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 November 21, 2013 | Volume 5, Issue 20
In This Issue
Prevailing Wage Costs Michigan Schools $224M Annually
Snyder Signs Veterans Employment Bills
Supreme Court to Hear NLRB Recess Appointment Case
Economic Update
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More about Prevailing Wage

Study: Prevailing Wage Costs Michigan Schools $224M Annually

According to a recent study by the East Lansing-based Anderson Economic Group (AEG), Michigan's prevailing wage law costs taxpayers and the state's public schools millions each year in higher construction costs - adding up to more than 315 elementary school buildings that could have been built in the past decade with the money lost to prevailing wages. 

 

"Over the past 10 years, Michigan taxpayers spent $224 million per year more on construction projects for K-12, community colleges and higher education than they would have without the state's prevailing wage law raising construction labor costs," says Alex Rosaen, a senior consultant at AEG and one of the study's authors. 

 

"The findings add to the mounting evidence about the wastefulness of prevailing wage and provide further support for repeal of the law," said Chris Fisher, president of ABC of Michigan, which commissioned the impartial study. "Not only is the law costly and outdated, but it denies local choice to school and university leaders who are entrusted by citizens to wisely manage financial resources." 

 

Michigan's prevailing wage law, on the books since 1965, requires all construction firms to pay wages and abide by work rules based on provisions in union agreements, even though unions represent less than 20 percent of the industry's workforce. The study was released as ABC-supported bills that would eliminate Michigan's prevailing wage law are pending before the state legislature.

 

"Prevailing wage requires the public to pay artificially high wages on state-backed construction projects, reducing money for other vital needs with no return on investment for such unjustifiable cost overruns," Fisher said. "At a time of depleted education budgets, parents, students and taxpayers deserve more than being saddled with unfunded mandates such as prevailing wage."

 

The full study on Michigan's prevailing wage law is available at www.prevailingwagetruth.com.

Gov. Snyder Signs Veterans Employment Bills

A series of bipartisan bills signed into law by Gov. Rick Snyder on November 13 recognizes veterans' specialized training and skills and eliminates some bureaucratic hurdles that might have delayed veterans in getting jobs in their fields of expertise and supporting their families.

 

"This is good for our veterans and it is good for Michigan," Snyder said. "Our veterans possess leadership skills and a work ethic that has been tested at an early age and under extreme circumstances. We need to create a clear path for our veterans to use these skills in Michigan's workforce and help our state's continued comeback."

 

More than 45,000 Michiganders have served in Iraq and Afghanistan, and an estimated 10,000 more are expected to transition back to the state each year for the next 3 to 5 years. Veterans are returning to a challenging business climate and employers who might not have understood how military training can benefit today's job-providers.

 

Michigan's veteran unemployment rate has dropped from 11.2 percent in 2011 to 7.9 percent today, but Snyder said that's still too high, and the state needed to do more to connect Michigan's returning veterans with job opportunities.

 

House Bill 4756, sponsored by state Rep. Bruce Rendon, allows eligible veterans to substitute military experience for up to 60 hours of education requirements toward a residential builders or residential maintenance and alteration contractor license. It is now Public Act 169 of 2013.

 

The other four laws also allow veterans to use military experience as a qualifying factor in different vocational licensing requirements. Veterans may now use their military training and experience to become emergency medical technicians, to become state-licensed fire fighters, to register as stationary steam engineers and boiler operators, and as the basis for licensing as a mechanical contractor.

 

For more information on resources available to Michigan veterans, visit www.michiganveterans.com. More information each piece of legislation above is available at legislature.michigan.gov.

Supreme Court to Hear NLRB Case Brought by ABC-Led Coalition

The U.S. Supreme Court has set a date of Jan. 13, 2014, to review a lower court ruling that President Obama's early 2012 "recess" appointments of three members to the National Labor Relations Board (NLRB) were unconstitutional.

 

The original case was brought by Noel Canning, a Washington state bottling company, which challenged an NLRB decision that it must enter into a collective bargaining agreement with a labor union. The ABC-led Coalition for a Democratic Workplace (CDW) intervened in the case and, on Jan. 25, the U.S. Court of Appeals for the D.C. Circuit ruled that the president violated the Constitution when he bypassed the Senate to fill NLRB vacancies. On May 16, the U.S. Court of Appeals for the 3rd Circuit issued another ruling declaring the March 2010 recess appointment of Craig Becker to the NLRB unconstitutional, as well. The U.S. Court of Appeals for the 4th Circuit agreed with the two other courts in a ruling on July 17.

 

After the Appeals Court for the D.C. Circuit issued its ruling, the NLRB filed a petition with the U.S. Supreme Court to appeal it. In response, all 45 U.S. Senate Republicans, the CDW and the U.S. Chamber of Commerce filed friend-of-the-court briefs asking the Supreme Court to uphold the decision. The Senators also asked the court to review the president's recess appointment power as a whole. 

 

If the U.S. Supreme Court upholds the Noel Canning decision, the ruling would invalidate all decisions issued under the terms of the unlawful recess appointees. The NLRB has been fully staffed since July 30 when the Senate voted to confirm five presidential nominees. Now that the board is fully staffed, it can issue rules and decisions requiring a quorum unencumbered by the legal obstructions that have plagued it over the last two years, including Noel Canning case. Read more about the case and its background here.

Third Quarter Nonresidential Fixed Investment in Structures Rises 12.3 Percent; Backlog falls in Mid-West States

Fixed investment in nonresidential structures and intellectual property grew 12.3 percent and 2.2 percent, respectively, in the third quarter, according to the U.S. Commerce Department's Nov. 7 report on gross domestic product (GDP). However, the growth was tempered by a 3.3 percent decline in fixed investment in nonresidential equipment.

 

ABC Chief Economist Anirban Basu noted that "because the latest budget deal only keeps the federal government open until Jan. 15 and only raises the debt ceiling through Feb. 7, construction industry stakeholders may need to wait until the spring for decision-makers to have enough confidence to allow for a reacceleration of natural economic growth."

 

Further details on the GDP release and its impact on economic sectors is available here.

 

And as the economy gradually recovers, nonresidential construction spending remains unchanged - a good sign the downturn in the industry has stopped, according to the Construction Backlog Indicator (CBI) produced by ABC. CBI also remained nearly unchanged between the second and third quarters of 2013 for the nation as a whole. However, backlog has declined slightly in the middle west states, including Michigan, falling from 6.97 months in Q3 2012 to 6.15 months in Q3 2013. 

 

"The most recent CBI reading suggests much of the growth next year is likely to occur after the first quarter of 2014, and only if a successful resolution to lingering federal budgetary issues emboldens decision-makers," said Basu. "Even with successful negotiations in Washington, D.C., ABC expects publicly financed segments to continue to be hamstrung by reluctant state and local government budget officials." Read more on the CBI here.


ABC of Michigan wishes you and yours a safe and happy Thanksgiving. 
Enjoy your family, friends, and this special time to give thanks for everything we have been given.
Associated Builders and Contractors of Michigan is a statewide trade association, working in partnership with three local chapters, dedicated to providing Michigan with high-quality, affordable, safe and on-time construction.  ABC of Michigan is an equal opportunity organization that opposes all discrimination in the construction industry including discrimination based on union affiliation. A leading construction industry voice with state government, ABC provides many member services including legislative advocacy, networking opportunities, member benefits, legal updates, business development and educational opportunities.