Abdur Chowdhury, Professor, Department of Economics, Marquette University
February 1, 2017
Prevailing wage laws have been the focus of public policy debate in the United States for some time now. …
The prevailing wage concept arises from the concern that unbridled competition among employers to pay low wages in construction would lead to a less-skilled and less-productive workforce and to shoddy construction practices and unsafe public buildings and infrastructure.
Attempts to repeal the prevailing wage laws in a number of states are based upon the claim that repeal will save dollars on total construction costs and will bolster state and local budgets. However, there seems to be a disconnect between what the critics of these laws are saying and the reality on the ground. For example, take the case of military veterans. Missing entirely from the debate is the fact that military veterans pursue jobs in the construction trades at substantially higher rates than non-veterans. An estimated half a million veterans are currently employed as construction workers. And this means that any effort to weaken or eliminate these laws would have an outsized impact on veterans. …
Two recent studies, Manzo et al (2016a, 2016b), have analyzed the impact of prevailing wage laws on military veterans. They have found that the economic conditions of veterans would be profoundly affected if states with strong-to-moderate prevailing wage laws were to weaken their standards. The authors showed that prevailing wage laws are vital to all construction worker wages, but are especially crucial for veterans whose post-military service work skews blue collar at a higher rate than other demographics. …
More than 75 percent of recent, peer-reviewed academic studies on this issue have concluded that prevailing wage laws do not increase the total cost of construction. Prevailing wage laws result in higher productivity and taxpayer savings on materials, fuel, and equipment costs. …
These findings in Manzo et al (2016a, 2016b) are consistent with the overwhelming majority of research indicating that the costs of building public structures, such as schools, highways, and street and sewer projects, etc., are unaffected by the presence of municipal, state, or federal prevailing wage laws.