Across the country, states and localities can respond to the President’s call to action and grow wages, create jobs, and reduce income inequality in at least one sector: the construction industry. Today, the Illinois Economic Policy Institute (ILEPI) is pleased to release a new study co-authored with Professor Robert Bruno, a labor expert at the University of Illinois at Urbana-Champaign, on labor market institutions in the construction industry.
The study, Which Labor Market Institutions Reduce Income Inequality? Labor Unions, Prevailing Wage Laws, and Right-to-Work Laws in the Construction Industry, finds that prevailing wage laws did a good job matching common construction rates with the actual market price of labor, increasing worker incomes by just 1.2 percent. On the other hand, they have no negative effect on the total incomes of contractor CEOs. Prevailing wage laws, the data show, reduce income inequality between the highest earners and the lowest earners of the construction industry by 45.1 percent.