Eaton County Dumps Prevailing Wage Law
Written by: Jack Spencer, Capitol Affairs Specialist, Mackinac Center for Public Policy
Last week, Eaton County repealed its prevailing wage law, opening up the local market to more competitive wages for construction jobs.
The 12-3 vote by the Board of Commissioners was along party lines with Republicans voting to repeal the restrictive wage law; Democrats voted to keep it in place.
Prevailing wage laws mandate that union-scale wages be paid on construction work funded by taxpayer dollars regardless of whether the company's workers belong to a union. Local governments can do nothing about federal and state prevailing wage laws, but they do have control over their own.
Eaton County's action in repealing its prevailing wage law was the second time a Michigan community has done so this year. In January, Bay City repealed its prevailing wage law.
Prevailing wage opponents say they hope Eaton County's step will help embolden other communities to rid themselves of their prevailing wage laws.
"I want to commend the Eaton County Board of Commissioners for their responsible decision to level the playing field and ultimately, save hard-earned taxpayers' dollars," said Rep. Deb Shaughnessy, R-Charlotte, who represents Eaton County in the State House. "During these challenging economic times, every dollar saved is so important and it is my hope other communities across the state will follow suit."
Chris Fisher, president of Associated Builders and Contractors of Michigan, said he was pleased with Eaton County's action.
"It was encouraging to see Eaton County stand up for accountability to taxpayers and join the super-majority of other Michigan communities that have no wage mandate," Fisher said. "We look forward to working with other local officials to promote fair and open competition elsewhere."
Sen. Rick Jones, R-Grand Ledge, whose Senate district includes Eaton County, said the county's action was overdue.
"I'm surprised that it took so long for them to do it," Sen. Jones said. "This was something they needed to do right away."
The three Democratic Eaton County Commissioners who voted against the motion to repeal the prevailing wage law did not return phone calls for comment.
At the state level, prevailing wage affects school districts and universities. Earlier this year, it was believed that the Michigan Legislature might make some prevailing wage law changes this summer, but it now looks like that won't happen until after the November election.
In a letter to the Eaton County Board circulated before Wednesday night's vote was taken, Fisher said that experience and studies show that the primary effect of prevailing wage laws is to add to the financial burdens of taxpayers in more ways than one.
"As Michigan and Eaton County work hard to climb out from a troubling economic climate punctuated with a high unemployment rate, Department of Labor data has also shown a correlation between prevailing wage requirements and higher unemployment," Fisher wrote. "When Michigan's prevailing wage law was suspended for 30 months, from December 1994 to June 1997 as a result of a federal district court ruling, 11,000 more construction jobs were created. Common sense and indisputable employment data show a clear correlation between prevailing wage and employment. Indeed, if history serves as any sort of a good indicator, which it typically does, it is well advised that Eaton County repeal its prevailing wage policy without delay."
Columbia University has released a study showing that taxpayers pay too much for construction under prevailing wage laws.
The Mackinac Center for Public Policy has looked at the costs of prevailing wage laws in Michigan and come to the same conclusion.
Written By: Jack Spencer, Capitol Affairs Specialist, Mackinac Center for Public Policy www.mackinac.org
