Michigan Supreme Court hears arguments on prevailing wage law

LANSING — The Michigan Supreme Court heard oral arguments this past week in a case that will decide whether municipalities have the power to require contractors to pay union-scale wages and benefits on local building projects.

The state’s high court is hearing the case, Associated Builders and Contractors v. City of Lansing, on appeal from Associated Builders and Contractors of Michigan, a Lansing-based trade group that represents mostly nonunion contractors. ABC sued the city in 2012 in a bid to get its local prevailing wage ordinance tossed out as unconstitutional.

At issue is whether cities and townships have the authority to set local prevailing wages or whether that is the role of the state. How the Supreme Court decides could influence a broader debate about repealing the state’s prevailing wage law playing out at the Capitol.

ABC’s argument hinges on a 1923 Michigan court ruling, Attorney General, ex rel. Lennane v. City of Detroit, which says only states can set wages and benefits for contractors. Attorneys for the city of Lansing argue the Lennane ruling was superseded by the 1963 state constitution, which more broadly interprets municipal powers.

Because Michigan and the federal government have prevailing wage laws, which apply to public construction projects, “the Lansing ordinance would pose no more difficulty than what contractors are dealing with on the state and federal levels,” F. Joseph Abood, an attorney representing the city, said in court.

Yet Kraig Schutter, an attorney representing ABC, testified that the court’s earlier decision in Lennane remains binding and even broad powers are not limitless.

“A city ordinance has to relate to its municipal concerns,” he said, “and that term has to have some boundaries.”

In May, a divided Michigan Court of Appeals panel reversed a decision from Ingham County Circuit Court, which initially sided with ABC. The appeals court said Lansing’s ordinance, adopted in 1992, is “a valid exercise of municipal power because it does not conflict with the Michigan Constitution or state law.”

Lansing’s ordinance requires contractors to commit to paying wages and benefits comparable to those paid to other workers in the same field — often union-scale — before city leaders will approve development agreements. The prevailing wage requirement also must be printed in bid documents.

City administrators have maintained that prevailing wages follow the market and the decision to require them is a local one. Justice Richard Bernstein raised that point while questioning Schutter, asking: “(Cities) don’t have the right to say, ‘If you want to work with us, here are the requirements?’”

That concept was challenged this summer, when lawmakers passed a bill that prevents cities from setting their own local minimum wages. Justice Brian Zahra, during the hearing, cited the new law and the fact that legislators have not applied the same standard to prevailing wages.

The Supreme Court is hearing ABC’s appeal as the organization leads a petition drive to overturn the state’s 50-year-old prevailing wage law. Top Republican lawmakers in the House and Senate have said ending prevailing wage is a legislative priority.

ABC is funding a ballot committee called Protecting Michigan Taxpayers, which recently submitted nearly 391,000 signatures to the Michigan Bureau of Elections to get its petition before the Legislature.

Protecting Michigan Taxpayers needs at least 252,523 valid signatures from registered Michigan voters to send its petition to lawmakers, who can either adopt it or let voters decide in November 2016. Gov. Rick Snyder would not be able to veto the legislation if it passed either way.

Snyder, Michigan’s building trades unions and Associated General Contractors of Michigan, a trade group for about 200 construction firms across the state, say killing prevailing wages would undermine the state’s efforts to strengthen its skilled workforce amid a labor shortage.

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Matthew Schoech
Mon, 10/19/2015 - 8:58am
"City administrators have maintained that prevailing wages follow the market" I don't think so. Not the free market anyway. Justin Bernstein himself drives a nail in that coffin when he asks rhetorically,“(Cities) don’t have the right to say, ‘If you want to work with us, here are the requirements?’” That's not free market language. The only requirement cities or states should ask is how soon? and how much will it cost? assuming they are licensed and bonded. To do otherwise leaves the door open for Graft and corruption.
Chuck Fellows
Mon, 10/19/2015 - 10:11am
There is no such thing as a "free market". An economy, no matter what level, is a balance between market forces and a regulatory environment. Without governance (AKA regulation) there would be a market for the few who retain power (and money). An example is the recent depression, a culmination of "free market" deregulation of the financial market that turned it into a gambling house whose loses are covered by the public. All those banks were saved by a "Free Market" Congress that diluted or eliminated all the margin requirements and other controls on banks and then bailed them out WITH PUBLIC MONEY (repeatedly since 1994) WHEN THEIR BETS FAILED. What is the business reason for ABCs position? They can bid at prevailing wage leveling the competitive field for city business. Are they really saying they cannot compete? If this is true why is that? (Political donations fed by prevailing wage????). Problem might go away if politicians were required to depend on public financing of their campaigns and had time limits on campaign duration.
Mon, 10/19/2015 - 10:40am
Sorry Chuck, but the banking sector is and was one of the most heavily regulated sectors of the economy prior to 2008 and your buddies Dodd and Frank sat on the Banking committees for years prior to 2008. What good did it do and why all the confidence after their spectacular failure? What your side can't see or admit is that "regulations" are just as much creatures of politics as the people and interests that create them. Likewise with prevailing wage.
Mon, 10/19/2015 - 9:11am
I've always wondered why government gets involved in wages. If I, as a business owner, do not get enough applicants for the jobs I have available, then I would have to raise the wage to make the job more attractive. If some outside force (prevailing wage law, union requirement, or whatever) requires more than I can withstand, then I simply do not bid to enter into that contract. In this case, the entity that set a requirement is somewhat the loser, especially if my workforce is largely minority or from a certain district, and that entity is trying to raise standards for some portion of the population. In any event, the give and take should be between myself as the business owner, and the entity trying to fulfill a contract. Government should not be involved in legal private contracts.
Mon, 10/19/2015 - 9:28am
You are exactly right about that, Rich. How in the world is this law fair to employers and taxpayers and what right does the government think they have to require this? It absolutely should be repealed.
Mon, 10/19/2015 - 10:02pm
Rich, Have you ever notived that the wage and health and safety and other regulations never have any expectations of the employee/individual, they never have any enforcement on the individual for violating a regulation or have to provide a minmum service for the wages they are paid required by the law? Only the entity that can't vote is regulated.
Mrs A
Tue, 10/20/2015 - 3:50pm
Could it be because public works require a standard of quality construction that will ensure not only the safety of the public using it but a reasonable lifespan of usage? And this level of workmanship has been provided and can be expected from unionized workers. Anyone can low-bid the job and use semi-skilled/unskilled workers who lack credentials but will work cheap if lowest bid is your priority -- and you'll get a crappy job that will cost in the future when (a) it falls down on someone and you have liability claims or (b) it falls down and you have to rebuild sooner than you should have. Sorry Rich, but for the trades in Michigan, if you want quality work with a group that stands behind it, you go Union. And why shouldn't we support these men and women who take their living wages and invest them back by doing business in their community? This fascination with a cheap superficial price tag which doesn't give credibility to the factors of quality, value and investment simply confounds me.
Wed, 10/21/2015 - 6:07pm
Mrs. A, You presume too much. Residencial construction has to be built to City codes, that are verifyied by city inspectors, private businesses have the same expectation for a long valued building life, and I have found in both cases non-union skilled and certified craftsmen that provide quality work and buildings [this is in Michigan]. When it came to workplace safety, I found that of those companies I worked with in my job that were not bound by union contracts were more open and aggressive at meeting safety expectations. My employer was and is one of those recognized by OSHA [with Star sites] for its successful safety and health practices and performance. I have found that union or non-union neither has a corner on quality workers, knowledgeable and skilled performing at a top level. It is more about employers and customers, and what they expect and inspect.
Mon, 10/19/2015 - 9:34am
Government typically takes the lowest qualified bidder. In the absence of prevailing wage, this guarantees a race to the bottom for wages. Sounds great for the taxpayer. Until you realize that along with that lower wage comes less experienced and/or well trained workers, and, frequently, cost cutting on safety standards and even materials. That is a recipe for shoddy construction and potential public safety concerns.
Mon, 10/19/2015 - 10:43am
I do not for one minute believe that lower wage equates to less experienced or less trained workers. There are thousands of workers in very small businesses that are very experienced and very well trained, and their wages must meet their expectations otherwise they would have left their jobs for something better. And if they were leaving in mass, the employer would have to raise wages to maintain a workforce. Sure, it is nice to advocate for minimum wage, prevailing wage, or defined benefits, but all this does is raise the relative window. The low paid job will still be the low paid job whether the pay is $8.00 per hour, or $15.00 per hour, or $29.00 per hour. How would you feel if someone said you could not shop at Wall-Mart, or buy a Kia, or choose any other less expensive option?
Mon, 10/19/2015 - 10:58am
Unfortunately I cannot agree with Rich. "Prevailing Wages" are there for a reason- and those who fight against it do not understand history and how we got them in first place. Repealing prevailing wage laws will create lower quality work, disturb the labor peace that we have enjoyed for decades, and create hostility on the job sites. those who advocate for "right-to-work" laws and repeal of prevailing wage laws deserve every bit of harm that they bring to the marketplace.
Mon, 10/19/2015 - 10:55am
Sue, any company doing business with municipalities has to be bonded and their work and safety procedures are subject to an inspection regiment specified by that government and other government units. Your shoddy work accusation while may happen has nothing to do with union verses non-union workers.
Mon, 10/19/2015 - 12:09pm
Setting wages by law has a limiting conotation for the worker; this is what you are worth. Incentive pay based on perceived worth (value) not only creates a better worker attitude it creates a reward basis for improvement in skills, training, innovation and production. e.g. automation implimentation and tedium of repitition. I worked my post military service life to improve my living standard with the manufacturing communities in the free world, have experienced tightly union controlled workers and non-union based on incentive pay scale and post-work related training. The incentive reward system is the preferable of the two as is the right to work environment over forced unionism. In my personal life experience most controls result in abuse. Fairness and freedom to choose is the reward of one of our freedoms in our employment and hiring of labor or workers. Making the taxpayer pay for the elevated wage of the featherbeded worker attitude is wrong.
Mon, 10/19/2015 - 6:31pm
I recommend we all observe what "Jim" has stated, above. One not knowing their history is bound to repeat it, and everything else where serious mistakes are made over, and over again. Building and construction codes, reinforced by government inspection and approval is all that has kept us safe for decades already. Relying on the "private-sector" to support doing things right is a fantasy. The entire reason for government regulation is to prevent lousy work resulting from unskilled workers doing things they just don't know much about. People who don't support unionization are just folks who want to put a few extra bucks (less expense for an employer and workers who think they are getting ahead by not paying union dues) in their pockets at the expense of everyone else. Private sector business almost always needs to be "regulated", and usually regards paying living (standard of living) wages (and adhering to workplace safety and union provisions) as no more than an impediment to making a (larger) profit. The standard of living (the thing that makes everyone in every other country want to come here) in America for everyone is what is at stake.There is much more HISTORY here than being able to "lo-ball" some unionized builder and workforce for a new courthouse, a bridge, or new city hall. We all must hope these narrow-minded folks don't draw our national infrastructure into the same kind of mess we got out of the banking, mortgaging and lending industry did by 2008!
Mon, 10/19/2015 - 6:59pm
This was a failed experiment in the 90's. It is unfortunate so many of these comments are from people that don't remember what happen and how long it took to recover. Racing to the bottom line is not a solution just as mindless budget cuts will not improve our future.
Tue, 10/20/2015 - 1:23am
Duane, Have you ever noticed that most employee deaths are related to OSHA violations? How many times are employers cited for unsafe working conditions because what matters is the production? As an employer, you certianly have the right to fire an employee who is working in an unsafe manner. You also can fire an employee for not producing. As a matter of fact, in the new "Right to work" world that Michigan finds itself in, you can fire an employee for any reason, or no reason. We are all "at will" employees these days. Rich, you are right. There should be no minimum wage. Let's lower the standard of living and compete with Bangladesh, Vietnam, and China on wages, and we can return millions of jobs back to the US. In fact, let's repeal child labor laws, and use slave and prison labor as well. It will be a real paradise. Matt, the banking sector was one of the most regulated until both parties sold out to the investment banks and repealed Glass-Steagall. A return to Glass-Steagall would be refreshing. Investment and Commercial banks should not be able to gmable with depositors funds.
Tue, 10/20/2015 - 9:56am
Sorry Scott, but most banks troubles in our world (Michigan) came from home equity and housing development loans which banks had made and kept on their balance sheets, and the trouble these borrowers (and banks) had as the asset values fell relative to the loan. This had little or nothing to do with Glass Stegall.
Tue, 10/20/2015 - 11:42pm
Scott, Thanks, you have offered many points to talk about. Nice move to avoid the question, individual responsibility. The reality is, it is easier to blame a company, then to hold a person accountable. OSHA uses a general duty clause, "is free from recognizable hazards that are causing or likely to cause death or serious harm to employees.", when OSHA doesn’t have an applicable rule to cite. OSHA citations of companies effectively deflects OSHA accountability, how better to protect [in a political environment] one’s self then place blame on others by fining them. Firing someone may not be risk free, even in Michigan there are the courts, wrongful termination law suits. Even if the company is vindicated people will claim it is because of their money. Have you ever heard of a union official not defending to the limits of the system when a union member is terminated? Have you considered the disruption and personal stresses that a firing creates even with the people doing the right things? And for a safety firing, the individual can complain to OSHA/MIOSHA claiming the firing was to hide bad employer practices. What do you think OSHA does with such a complaint, what do you think the media will do? Firing isn’t as easy as it seems and it seldom the best action. Your view about firing makes a good case for contracting services rather than doing them in house, it is easier to set and enforce performance expectations and to terminate a contract/contractor then it is an employee. If an agency only hold the employer accountable that even influences your presumption the should not be responsible. 2 ₵ on jobs and wages. Minimum wage law is a clear prejudice against the employers. The employers are required to pay a minimum wage, but the law has no requirements of the employees. The employee has nothing they are responsible for in the eyes of the law; the employee doesn’t have to have a minimum work ethic, minimum knowledge or skill, be able to communicate, they don’t even have to do their job and the employer is required to pay a minimum wages. How do you spend your money? Do you seek appropriate value for your dollars? Why don’t you think employers should be able to seek value for their money? China is losing low knowledge and skill jobs to Bangladesh and Vietnam, it is about value. Do you want those low value/low pay jobs or do you want ‘good’ jobs with ‘good’ pay here in the Michigan? If the latter, then why does the law require some effort be made by the individual, why aren’t individuals required to be investing their time and effort into develop their value to an employer. I see value in regulations/rules, value in accountability, value in periodic assessments, and believe in consequences for actions. I believe rules are most effective as a means for communicating a baseline of proven practices, not a means for controlling practices.
Fri, 10/23/2015 - 3:49pm
Does anyone think the republican-run supreme court is going to require municipalities to pay a living wage?
Fri, 10/23/2015 - 6:03pm
What is a living wage? How much is it in Michigan?
Sun, 10/25/2015 - 10:53am
Rescinding prevailing wage only lower the workers salaries. Greed keeps the cost up. The want for higher profit margins fuels this debate. Just look to state that have no prevailing wage law. Construction cost are actually higher in those states. This meaning the contractors are filling there pockets with tax dollars while enslaving there workers. Which then furthers the burden on tax payer because now the workers qualify for public assistance. It's important to know and understand the facts. Wise up michigan.