Created in a 1965 Michigan statute, prevailing wage raises the cost of construction projects by forcing contractors to pay their employees a certain regional rate for construction projects. Rather than choosing the highest quality bidder for the lowest cost, prevailing wage boxes out certain contractors, like the Associated Builders and Contractors of Michigan, in favor of those with a high union membership. ABC Michigan’s non-union members make up over 80% of the contractors and subcontractors in the state.
In 2018 a voter-led legislation repealed the prevailing wage statute, allowing contractors like ABC Michigan to compete within their market, and reducing the cost to taxpayers by allowing contractors across the state to offer their lowest possible price.
Despite this clear position from the State House of Representatives, the State Senate, thousands of contractors in the state, and the people of Michigan, Whitmer announced in October 2021 that she would be reinstituting this harmful policy. Rather than doing this via executive order, however, Gov. Whitmer announced the repeal via press release.
The State of Michigan’s Department of Technology, Management & Budget (DTMB), began in March 2022 to require that any contractor bidding on a state construction project over $50,000 would be subject to the prevailing wage requirements.
“Our members are willing and ready to work. But in order to accommodate the prevailing wage requirements, contractors who are well qualified and have done good work would have to change their entire cost structure,” said Jimmy Greene, president of the Associated Builders and Contractors of Michigan. “The state is under no obligation to use the lowest price, but they should at least know what the real cost of construction is. Instead, it has decided to pick winners and losers based on politics.”
This is an extremely dangerous precedent. Whitmer and the DTMB have violated separation of powers by overturning a law, a power reserved for the legislative branch, without the proper authority to do so. The outcome is not only unconstitutional but damaging to contractors and taxpayers alike.
The Mackinac Center Legal Foundation is partnering with ABC Michigan to make prevailing wage once again a thing of the past. On July 21, 2022, the Mackinac Center Legal Foundation submitted a complaint asking for a ruling on the matter.