States Consider Repeal Of Prevailing Wage Laws

pwmapA number of state legislatures have wasted little time this year by enacting laws or introducing bills to either repeal or scale back their state’s prevailing wage laws. A prevailing wage, sometimes known as common construction wage, is the hourly wage paid to a majority of workers in a specific area for a given trade or occupation. Prevailing wages typically include benefits and overtime pay. States with prevailing wage laws require that contractors pay their workers the established prevailing wage on public works projects.

States determine prevailing wage rates in a number of different ways. Some states use collective bargaining agreements to establish prevailing wage rates while others base their rates on survey data collected from unions and contractors. Others, like Michigan and Pennsylvania base theirs on local union wage rates.

There are currently 32 states with prevailing wage requirements, but that could soon change as prevailing wage laws are being challenged in a handful of states. This isn’t the first time we’ve seen a major push by multiple states to repeal prevailing wage laws. Starting with Florida in 1979 and continuing through the 1980s, nine states repealed their prevailing wage laws. Oklahoma had their prevailing wage requirements invalidated by a court decision in 1995.

(The map at the top of this post shows the states that currently have prevailing wage in green, states in red or those that have had their prevailing wage repealed and the gray states are those that never enacted prevailing wage laws.)

Here’s a look at which states have either made or are looking to make changes to their prevailing wage laws by either repealing or altering them this year:

On March 6, 2015, Governor Brian Sandoval of Nevada signed SB 119 into law that exempts school construction projects from adhering to the state’s prevailing wage laws. Repealing prevailing wage on certain project types isn’t uncommon. Ohio also repealed prevailing wage on school construction projects back in 1996. In 2013, Tennessee repealed prevailing wage on vertical construction projects, but didn’t change it for horizontal construction such as highways and bridges.

Supporters of prevailing wage laws can claim at least one victory. In Kentucky, the House Labor and Industry Committee voted down SB 9 in February which would have repealed the state’s prevailing wage on all school construction projects. That committee voted down a similar bill the previous year that would have eliminated prevailing wage in the state.

In Connecticut, there have been 23 bills introduced so far this year between the House and the Senate addressing prevailing wage laws. One bill would eliminate the prevailing wage outright and a couple of them would enact a three-year moratorium on its use for certain projects. There were quite a few bills introduced that seek to increase the thresholds for new construction and remodeling, some as high as $1 million. The current thresholds in Connecticut are $400,000 for new construction and $100,000 for remodeling projects.

West Virginia lawmakers were considering a total repeal of the state’s prevailing wage laws. Amendments to that bill, which has since been passed and signed into law, will transfer the responsibilities of calculating the prevailing wage from the Department of Labor to WorkForce West Virginia in conjunction with economists from West Virginia University and Marshall University. It would also establish a threshold of $500,000 on projects for prevailing wage to be applicable. West Virginia previously did not have a threshold set for prevailing wage.

In February, the Indiana House Employment, Labor and Pensions Committee voted in favor of HB 1019 which would repeal their Common Construction Wage Law. Republicans in the Wisconsin State Assembly introduced a bill that would eliminate the state’s prevailing wage and preserve current statutes that prohibit local governments from establishing their own prevailing wage laws. The bill has been referred to the Assembly chamber’s labor committee for review.

A convoluted and confusing bill introduced in Missouri would allow the city of St. Louis along with nine urban counties to continue using the prevailing wage, but all other counties would be required to pay the median hourly wage based on the U.S. Bureau of Labor Statistics’ Employment Wage Estimate. The bill has been passed by the House Workforce Standards and Development Committee and has been referred to the Select Committee on Labor and Industrial relations.

The Michigan House and Senate have both introduced bills that would eliminate the prevailing wage. House Bills 4001 – 4003 has been referred to the House Commerce and Trade Committee and Senate Bills 1 – 3 have been referred to the Senate Michigan Competitiveness Committee. Even if these bills pass, they could eventually get vetoed as Governor Rick Snyder is in favor of the prevailing wage and does not support repeal.

Opponents of prevailing wage argue that project costs are unnecessarily increased by requiring artificially inflated rates be paid to workers. Supporters of prevailing wage argue that it guarantees quality work because the work is being done by skilled workers receiving good pay. It will be interesting to see how this all shakes out. Will we see a bunch of states passing outright repeals of prevailing wage laws like we did in the 80s or will these other states follow Nevada and West Virginia and simply modify or partially repeal their prevailing wage laws.

Fun fact: State prevailing wage laws are sometimes referred to as Little Davis-Bacon Acts due to the Davis-Bacon Act of 1931 which requires prevailing wage be paid on federally funded projects over $2,000. This is despite the fact that more than a half dozen states had already established prevailing wage laws prior to the Davis-Bacon Act with Kansas being the first in 1891.

 

 

4 Responses to “States Consider Repeal Of Prevailing Wage Laws”

  1. David March 17, 2015 at 11:45 AM #

    “…state legislatures have wasted listed time this year by enacting…”
    This opening statement leads me to believe that the author has bias in his opening statement. He appears to believe that it is a waste of time to eliminate the prevailing wage rate. I personally agree with the statement that all the prevailing wage does is inflate the cost of the project. It does not improve the workmanship as the same labor force is doing the task that they previously did for less money. As a subcontractor, It also makes it hard to land projects with prevailing wage rates. Many of my competitors manipulate the system to avoid paying the rates. Most of the time they don’t get caught and the times that they do, they just go away for a few months or open under a new name. Forced prevailing wage rates need to go away.

    • Kendall Jones March 17, 2015 at 12:14 PM #

      David, thanks for the comment. That was actually a typo, it was meant to read “wasted little time” meaning it’s been the top priority among the lawmakers pushing to do away with prevailing wage. I apologize for the confusion and it’s been corrected, no bias was implied.

  2. John March 19, 2015 at 12:19 AM #

    The Prevailing Wage Rate kills the Tax Payer’s who have to pay for it, it kills the self employed, small business contactors, it kills any state governor to cut cost,waste & fraud that the voters put him-her in office to do. It is nothing but SCAM!! It’s the worst law that ever was inacted & it was only made law by the Gov. so there politicial careers get more donations to keep there jobs! As a 25 yr. union journeyman,i started my own Co. in my trade,i employ 20-25 employee’s with hr.ly wages of $25. to $35. for a skilled worker. Construction Co’s i worked with over the yrs., beg me to do there work because of my reputation,but i can’t. One reason,there job calls for a PREVAILING WAGE!!! I would have to pay a laborer $36.17 an HR & $61.22 for a skilled worker. Are you kidding me?? I’ll give up my business & go to work for any Co. that will pay me $61.22 an Hr.. These wages are only for GOV. Contracts,not the private sector jobs,plus,you will never get a Gov. contract with out giving something back to a politiction or Gov. hack. The Prevailing Wage Rate made by the Gov. is double the standard rate because it’s not there MONEY!! It’s a SCAM & Every State should REPEAL IT!!

    • Kendall Jones March 19, 2015 at 7:44 AM #

      John, thanks for the comment. I’m from a state without prevailing wage and there’s plenty of construction work and workers here. I would think that the market would sort itself out if these laws were repealed, like say in Florida where construction appears to be booming. I know you are in favor of repeal, but would you also support laws that would change the way the wage is calculated to more closely reflect actual wages like they just did in WV?

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