Repealing prevailing wage law will benefit Michigan school districts

Michigan has made a number of positive strategic moves that are finally getting our state house in order to cut spending, increase transparency and demand accountability for taxpayer dollars spent. The repeal of the prevailing wage law is the next step to keep Michigan moving forward.

While most homeowners and businesses request multiple bids before moving ahead on building a home, remodeling a plant, or even paving their driveway, Michigan's 1965 prevailing wage mandate takes away that option for public schools and state contracts. Instead, this 50-year-old law requires government and schools to pay wages set by union bosses in limited job classifications. This has the chilling effect of limiting the number of bids submitted by contractors of equal or better quality that can do the same work for less money. Many small businesses have skilled people working on contracts that don’t fit into these arbitrary classifications, and also can’t afford the administrative time this law has created.

Basic economics tells us prohibiting competition and adding bureaucracy, whether for a product or service, always drives up costs. Our schools deserve to have all the same options to bid work the same as business and/or homeowners.

Imagine if a family had to fix their furnace or car and were forced to hire a contractor or body shop with set rates, regardless of quality, service or price. Think of the enormous cost that would add. Then imagine if a company had to fix a machine, or contract to expand their plant and the cost of that work was pre-determined by the contractors who are bidding. Prices on goods and services would skyrocket!

So what is the cost to our schoolchildren as a result of this law? $224 million could go directly into the classroom but instead goes to big business profits. Michigan schools spend $224 million more to do the work needed than if they had the option to bid out the work like a regular business or homeowner. Just think for a minute of how that money could be better used in the classroom. It's simple; it equals the cost of 3,500 new teachers and about $140 for every Michigan student.

I'm a manufacturer. I have a passion for education and the talent my company will need in the future to remain strong. My customers from around the globe demand the highest quality products at the best price for every part we create for them. I employ some of the brightest, most talented individuals in the world in order to secure the customers and work that we have. I must pay them well to keep them working for me and ensure that we remain competitive. Our state needs to do the same.

Michigan is ranked 29th in household income (below average) and is one of only 6 states that has a prevailing wage mandate based on union contracts. We also have a shortage of workers to fill skilled trades’ jobs. The 50-year history has proven that a prevailing wage mandate has not better prepared our workers to fill the skilled trades’ needs nor has it significantly changed income levels. Therefore, it makes no sense that we should keep what isn’t working.

I am a member of the 40+ Michigan employers who align with the West Michigan Policy Forum in support of the elimination of this law. Now is the time for our lawmakers to take this next step forward, and eliminate this law. Let’s put additional dollars back in the communities and schools that need them. Neighboring Ohio recently eliminated a similar mandate and it has saved their schools and taxpayers about $480 million. We can do the same.

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Comments

Bob Martel
Sat, 06/13/2015 - 6:17pm
A.L.E.C. 'nuff said.
Rick
Sun, 06/14/2015 - 9:04am
And DeVos money behind this 'policy forum'. More like a 'one policy' forum. Drive wages down, make sure businesses can pay less taxes and less to their employees seems to be the 'policy'.
Ed
Mon, 06/15/2015 - 8:51am
Rick: ARTIFICIALLY high wages on government projects- ONLY- will NEVER drive down wages. IF you owned/ran a business, employers pay MARKET rates for skilled trades. IF they didn't, they'd be out of business. Devos money not here, but Seros and Styler behind pipeline prevention- you big Democrats.
MossyBuddha
Wed, 06/17/2015 - 1:51pm
"an order of men, whose interest is never exactly the same with that of the publick, who have generally an interest to deceive and even to oppress the publick, and who accordingly have, upon many occasions, both deceived and oppressed it."
Thomas Shaver
Sun, 06/14/2015 - 12:35am
Actually Mr. Kennedy, wherever I go to do business, whether it be the body shop or the heating and cooling guy to fix my furnace, they all charge pretty much the same per hour. Real estate people are not unionized either, but, amazingly, they've all agreed to charge the same percentage when I sell my home. How did that happen? Perhaps they've all decided, informally of course, that this what the "prevailing" wage should be for their work. One last note, our State house is not "in order" . Not by a long shot.
Reg Smith
Sun, 06/14/2015 - 3:05pm
If that is true why do we need a law?
Ed
Mon, 06/15/2015 - 8:56am
The difference, that you are failing to understand - regarding your repairs- IT IS NOT WRITTEN INTO LAW and ONLY for government projects. You can shop union and non-union businesses.Marketplace wages/benefits/vehicles, for trades, create similar pricing and you can always find people that charge WAY more/less and realtors do charge different commissions. Your challenge is to find them as their trade groups work to keep those companies unknown.
John Cee
Sun, 06/14/2015 - 5:26am
$224 million that will go directly to the schools? First off, that is also $224 million that will not go to families and the support of Michigan's working people. Secondly, your state house representatives would probably declare it a surplus and call for a tax refund, which has a long history of benefitting corporate and upper economic elites, but not the rest of us. And thirdly, this is simply part of the ongoing effort to destroy the unions and middle class, enabling a sophisticated but effective indentured servitude.
Ron Beyer
Tue, 06/16/2015 - 10:41am
It does seem that some claim anything that hurts the middle class is good and this is just another example. How ignorant of history can these people be? The economic height in this country was achieved in large part because we had a wealthy and vibrant middle-class. Those that say otherwise are either shrills for the rich or proudly ignorant.
Gayl Dybdahl
Sun, 06/14/2015 - 6:09am
I found it interesting that the article supporting an action that will certainly result in lower wages included the statement, "Michigan is ranked 29th in household income (below average)... " Aren't these workers our fellow citizens living (spending) in our communities? If the answer to that question is "yes", then perhaps the article should be entitled, "Michigan is ranked 29th in household income, but wouldn't 40th be better?"
brokengovt
Sun, 06/14/2015 - 10:50am
The prevailing wage is set by whom? Does it reflect the actual prevailing wage for a given skill or location or just what some think it is or should be based on an antique formula? Would the elimination of the protected wage scale lower some wages? Of course it would. However, that's the point. Instead of a government, that should never enter into the competitive system mandating what one is worth, the free-market does that. There is also a monumental difference between the real life wage and the draconian prevailing wage. Only government funded wages are subject to this. All those funds are payed by taxpayers, not customers from a business. All business adjusts rates and costs from their competition. Those listed in a previous comment are the example. There are natural caps in what the market will bear. Notice that they are similar rates and not higher. Not so with government mandated minimums for work that is performed by private, independent companies and their workers. What makes so-called government work so special? If it's so good and a required regulation why isn't there a prevailing wage set by government for any and every job performed in the state public and private? To say that jobs/work performed with public money is worth more is absurd. It simply enable funds from the public largess to be exploited. Is it not a form of corporate welfare forcing taxpayers to shell out more money simply because you can? Imagine the cost of the prevailing wage in road/bridge construction, repair, rebuilding. It has no effect on the quality of the work or project, ever. It simply creates a protected class for a few.
Chuck Jordan
Sun, 06/14/2015 - 1:21pm
I wonder who paid AEG to do this report. The title of link is interesting: "224 million could go directly into the classroom but instead goes to big business profits." Are Mr. Kennedy, AEG, Mackinaw Center and 40+ employers in West Michigan Policy Forum really concerned with "big business profits?" Sure. And please explain how $224 million" would go directly into the classroom? Sure.
Jordan Genso
Mon, 06/15/2015 - 3:38pm
What makes less sense is equating prevailing wage with "business profits". Here's a hint: paying employees a middle-class wage is not the same thing as increasing "business profits". Are they really that dumb they don't realize wages are an expense?
Bob Balwinski
Sun, 06/14/2015 - 1:21pm
I have thoughts to share on commentary by "brokengovt" but it is my personal policy to avoid doing so to anonymous or unidentified folks.
David Waymire
Sun, 06/14/2015 - 2:20pm
There are no "studies" showing savings for schools in Michigan, only a paper based on faulty assumptions. http://michiganprevails.com/wp-content/uploads/2015/05/Philips-2013-prev...And it is worth noting that the Michigan Association of School Adminstrators, representing superintendents and building managers, is opposed to ending prevailing wage. A recent survey of voters found less than a third back this effort to cut the pay of skilled trade workers. And every major construction group except ABC, which exists only to lobby for a handful of anti worker construction companies and which supports efforts to being more unskilled foreign workers into the U.S., is opposed to the proposal.
Sun, 06/14/2015 - 3:20pm
This article only presents one side of the story - but not the side of the workers who are far behind in earnings and will fall further behind if this goes through.
Bart Carrigan
Sun, 06/14/2015 - 5:33pm
Waymire hits the nail on the head...click on the study and find out why...I urge the readers to compare Kennedy's piece with MSU Professor Dale Belman's piece in Bridge last week... ABC's and Kennedy's claims are specious...that is , attractive but FALSE!
Reg Smith
Sun, 06/14/2015 - 3:14pm
Truly skilled workers are not going to take a pay cut. The demand will always be there for high skilled trades and contractor's who deliver high quality work. This law failed because it required the same pay for individuals and companies to deliver inferior work while collecting the same amount of pay. Wages should not be manipulated by random laws pushed into place by union bosses and past failed administrations. The policies we have had for years got us into this mess of Michigan's lost decade so it's time we tried something else. Let the market set the price.
Bart Carrigan
Sun, 06/14/2015 - 5:14pm
Prevailing Wages track the wages negotiated between labor and management in the commercial construction industry , not some "antique formula " ...management is composed of very strong associations who use skilled negotiators and their goal is to be competitive on bid day , so they are motivated to represent the taxpayers interest...wages are bargained locally,with the wage in Detroit the highest, and the remaining six regions are 65% to 78% of Detroit wages...pension , health care and apprentice/journeymen re-training are included in the base wage which tends to allow workers to become middle class citizens ...annual income is always lower than one might think due to weather and cyclical turns in the construction markets...workers have no sick pay , paid vacation or other standard benefits and there is no seniority nor access to the grievance procedure if fired or laid off...and you want to now lower their wages and work opportunities???...Michigan is lucky to have a skilled construction workforce , but we won't maintain it if ABC and the superpacs are successful in this opportunistic misguided effort
Ken in Zeeland
Sun, 06/14/2015 - 5:43pm
Seems strange Mr. Kennedy seems to believe that the money schools save on projects (and all other public projects) where prevailing wage laws were used will go to the education of our children. Having worked in public education, both in public schools and for community colleges, I can tell you from experience that any money saved will return to the State of Michigan's general fund were the Radical Republicans like Mr. Kennedy and other wealthy Western Michigan funders of the Mackinaw Center, which isn't in Mackinaw City or on Mackinac Island, will use it either to spend on projects that they can make a profit from or will use it to reduce any taxes still left on their businesses. Yet, Mr. Kennedy is complaining that his company cannot find enough job candidates with the high tech skills he needs, but forgets he was part of the Radical Republican movement that slashed educational funding for Vocational Technology while stressing College Preparation programs and High Stakes Testing using tests that have no validity to show how prepared students are for getting a job or going to college. They just test how well a student takes a standardized test, i.e. If they know the tricks to beat the tests!
Ken in Zeeland
Sun, 06/14/2015 - 5:53pm
What we really need is a law that requires construction companies doing work for the public, be it schools, roads, bridges, the Soo Locks, what ever must take-out bonds to cover the entire cost of the project for the life of the project. Then we won't be having to pay more taxes to rebuild our roads that are less than 15 years old! Since we will have to pay more taxes why not tax businesses by the pound for the raw materials they bring into their plants and per pound of the finished products and waste that leaves these plants. They use and destroy our public highways, but they received a huge tax cut under the Radical Republican government we currently have while seniors, like me, were hit with a 100% increase in taxes I have to pay the state. It is time Mr. Kennedy and his ilk pay for the public services they use.
Matt
Sun, 06/14/2015 - 10:12pm
Where to start?? Construction projects involve a whole lot more than construction companies and especially public ones. There are a whole slew of parties involved from from engineers, designers and inspectors (often public employees) before the construction co, even stepped on the site. Generaly the construction co has no discretion except as allowed by the state's inspectors. This, along with the rest of your screed makes no sense.
DER
Mon, 06/15/2015 - 8:41am
Another dumb and destructive attempt from the far right.
Ed
Mon, 06/15/2015 - 8:59am
Government jobs do not support the entire economy in this state, and if you want to support artificially high wages: pay more for EVERYTHING YOU BUY. Gallon of milk: pay $10.00. Bread? $8.00 Gallon of gas: $10.00 - INSTEAD OF THE RATES SET by the marketplace.
Ed
Mon, 06/15/2015 - 9:06am
It's amazing all of the union mantra messages, proving the inability to understand economics. It's ALWAYS 'wages will be driven down' by people that have been fed that garbage for 50 years. If you have the skills/education, your wages will never be driven down nor will you ever be forced to stay at a company - that doesn't pay market wages. If you want to save this archaic law, whip out YOUR checkbook and start writing the checks to pay for it.
Jerry
Mon, 06/15/2015 - 1:33pm
Ed, of course you know that's a hollow argument. If you wish to disagree, do so in a constructive manner.
Lola Johnson
Wed, 06/17/2015 - 4:45pm
How can anyone not know that real wages have been driven down consistently for the last 30 years. Those who cheer for "competition" neglect to consider all those "trade associations, "business development groups", and "business round tables". Right. No price fixing going on there. Move along, folks.
Patrick
Tue, 06/16/2015 - 9:51am
Mike Stobak, VP of Barton-Malow Construction would disagree. He points out that in the 90's the suspension of "Prevailing Wages" didn't end up lowering cost. We could end up sacrificing quality…. This raises concerns about student safety. https://vimeo.com/128892054
MossyBuddha
Wed, 06/17/2015 - 1:48pm
Lets take the advice of a guy named Adam Smith when it comes to "groups of merchants"... "The interest of the dealers ... in any particular branch of trade or manufactures, is always in some respect different from, and even opposite to, that of the publick. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the publick; but to narrow the competition must always be against it, and can only serve to enable the dealers, by raising their profits above what they would normally be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens." It is no different today than it was then.