MIDLAND — Michigan lawmakers voted to pass critical, landmark reforms this week which eliminate costly “prevailing wage” mandates on public construction projects and implement work requirements on the able-bodied population enrolled in the state’s Medicaid program. Both reforms save taxpayers money while helping get more people into the workforce.
Michigan's "prevailing wage" law mandated union wage scales on public construction projects, adding approximately $400 million per year to the cost of building schools, roads, bridges, universities, town halls and other critical infrastructure. Not only are the costs burdensome for taxpayers, but many workers and local businesses were often inhibited in their abilities to compete for these construction projects since the mandate incentivized public entities to use larger, more expensive firms.
“Michigan's prevailing wage law was the most stringent and complicated in the country,” said Jarrett Skorup, director of marketing and communications at the Mackinac Center for Public Policy. “It upended the market bidding process, which made construction projects more costly, meaning that fewer schools and roads were being built. This was a bad deal for taxpayers and its repeal makes Michigan a more enterprising place to live and work.”
Following the repeal of prevailing wage, the Legislature passed a bill to implement work or community engagement requirements for able-bodied adults receiving benefits through the “Healthy Michigan” Medicaid-expansion program. Individuals who qualify for these new requirements may also be eligible for a number of exemptions based on socioeconomic circumstances and must self-report their fulfillment of the requirements to the Department of Health and Human Services. The House Fiscal Agency projects these changes to result in taxpayer savings of between $7 and $22 million annually.
“It’s important that we remember why Medicaid was established in the first place, which was to ensure that our most vulnerable citizens have a safety net for critical healthcare needs,” said Lindsay Killen, vice president for strategic outreach and communications at the Mackinac Center. “But Medicaid has ballooned into an unwieldy and massively expensive entitlement program that crowds out access to services and vital resources for that most vulnerable population. Work requirements will enrich the lives of able-bodied adults who now have more incentives to find work and become increasingly self-sufficient, while protecting the children, elderly and disabled individuals Medicaid was originally intended for.”
Mackinac Center experts have long supported the repeal of the prevailing wage law and reforms to government health and welfare programs that respect taxpayers, benefit workers, families and patients across our state.
# # # # #
The Mackinac Center for Public Policy is a nonprofit research and educational institute that advances the principles of free markets and limited government. Through our research and education programs, we challenge government overreach and advocate for a free-market approach to public policy that frees people to realize their potential and dreams.
Please consider contributing to our work to advance a freer and more prosperous state.