Dive Brief:
- A Midwest Economic Policy Institute study found that Indiana's 2015 repeal of its prevailing wage law, the Common Construction Wage, has not provided taxpayers with the benefits proponents said it would, according to the institute.
- The Common Construction Wage set a minimum wage for construction workers on publicly funded projects. The institute said that in the time since the law was repealed, wages for blue-collar workers have dropped 8.5%. Likewise, productivity decreased 5.3% and job growth dropped 1.5%. There has also been: no change in the union share of construction projects; a decrease in the education level of construction workers; an increased turnover rate; no cost savings on construction projects; and no additional competition in the bidding process.
- Advocates of the 2015 repeal said if the state allowed the free market to set wages, the result would have been a 10% to 20% cost reduction on public works projects, a general savings for taxpayers, among other things. The institute said none have materialized.
Dive Insight:
It's hard not to act when big business is dangling the prospect of an economic boon in front of lawmakers. For instance, Kentucky also repealed its prevailing wage laws early last year, and those for and against the action had much of the same arguments as those in Indiana did.
Adding weight to the pro-repeal side, aluminum manufacturer Braidy Industries announced in August that it would build a $1.3 billion rolling mill near Ashland, KY, citing the state's prevailing wage repeal and some other business-friendly legislation as reasons for its decision.
There also are states and cities trying to preserve prevailing wage regulations, and employers that don't adhere to the laws are hit with criminal charges and steep fines. In fact, shortchanging workers on prevailing wages was one of the issues at play when Manhattan District Attorney Cyrus R. Vance Jr. announced last month that he and other officials in surrounding New York City counties had charged local construction companies and their owners with more than $2.5 million in wage theft.
Aside from not paying the required prevailing wages, Vance said the companies had bounced checks to their employees, did not pay the required overtime or failed to make payment altogether. The building boom in the New York City area, Vance said, has made it easier for some employers to find opportunities to commit wage theft.
