Whatever the intentions behind the prevailing wage law when it was passed, it is difficult to develop a rationale for its continuation, at least in its current form.
The prevailing wage law forces the payment of union wages on state construction projects despite the fact that union workers made up just 22.1 percent of the construction work force in Michigan in 2006. In the process, the law provides a boost in compensation of 40 percent to 60 percent to construction workers who already receive wages well above the average for workers in this state. This cost is ultimately passed on to Michigan taxpayers, who lose $232 million annually — a conservative estimate calculated in 2002 dollars — without any discernible benefit for the vast majority of Michiganians.
The need for a prevailing wage law is dubious, but lawmakers who wish to preserve a wage floor on state-supported construction have several reform options that will still allow the people of Michigan to realize significant savings on government construction. The key is to free contractors from the unnecessary burden of matching the wages found in collective bargaining agreements and to allow those contractors to pay market wages on state construction projects.
However well-intentioned Michigan’s prevailing wage law might have been when passed, it now costs taxpayers hundreds of millions of dollars annually while it boosts the pay of higher-wage construction workers and closes opportunities for lower-wage construction workers. In a time of high unemployment and dwindling revenues, this costly law ought not go unchanged.