The state of Michigan has a strong prevailing wage law, albeit one that is still under legal challenge. An examination of the evidence on employment, construction costs, and even broader economic effects suggests that state prevailing wage laws have adverse consequences. They cause significant unemployment in the construction industry. The temporary invalidation of the Michigan law resulted in more than 11,000 new construction jobs being created, and the permanent removal of the legislation likely would have more substantial employment effects.

Both economic theory and empirical evidence suggest that minority workers will particularly gain from the removal of prevailing wage restrictions. The severe underrepresentation of blacks in the Michigan construction industry is shameful, and in significant part likely arises because of the state's prevailing wage law.

It is estimated that in fiscal year 1995, the Michigan prevailing wage law increased the costs of public capital outlays by at least $275 million, equal to five percent of individual income tax collections that year. Significant tax relief and/or expansion of public infrastructure would be possible if the Michigan law were permanently repealed.

Prevailing wages restrict people from operating in a free market to allocate resources and use factors of production most efficiently, thus retarding job creation and contributing to lower economic growth. People have been moving out of Michigan and other prevailing wage states, preferring to earn money in environments where their rate of pay is determined by their individual skills and worth, not by a governmentally determined "just wage" that bears little resemblance to economic reality. The original prevailing wage laws were conceived two-thirds of a century ago to meet problems that do not exist today. Michigan's law was enacted over 30 years ago to likewise deal with economic conditions that simply do not apply in the modern global economy. The preponderance of the evidence suggests that the Michigan legislature would be wise to repeal the Prevailing Wage Act of 1965.