Posted on 02/19/2015 11:39:44 AM PST by MichCapCon
In rural Dickinson County, located in the Upper Peninsula on the Michigan-Wisconsin border, the cost of living is low and the median household income is about $44,000.
Steve Zurcher, the owner of St. George Glass & Window located in Iron Mountain, pays his glaziers about $20 per hour. That’s the market wage for qualified glass-installers in the area.
But the State of Michigan doesn’t care about market or privately-negotiated wages. Because of the state’s “prevailing wage” law, any glazier in Dickinson County who works on a taxpayer-funded construction project is mandated to be paid $43.53 per hour.
Prevailing wage laws force government and publicly-funded entities to pay a set minimum wage for workers based on union contracts when contracting for construction work. In Michigan, this minimum construction wage is mostly arbitrary, not taking into consideration private-sector wages or the cost of living in an area. For example, the mandated minimum for glaziers in Livingston County – the wealthiest county in the state with a household income of over $72,000 – is $47.35. That's only a few dollars more per hour than the state’s mandate in the U.P., despite large cost-of-living differences.
This means, for the majority of construction projects for local schools, Zurcher’s company isn’t allowed to pay his employees their privately-negotiated wages. Instead, the state forces an inflated minimum hourly wage of over $43. That doubling of labor costs comes from the school’s budget, and ultimately from taxpayers. This also causes other negative effects, like less workers on projects.
“I believe prevailing wage has not benefited the taxpayers of Michigan,” said Zurcher, who has done work on hundreds of taxpayer-funded projects. “It artificially increases construction costs, reduces price competition, promotes interest from contractors outside our state, interferes with the labor agreements of private businesses, creates a disincentive to complete projects in a timely fashion, and creates unfairness in compensation between long-time employees and new hires.”
In September of 2014, Zurcher won a bid to do work for a new welcome center at Michigan Technological University. His base bid for the work was $84,000 with labor costs totaling $23,636 of that. But the cost was inflated because of the state’s prevailing wage law. Without the law, the university would have paid $72,504 for the project with labor costs totaling $12,139. Michigan Capitol Confidential examined documents verifying this information.
Extrapolating that savings to every government-funded construction project in Michigan adds up. A 2013 study from the Anderson Economic Group found that the law costs school districts about $224 million annually in mandated extra costs. But it’s not just schools: State and local government projects are also subject to the mandate, limiting their negotiating power when seeking bids.
Zurcher said the prevailing wage law harms one of his main competitive advantages: Price. When the state mandates a wage far above market value, larger and non-local shops often gain an advantage. That's because it makes more sense for a large company out of an area to bid and work on projects in which Zurcher’s labor costs are inflated to their levels.
“Wisconsin glazing contractors see prevailing wage as an essential benefit and affords them the means to be able to bid on projects in the U.P.,” said Zurcher. “It forces me to elevate my labor costs to their level which removes a major and key competitive edge we would normally have. Any supposed benefit the community and my employees might gain from the increased hourly pay is just as easily lost to competition from businesses outside our community.”
As a principled fiscal conservative, Zurcher is opposed to the government interfering with labor contracts, even if that mandate sometimes benefits his company.
“Prevailing wage only serves to support special interest groups who use their power and influence to create their own special minimum wage standards,” Zurcher said. “The Legislature should repeal the law and end the cronyism.”
Who knew?
I get the impression the author is trying to represent this as a Michigan problem. The Davis-Bacon Act is a federal law and applies everywhere. Davis-Bacon is one of the major totems of the left. When Bush temporarily suspended Davis-Bacon for the area devastated by Hurricane Katrina the left went berserk and started filing lawsuits.
A significant improvement could be made if the prevailing wage were calculated on a per county basis instead of a state wide basis.
Davis-Bacon has been a major burr in my butt for a long time. Making the taxpayer pay inflated labor costs for every construction project- every road, every sewer, every school, every courthouse - is insane, given the chronic budget deficits of state, local and federal governments. It is nothing buta subsidy for unions companies who couldn’t win a contract without it. If you want to fix our crumbling infrastructure, I would start by getting rid of Davis-Bacon.
A significant improvement would be to let the market decide what the wages should be. I mean, not only is there an added cost to the taxpayer for the inflated wages, but there are extensive hidden costs. With prevailing wage rates, you need an army of bureaucrats to calculate and enforce the rates. When you work on a publicly funded project you get a schedule of rates for the different tradesmen. This schedule is the size of a small phonebook. Each individual trade has different wages, benefits, and timetables. It is possible that the wage rate can change in the middle of the project. You get situations where someone is paid as a laborer, but if he picks up a trowel and starts finishing concrete, he now must be paid as a cement finisher. The contractor has to provide detailed certified payroll for all of this, and he is closely watched. The unions and their lackeys in the state labor department make sure of it.
In my younger days I was a mason and we did a lot of Boiler settings. I was top dog and made 14 a hour my helpers made 6 to 9 $ a hr. Occasionally we would get a state or municiple job, Prevailing wage was 27.00 Hr and 14.00 for helpers. Everyone wanted to work those jobs but in order to make money the owner needed us to work with no breaks ,eat on the run, and work double time and we were glad to do it. We were actually told to slow down by the union guys on the job because we made them look bad. Also sometimes we were forced to hire some of the guys from union Hall and they were useless except for one guy who was a good musician, I told him to just bring his guitar and play leave your tools home.
Someone really had to analyse WHY making things costs more raises costs???
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