Prevailing wage benefits workers, contractors and taxpayers

Prevailing Wage is good for Minnesota.

It is a policy that places value on a highly skilled and productive workforce. It is a policy that promotes safe, high-quality construction projects. It is a policy that promotes the use of local contractors and local workers. Prevailing Wage does all this while making sure the state doesn’t pay more than the typical rate on construction projects.

Opinion: Prevailing wage benefits workers, contractors and taxpayers

The principle behind Prevailing Wage is simple: On public construction projects, workers must be paid the “prevailing rate” for their work. By law, the “prevailing rate” matches the local rate – the market rate already being paid in the community where the work is being done. The prevailing rate is the most common wage that a carpenter, or laborer, or ironworker, or plumber, or electrician makes in that community.

In Minnesota, Prevailing Wage applies to all construction projects paid for by state taxpayers. Some cities, counties and school districts have similar local policies. On federal projects, Prevailing Wage is required by the Davis-Bacon Act, which Congress passed in 1931.

Prevailing Wage creates a uniform “specification” for labor in the competitive bidding process. By creating a standard “spec” for labor, Prevailing Wage requires contractors to compete for public projects on factors such as skill, productivity, innovation, and management abilities – not on who can scrape up the cheapest workforce. It does this by simply requiring that employers who bid on state work pay the same rates being paid on private construction work – no more, no less.

This month, KARE 11’s Rick Kupchella ran an extensive report that questioned the value of Minnesota’s Prevailing Wage laws. In that report, opponents attacked how Minnesota determines Prevailing Wage rates. They conveniently ignored that it’s a relatively simple system that has worked well in Minnesota for more than 30 years. They also ignored that the nonpartisan Office of the Legislative Auditor says there are “no superior alternatives” to the state’s current methods.

Opponents argued that unions set an artificially high rate. They ignored the fact that Prevailing Wage is not a union or nonunion issue. It’s a matter of community standards, and of taxpayers being able to hold contractors accountable for the wages and benefits they provide.

The fact is, Minnesota bases its prevailing wage determinations on both union and nonunion construction. The fact is, in Minnesota, a union rate prevails in only about 50 percent of the job classes covered by prevailing wage. Nationally, the union rate prevails only about 28 percent of the time.

Opponents claimed over and over that Prevailing Wage costs taxpayers more. But they ignored the Legislative Auditor’s conclusion that the claim is not true. The best studies with the highest level of credibility “found that prevailing wage laws do not have a statistically significant impact on overall construction costs,” the OLA report said.

Opponents also ignore other key benefits of Prevailing Wage, including higher levels of worker productivity and training.

Worker productivity has a huge impact on project costs. A wage rate tells you how much you’ll pay per hour. It doesn’t tell you how many hours you’ll pay for.

Because Prevailing Wage recognizes the value of a highly skilled and productive workforce, taxpayers get more for their money. Prevailing Wage helps the state hire contractors who get the project right the first time, thereby avoiding unanticipated costs and delays. What seems like the cheapest labor upfront isn’t always the best deal in the long run.

Prevailing Wage also promotes the worker training programs that support higher levels of productivity. In states with Prevailing Wage requirements, like Minnesota, enrollment in apprenticeship training programs is 82 percent higher. In those same states, the graduation rate for apprentices is twice as high as in states without Prevailing Wage.

States that have Prevailing Wage enjoy other benefits that are not so obvious. For example, injury rates on construction sites have risen as much as 14 percent in states that repealed their Prevailing Wage laws. In those same states, 79 percent of construction workers lost access to health insurance once Prevailing Wage was abolished.

Investing in Minnesota’s infrastructure is an investment in Minnesota’s economy. Prevailing Wage strengthens that investment by strengthening our local employers, and improving our workforce. It does all this while providing the accountability that makes sure taxpayers get the best results for their money.

Dick Anfang and Gary Thaden are co-chairs of the Quality Construction Coalition. QCC is an initiative of construction employer associations and construction unions. QCC works to improve construction in Minnesota by supporting laws, rules and policies – including prevailing wage and state-certified apprenticeship training – that promote quality construction.