In a signature victory for small businesses across the state, Michigan’s Legislature repealed the state’s 53-year-old prevailing wage law, a measure that drove up the costs of publicly funded building projects. The repeal will go into immediate effect.
The wage law required union scale wages to be applied on state construction projects and was put into place in 1965.
“Michigan’s antiquated prevailing wage law results in overcharging taxpayers on publicly funded construction projects by requiring that union-scale wages be paid regardless of whether a contractor has non-union employees,” said NFIB Michigan State Director Charlie Owens. “Estimates of the additional cost to taxpayers ranges from 10 to 15 percent on a project.”
Michigan has joined a handful of states that have repealed versions of their prevailing wage laws. Indiana repealed its common construction wage statute in 2015, Kentucky repealed its wage statute in 2017, West Virginia repealed its wage statute in 2016, and Missouri partially repealed the state’s prevailing wage law last month. Wisconsin eliminated its prevailing wage laws for local projects in 2015, and its state projects in 2017, according to the Daily Reporter.
“Any debatable benefit to the public created by prevailing wage laws has long passed,” said NFIB Executive Director of State Public Policy Tim Goodrich. “More and more, states are realizing the benefits of eliminating this unfair barrier to public-work projects. As the success of repealing prevailing wage laws grows, we can expect more states to move in this direction.”
Non-union contractors who support the repeal argue that the prevailing wage law inflated the bill on taxpayer-funded projects, according to Crain’s Detroit Business. The article further cited claims by the Associated Builders and Contractors that taxpayers paid $2.2 billion more for state-funded projects than they should have between 2002 and 2011.
Michigan previously passed a right-to-work law in 2012 that made it illegal to require payment of union dues as a condition of employment.