Small Business Says Time to Repeal Prevailing Wage Law

Date: May 13, 2015

Related Content: News State Michigan

May 13, 2015 (Lansing) –Taxpayers can no longer afford Michigan’s outdated
and wasteful Prevailing Wage Law according to testimony today by
the National Federation of Independent Business (NFIB) before the Senate
Committee on Competitiveness. The committee held a hearing on Senate Bills 1, 2
and 3 that would end Michigan’s Prevailing Wage Law.

Michigan citizens share the concerns of the Senate Members on this committee
with regard to the adequate funding of our schools and infrastructure in the
face of challenging budgets,” said NFIB State Director Charlie Owens. “While
state and local governments are looking for ways to stretch resources and be
good stewards of the taxpayer’s dollars, we would be remiss if we did not
examine the impact of Michigan’s outdated and wasteful prevailing wage law on
the cost of construction projects financed with state taxpayer dollars”.

prevailing wage law, passed in 1965, requires that contractors on state funded
projects pay the wages and fringe benefits according to the union scale
regardless of whether the builder in question has union or non-union employees
on the job. Michigan is one of only six states in the nation that require union
wages be paid on state funded construction projects. Estimates are that the law
results in $224 million in extra costs per year on school construction alone.

law requires all contractors on state funded projects to pay the union scale
wages and fringe benefits which are almost always higher than what local labor
market conditions would dictate”, said Owens. “As a result, taxpayers are
overcharged anywhere between 10 and 15 percent more than what a competitively
bid job would cost without the mandated union wage requirement.”

went on to cite examples in other states and in Michigan (during the 30 month
period a court case suspended Michigan’s prevailing wage law) where the absence
of a union prevailing wage requirement resulted in cost savings on projects
with no decline in safety or quality of construction. Owens said that the
Bureau of Labor Statistics indicates that the vast majority of construction
workers are non-union with only about 18 percent belonging to a labor union.

are missing the opportunity to increase the buying power of the state, school
districts and local governments without any new taxes or increased state
spending,” said Owens. “We are here today to ask your support for Senate Bills
1, 2 and 3 that would end Michigan’s antiquated and unnecessary Prevailing Wage

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Related Content: News | State | Michigan

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