Legislation introduced to repeal the "prevailing wage" law will eliminate unnecessary costs to taxpayers, as much as $250 million, says Associated Builders and Contractors (ABC) of Michigan, which commended House and Senate members for taking another bold step toward improving Michigan's economy.

           "The prevailing wage act denies construction contractors a competitive ability that every other small business enjoys - paying market wages," says Chris Fisher, ABC of Michigan president, following introduction of a bill by Sen. Arlan Meekhof (R-West Olive) and cosponsored by 15 other senators.

The association points to studies indicating a savings of 10 to 15 percent when prevailing wage mandates are removed. For example, had prevailing wage not been in effect in 2002, the state would have saved an estimated $216 million. In 2007 the number rises to $250 million. From 2010 to 2012, an estimated $188 million could have been saved on public school and higher education construction alone. Although the State of Michigan reports that the average free market construction wage is already at a healthy $23 an hour, prevailing wage drives the rate up to artificial levels as much as 60 percent higher for some trades.

"Nearly every peer-reviewed study concludes that prevailing wage is a job killer and tax dollar waster," Fisher explains. "Far from 'prevailing,' the current law dictates that unions, which represented only 17 percent of the construction workforce in 2012, set wage rates and determine inefficient trade classifications for the rest of the industry. Such decisions are not subject to any oversight or negotiation and vary from trade to trade and from locality to locality,creating a red tape nightmare for contractors.

"Because construction is such a key jobs provider in Michigan's economy," says Fisher, "we believe the time is now to repeal prevailing wage to create more good paying jobs and help the industry compete with more than 43 other states that have no such artificial mandates or that base wage rates on more accurate and reliable measures."

"Prevailing wage is a mandate not imposed on any other industry in the state," Fisher points out, noting that it is also a bureaucratic burden. "It forces contractors to constantly monitor thousands of different pay and benefit rates for different job functions that vary greatly among localities and trades. Nothing is so misunderstood or applied as absurdly as the prevailing wage law. We applaud the bill sponsors for making another courageous move that will benefit our industry, the state's economy and Michigan taxpayers as well."  

Repeal bills were also introduced yesterday in the House by Reps. Amanda Price (R-Park Township), Bradford Jacobsen (R-Oxford) and Peter MacGregor (R-Rockford). House leadership last week made prevailing wage repeal a priority, stating, "We will repeal Michigan's Prevailing Wage Law to save the state and local units of government almost $250 million every year." (2013-14 Action Plan for Hard-Working Michigan Taxpayers)

"It's simply a matter of good public policy," says Chris Beckering, director of business development at Pioneer Construction in Grand Rapids and chair of the ABCMI board of directors. "It should not be the responsibility of Michigan taxpayers to pay artificially inflated prices on public construction projects. Michigan citizens deserve the additional job opportunities and fiscal accountability that will result by eliminating this antiquated mandate."