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
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.