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STUDY: 4K Jobs, $681M Economic Boost Could Result from First-Ever Prevailing Wage Law in NH

Prevailing wage bill sponsor, Rep. Jackie Cilley

Prevailing wage bill sponsor, Rep. Jackie Cilley

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A newly published study from the Keystone Research Center finds that a proposed prevailing wage bill in New Hampshire would boost jobs, aid in-state contractors, and generally spur the state’s economy.  New Hampshire is currently the only state in the northeastern United States without prevailing wage laws for construction.  

Seeking to remedy the situation, Rep. Jackie Cilley sponsored HB 1641, which would set a minimum prevailing wage on all public works construction projects.  According to the Keystone study, if HB 1641 passes it will create several thousand jobs and generate at least $300 million for the state while increasing local and state tax revenues by a minimum of $17 million.  

The study used peer-reviewed research, data from the Economic Census of Construction, and industry-standard IMPLAN software to analyze the impact of prevailing wage standards on: skilled construction trades in New Hampshire; construction workers’ wages and benefits; and reliance on taxpayer-funded public benefit programs.  According to the report’s co-author, Colorado State University economics professor Kevin Duncan:  

“Comparing data from prevailing wage and non-prevailing wage states shows that a prevailing wage law would be a great bargain for New Hampshire taxpayers.  A prevailing wage law would boost productivity, the efficiency of materials use, and worker skills, while enabling more New Hampshire contractors to recapture business from low-wage out-of-state contractors. Every sector of the economy and every part of the state would benefit as the gains for local contractors and construction workers ripple through New Hampshire.”

Using conservative assumptions, the report’s authors found that a prevailing wage law would result in:

• A net gain of 1,710 to nearly 4,000 jobs across all industries, the precise number depending on how much market share is recaptured by in-state contractors once out-of-state contractors can no longer win state business by undercutting local standards

• An increase in economic activity across all industries of $298 million to $681 million

• An increase in state and local tax revenues in the range of $7.3 million to $17 million

• 2,515 more New Hampshire construction workers receiving health benefits through their jobs and 1,422 more receiving pension benefits

• About 600 fewer construction workers needing public food assistance and another 600 fewer receiving the Earned Income Tax Credit

The report’s other co-author, Frank Manzo IV of the Illinois Economic Policy Institute, added that higher wages for construction workers have secondary positive effects as well:

“More economic activity and fewer people working for lower wages translates into less reliance on public assistance programs. Taxpayer savings and additional tax revenue free up resources for tax cuts or more state funding of education and vital public services.”

The report also argues that there is mounting academic research showing that prevailing wage laws do not increase construction costs, contrary to the argument constantly made by anti-worker conservative outfits. On the contrary, the report suggests, prevailing wages increase productivity, investment in training, safety, worker experience, wages and benefits. 

According to Dr. Stephen Herzenberg, Executive Director of the Keystone Research Center, the timing of the prevailing wage push is important. After shrinking by a quarter between 2006 and 2010, the construction industry is again expanding:

“Will construction contractors expand by rebooting apprenticeship training and taking the high-skill, efficient high road, or will they seek out low-wage, low-skill labor, leading to more loss of market share to out-of-state firms that specialize in tapping vulnerable workers? A prevailing wage law can help ensure that more of the industry takes the high road with benefits for the New Hampshire economy, taxpayers, in-state contractors and construction workers.”


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