contractors, and contractors pass the costs on to the government. Possible explanations for the breakdown in the seemingly intuitive relationship between wage rates and projects costs may include: (a) contractors might already be paying wages that are required under prevailing wage laws; (b) labor costs are not the predominant costs in government contracts; (c) prevailing wage rates can attract higher-skilled workers, and more efficient management, so that increased productivity would offset higher wages; and (d) higher wages may be offset by factor substitution, such as more efficient materials.”

Phillips also suggests that the basis of the figures in the ABC-WTA report is faulty.  They argue that the prevailing wage is too high because the Department of Workforce Development (DWD) gets a high percentage of wage survey results from union shops despite a 25% union penetration rate in Wisconsin. Phillips says that figure is actually 57% when it comes to prevailing wage-centric work:

Total white and blue-collar construction workers in Wisconsin in 2014 = 116,485

72% of this total were blue-collar construction workers = 83,869

64% of these blue-collar construction workers worked outside of residential construction =54,012

30,774 of these non-residential blue-collar construction workers were covered by a union contract = 57%

This number is even higher in more highly unionized counties, Phillips says.

The bills in question, Assembly Bill 32 and Senate Bill 49, are predictably disliked by unions and Democrats who view them as part of a politically-charged attack on middle class wages and workers’ rights.  But opposition is not reserved to the left. Life-long Republican and former President of the International Contractors Employers of BAC, Fred Kinateder, explained the reality of SB 49 in a letter beseeching Senator Paul Farrow to oppose the effort.  Kinateder says that when he started his masonry company he decided to go union because he believed it would offer the most training and benefits to his employees.  Now he wonders if the next generation of workers will be properly trained:

SB 49 is a direct assault on the Building Trades Unions and therefore our training programs.This anti-union hysteria is not going to make Wisconsin a better place to live. Not having a trained workforce is not going to improve the middle class in our state. Labor and Management have a system to negotiate our labor agreements and administer our training programs and it works. Why does the state want to undermine a system that works?

I am 60 years old and I have been a lifelong republican. I have seen many changes over the years not all of them for the better. Passage of this bill would certainly be a change for the worse, but worse than that I would find it very difficult to ever vote republican again.

Wisconsin Contractor Coalition spokesman Steve Lyons voiced his opposition to AB 32 and questioned the ABC-WTA study as well.  Lyons addresses ABC claims in an earlier op-ed in which they reject the safety concerns surrounding these bills:

To put it in the most basic terms, “trained” construction workers are “safe” construction workers; the more training and expertise, the safer the work environment.

Unfortunately, ABC non-union contractors are the source of only about 5 percent of the Wisconsin construction industry’s investment in apprenticeship training. The remaining 95 percent has come from Wisconsin’s unionized workforce, which has provided $82 million in the last three years.

Where safety matters, training is essential. And where prevailing wage has been repealed, training drops to dangerously unsafe levels. When Kansas repealed its prevailing wage in 1987, construction-apprenticeship training fell by 38 percent. When Colorado repealed its prevailing wage in 1984, construction-apprenticeship training fell by 42 percent.

The ABC believes that repealing prevailing wages will not cost union workers anything because they still have the protections of collective bargaining agreements. However, the ABC fails to point out that non-union contractors can, and in many cases will, cut their workers’ wages by 20 percent. In fact, in states that do not have prevailing wages, blue collar construction workers receive 18 percent less.

But safety, as important as it is, is not the only problem caused by a lack of training. Today, Wisconsin is in the midst of workforce crisis and is struggling with 70,000 jobs that are not being filled because of a shortage of trained workers. Many of these jobs are in the construction trades. The results are unsafe workplaces and a labor shortfall, which hurt Wisconsin construction businesses and our economy.

It has already been revealed that the national push to repeal the prevailing wage is being led by dark money think tanks and ALEC model legislation. These are familiar bedfellows of the ABC, so the situation in Wisconsin should not come as a surprise. It should, however, spark outrage. Sadly, if recent events are any indication, the will of the people won’t be a factor for Republican decision-makers in dairyland.


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