Prevailing Wage Has Got to Go
Opinion column by Senator Dale Schultz
To understand how prevailing wage works, let's consider a hypothetical road project. A small, rural contractor pays her construction workers 80 percent of the rates that "prevail" among large, urban contractors. For our road projects, labor is 40 percent of the total cost. Materials and equipment are the rest. The result would be a reduction in the total project cost of 8 percent, or eight percent more road work would get done under the lower labor rates. |
Changes to prevailing wage law in the budget being hurried through the legislature in Madison will kill jobs and burden property taxpayers, especially throughout rural Wisconsin.
The prevailing wage law was passed in the early 1930's to end the problem of shoddy work by contractors endangering public safety. The famous example at the time was a school collapse in Louisiana that launched the career of Governor Huey Long. Today we protect public safety through close scrutiny of the design, construction and maintenance of all government construction projects.
In rural Wisconsin, household incomes are around two-thirds that of most urban and suburban areas of the state. Rural school districts, municipalities and counties often look to small, local contractors who can build projects for less than large, urban contractors where wage rates are higher.
The prevailing wage law doesn't let local labor rates apply. Instead, prevailing wage means the rural workers on a local road, school or other public project must be paid the same as workers in wealthy areas of the state.
The budget plan expands the prevailing wage law in two ways. All local government projects of $2000 - basically all local government construction work - will now be subject to prevailing wage.
The budget also applies prevailing wage to “publicly funded private construction projects,” defined as any project receiving a grant, loan or other assistance from a local government. If a private developer pays 100 percent of costs and also builds a new sidewalk and turns it over to the local government, the entire project would be subject to prevailing wage. This hurts a small town's ability to build affordable housing projects and achieve other community development goals.
The prevailing wage changes in the budget amount to an added tax in the range of 5-10 percent on the cost of local government projects. More work could get done if labor rates were not government mandated. Property taxpayers will pay more, or community development projects will have to be scaled back or put off if the prevailing wage changes stay in the budget.
In the legislature, the co-chairs of the Joint Committee on Finance say they want to leave 45 policy items in the budget including the prevailing wage expansions. To remove prevailing wage and other policy from the budget, a few brave majority party legislators must stand up for their districts and stand up to their party leaders and the Governor.
Make your voice heard today. Visit my web site at http://budget.senatordaleschultz.com to learn about the 45 policy items in the budget. Send an email to me at sen.schultz@legis.wi.gov about prevailing wage and other policy items that should come out of the budget. I will forward your message to all 16 members of the Joint Committee on Finance.