Education and Infrastructure Grow the Economy. Other Proposals Being Debated in Illinois Don’t. (IL)

With the State of Illinois finally having a new budget for the first time in two years, the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign and the Illinois Economic Policy Institute evaluated the economic research on policy measures currently under consideration by state lawmakers.

 

PUBLISHED BY – Frank Manzo IV
JULY 19, 2017

Economic and social science research generally finds that investing in K-12 education and postsecondary education- “human capital development”- and investing in infrastructure- “physical capital development”- are the most effective public policies at improving economic growth. Fiscal sustainability through balanced budgets also allows governments to fund these investments and boosts business confidence.

Investing in public education improves the economy.

  • A well-educated workforce raises median wages in a state.
  • An extra year of education increases a worker’s earnings by 7-10%.
  • A 10% increase in spending on public education leads children to complete more schooling and reduces their chances of living in poverty once they hit adulthood by 3.7% on average.
  • In a survey of economics professors and public policy academics from accredited universities in Illinois, 66% say that expanding enrollment in early childhood education programs would improve the state’s employment rate and grow the economy and a majority say the same about raising the share of the workforce with a bachelor’s degree.

Investing in public infrastructure boosts economic growth.

  • For every dollar increase in infrastructure spending, the economy improves by $1.57 on average.
  • 67% of academic studies find that highway spending has positive impacts on the economy.
    Improving an expanding highways, bridges, and public transportation statistically increases the working-age employment rate by increasing connectivity and improving productivity.
  • In a survey of economics professors and public policy academics from accredited universities in Illinois, 79% think Illinois should increase transportation infrastructure investment.

Other policy changes that have been proposed in Illinois have no, mixed, or limited economic impacts.

1. Peer-reviewed studies demonstrate that “right-to-work” laws have no statistical effect on overall employment in a state economy, but research does find that “right-to-work” tends to reduce wages, limit unionization, and redistribute income from workers to owners.

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Frank Manzo IV: Lawmakers should consider the social cost of construction wage cuts

June 28, 2017
Frank Manzo IV | Policy Director
Midwest Economic Policy Institute

According to the conservative Wisconsin Taxpayers Alliance (WTA), state legislators and Gov. Scott Walker may soon act to cut the wages of private construction workers by as much as 44 percent.

How? By repealing Wisconsin’s prevailing wage law – the minimum wage standard on state-funded construction projects such as highways, bridges, and other critical infrastructure.

What they haven’t told you is that their own numbers suggestthat this could actually cost taxpayers more than $300 million per year. This is the social cost of wage cuts that would remove thousands of Wisconsin’s working families from the middle class.
The math is really quite simple.

According to the Bureau of Labor Statistics data on which WTA’s analysis relies, the skilled construction workers who would be affected by prevailing wage repeal earn an average of $51,000 per year. The 44 percent savings scenario that WTA and their allies in the Legislature and Walker administration have promised would require that average wage to drop to about $29,000 per year.

When you add up all of the health-care, home-heating, and food subsidies for which these workers and their families would then qualify, as well as low-income tax credits and the lost income tax revenue that the state would have to find from other taxpayers, the total cost of Wisconsin’s wage cut exceeds $300 million annually.

How can any legislator – especially those who campaigned on promises of lifting wages and fiscal responsibility – defend such a position?

The short answer is by ignoring basic math, the fundamental realities of the construction industry and the economy, or both.

Construction is dangerous work. When it comes to the things the public relies on – schools, roads, transit systems and water facilities – having well-trained professionals on the job matters. By establishing criteria that reflect local market standards and incentivize contractors to invest in workforce training, research shows that prevailing wage laws dramatically increase local hiring, productivity, efficiency and safety on the worksite. In doing so, they simultaneously reduce waste, and reduce spending on fuels, materials, equipment and purchased services.

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“Right-to-Work” Laws in the Midwest Have Reduced Unionization and Lowered Wages

Published by Frank Manzo IV, MPP
APRIL 3, 2017

Recent “right-to-work” laws have had negative consequences for many workers in Indiana, Michigan, and Wisconsin, according to a new study by researchers at the University of Illinois at Urbana-Champaign and the Illinois Economic Policy Institute.

The analysis focuses on labor markets in six Midwest states from 2010 through 2016. Indiana, Michigan, and Wisconsin all enacted “right-to-work” (RTW) laws during this period, providing a regional experiment on the effects of the laws. Three neighboring states- Illinois, Minnesota, and Ohio- serve as a comparison group because they did not have RTW laws at the beginning of the time frame and still do not have RTW today.

As of 2016, there were significant differences between the two groups of states. Notably, workers in Indiana, Michigan, and Wisconsin earned 8% less per hour on average than their counterparts in Illinois, Minnesota, and Ohio.

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(See PDF of Study Here)

Podcast: “Right-to-Work” Regulations and Unions

The Illinois Update
DECEMBER 5, 2016

Episode 3 of For A Living focuses on “right-to-work” laws. The podcast is available on iTunes and on SoundCloud.

What are so-called “right-to-work” laws? What is the historical background of these laws? What are their policy implications for the working class? Where are current political and legal battles occurring?

Professor Robert Bruno, Professor Emily E. LB Twarog, and I are joined by Dale Pierson, a Chicago-area labor lawyer who has served as General Counsel of the International Union of Operating Engineers (IUOE) Local 150 since 2002, to answer these questions.

Thanks for listening!

For A Living is an educational podcast jointly provided by the Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign.

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Guest Commentary: Apprenticeships beneficial to economy

Sun, 10/30/2016 – 7:00am | The News-Gazette
By FRANK MANZO IV

Students of all ages across our country are back to school.

And while there are many disputes about education policy, there is no disputing its fundamental purpose – to prepare Americans for the jobs of tomorrow.
In Illinois, our fastest growing industry is construction. And construction is projected to grow at twice the rate of Illinois’ economy over the next decade, adding thousands of new
middle-class jobs.

Accessing these jobs in the fastest-growing skilled trades typically requires at least three years of apprenticeship training. And new research from the Illinois Economic Policy Institute and University of Illinois at Urbana-Champaign shows that the average impact of that training – in the form of increased earnings over an entire career – is greater than the effect of associate’s degrees and many bachelor’s degrees.

So what is an “apprenticeship?”

Apprenticeships have been around for nearly a century. They are governed by state and federal standards that ensure proper certification of graduates. Funded almost entirely by private entities such as employers, labor-management groups and unions, they require almost no out of pocket costs for students, and better yet, enable students to “earn while they learn” – collecting a paycheck while learning a skilled trade on the jobsite and in the classroom. Best of all, they ensure that our state has a pool of skilled tradespeople to meet our long-term infrastructure and building needs.

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Attacks On Prevailing Wage Laws Disproportionally Hurt Veterans

Report Finds That As Hundreds Of Thousands Of Iraq and Afghanistan Veterans Enter Work Force, Prevailing Wage Greatly Improves Economic Outcomes For Veterans

May 10, 2016 – Posted by Frank Manzo IV

A first-of-its-kind study released on May 10, 2016 finds that prevailing wage greatly improves economic outcomes for veterans and that growing attacks on prevailing wage at the state level will disproportionally hurt the hundreds of thousands post-9/11 veterans who are returning to the workforce.

Exploring of the economic impact of state prevailing wage laws on veterans in the construction industry, the study was commissioned by VoteVets, the largest progressive group of veterans in America. The study was conducted by Frank Manzo IV of the Illinois Economic Policy Institute, University of Illinois at Urbana-Champaign Professor Robert Bruno, and Colorado State University-Pueblo Economist, Dr. Kevin Duncan.

“The data clearly shows that veterans work in the skilled construction trades at significantly higher rates than non-veterans,” said Manzo. “The difference is even more pronounced in states with average or strong prevailing wage policies-so any changes in these laws will have an outsized impact on those who have served in the military.”

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(PDF of Study)

(Copy of Summary)

Weakening a prevailing wage law by raising coverage thresholds has negative impacts on local contractors, construction workers, and economies, according to a new study

(ILEPI Report) Prevailing Wage Thresholds Lower the Bar in Public Construction

 
Posted by Frank Manzo IV
4/5/2016

The report, An Analysis of the Impact of Prevailing Wage Thresholds On Public Construction: Implications for Illinois, was conducted jointly by the Illinois Economic Policy Institute (ILEPI) and the Project for Middle Class Renewal (PMCR) at the University of Illinois at Urbana Champaign.

It is the first study to focus specifically on prevailing wage thresholds.

A prevailing wage threshold is the minimum cost of a public project at which point workers must be paid prevailing wage rates. Publicly-funded projects below the threshold are exempt from the law, while those above are covered. Contract thresholds vary by state, from those with no threshold (such as Illinois) up to $500,000 in Maryland.

Although the study forecasts effects on Illinois if the state were to introduce a prevailing wage threshold, the report is applicable to any state that is considering raising a contract threshold.

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(PDF of Study)

State Prevailing Wage Laws Save or Create 400,000 Jobs in America

FIRST OF ITS KIND NATIONAL STUDY EXAMINES ECONOMIC, SOCIAL, AND FISCAL IMPACTS OF STATE PREVAILING WAGE LAWS

Posted by Frank Manzo IV
February 9, 2016

CONTACT: Todd Stenhouse, (916) 397-1131 or toddstenhouse@gmail.com

Chicago, IL – As policy debates rage in states from Michigan and New Hampshire to New Mexico and West Virginia, researchers from the Illinois Economic Policy Institute, Colorado State University-Pueblo, and Smart Cities Prevail have just completed the first ever national study on the economic, social, and project cost impacts of state prevailing wage laws.

Prevailing wage laws govern the wage rates paid to construction workers on government-funded public works projects.

The report, entitled “The Economic, Fiscal, and Social Impacts of State Prevailing Wage Laws: Choosing Between the High Road and the Low Road in the Construction Industry,” utilizes industry standard IMPLAN modeling software and industry comparisons between states with and without prevailing wage laws to assess the impact of these policies on a variety of economic and social factors: including job creation, wages, worksite productivity, rates of in-state contracting, impacts on taxpayers, reliance on government assistance programs, and effects on communities of color and veterans.

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(Report Fact Sheet)

(Full Copy of Report)

Local Right-to-Work Zones Would Weaken the Illinois Economy

April 6, 2015
Frank Manzo IV, Policy Director
Illinois Economic Polict Institute (ILEPI)

 

Efforts to create local “right-to-work” zones would have negative impacts on workers and the economy in Illinois, according to a new report released today by the Illinois Economic Policy Institute (ILEPI) and the University of Illinois at Urbana-Champaign.

The report, The Impact of Local “Right-to-Work” Zones: Predicting Outcomes for Workers, the Economy and Tax Revenues in Illinois (PDF), investigates the economic and policy impacts of adopting local “right-to-work” zones in Illinois, testing claims made by proponents of the ordinances. The report finds that worker incomes are lower in economies with right-to-work laws and that employment effects are inconclusive. For instance, average worker wages are $2.90 per hour (13 percent) higher in Illinois than in right-to-work Indiana. At the same time, the unemployment rate in eastern Illinois counties is lower than in right-to-work counties across the Indiana border in December 2014.

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(Read Full Report here)

Collaborative Development: The Benefits of Public-Private Partnership

A new ILEPI Policy Brief, released this morning, investigates the pros and cons of public-private partnerships in the construction industry.

The report, Collaborative Development: The Pros and Cons of P3s on Construction Projects (PDF), finds that public-private partnerships (P3s)- such as the proposed Illiana Expressway– offer the potential for significant cost savings for the public sector. P3s allow governments to increase internal investment, capitalize on the efficiencies and innovations of private companies, and build infrastructure slightly less expensively and slightly more quickly. For the private sector, P3s provide stable assets (infrastructure facilities) with predictable long-term returns from user fees for portfolio diversification. P3s also allow private entities, backed by the government, to borrow cheaply.

The Policy Brief utilizes case studies to demonstrate how P3s may be mutually beneficial and discusses the expected positive benefits of three potential P3 projects in the Midwest.

(Read More)(Copy of Report)