Your View: Prevailing Wage Strengthens Ohio Communities

A thoughful and helpful rebuttal to yesterday's post

Yesterday’s edition of our publication talked about current Prevailing Wage laws and the position (or at least my position) that these laws are antiquated and should be abolished, or at least, greatly reformed. The response to this position was more than I expected, especially for such a set of regulations that aren’t that well known.

In fact, one of our readers, John, from Central Ohio (yes, we have readers all across the state!) provided a very well written piece with good arguments to consider. I asked John if I could publish his thoughts, and he kindly obliged.

John’s willingness to share his thoughts and ideas is one of the aspects of this project that I enjoy the most. This publication has always welcomed opposing views and this platform is always open to our readers to help further the discussion of important policy discussions.

Thank you John, for your contribution to Civic Capacity.

Prevailing wage has existed on both the federal level and in Ohio for nearly 100 years because it fosters good, middle-class careers in construction. It's the government's way of saying, if you're building stuff with our money, you have to pay your workers a certain minimum wage based upon your locality. In effect, the laws enable local contractors to bid on local jobs using skilled local workers without fear of being underbid by an out-of-state contractor using cheap, out-of-state labor.

By protecting local wages, prevailing wage laws protect work for local contractors and workers. The laws allow local contractors to submit competitive and profitable bids while employing skilled local workers. Those workers, in turn, are likely to spend their earnings in the local community, stimulating economic activity.

As you emphasized, the most frequent charge levied against prevailing wage laws is that by ensuring construction workers are paid a region's standard for wages and benefits, costs for public construction projects are increased.

However, an overwhelming number of peer-reviewed studies on the impact of federal and state prevailing wage laws on the cost of school, highway, and municipal building projects since the year 2000 have found prevailing wage laws have little to no statistically significant effect on construction costs.

Why don't prevailing wages increase costs? Labor costs are typically only 23% of building costs. And when wages and benefits for union and non-union workers are similar, as they tend to be during robust economic times, a small increase in labor costs can be offset by employing more-productive workers or by reducing expenditures on materials, fuel, or rental equipment, or by accepting marginally lower profit margins.

Several neighboring states have repealed state prevailing wage laws recently and yet have seen no real cost savings.

Indiana, for example, repealed its prevailing wage laws in 2015. Yet, two years later, Indiana House Assistant Majority Leader Ed Soliday (R) said, "we got rid of prevailing wage and so far it hasn't saved us a penny." Soliday complained that Indiana legislators were promised savings of up to 22% by repealing prevailing wage, but he noted "total labor costs right now in road construction is about 22%, and I haven't noticed anyone who's going to work for free."

In 2016, West Virginia repealed its prevailing wage law. A study by the Midwest Economic Policy Institute conducted in 2019 found no statistical impact on school construction costs since the repeal. The same organization conducted a study in 2020 three years after Wisconsin repealed its prevailing wage laws. The Wisconsin study found no statistical impact on the cost of road projects, but it did find evidence of local construction workers receiving lower wages and a 60% increase in road construction projects being awarded to out-of-state contractors following repeal.

Prevailing wage laws have also been credited with increasing participation in apprenticeship programs, increasing the number of workers covered by employer-provided health care plans, providing good jobs to our veterans (who comprise a significant percentage of persons employed in the construction trade) and reducing worker reliance on government assistance.

In the absence of prevailing wage laws, communities like Troy would see public construction contracts increasingly being performed by out-of-state contractors employing out-of-state employees. Money, otherwise which would be spent in Troy, would leak out-of-state.

Prevailing wage laws keep work, and money, in our area, raising our community's standard of living. A repeal of Davis-Bacon and Ohio's prevailing wage law would harm our community.

What Do You Think?

Again, thanks for John for keeping the conversation about Prevailing Wage going. And if you have ideas that you want to share on civic issues, longer pieces are always welcome. If you want to share your thoughts without the limits of word counts and paywalls, you can always send your writing to pinnaclestrategiesltd@gmail.com and it will be run in a future edition of Civic Capacity.

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