MIDLAND, Mich. — Associated Builders and Contractors of Michigan and the Mackinac Center Legal Foundation filed suit today challenging Gov. Gretchen Whitmer’s unilateral announcement mandating union wages on state construction projects. ABC, whose members make up more than 80% of contractors in the state, argues that the governor violated the separation of powers by unlawfully reinstituting a policy that was repealed by voter-initiated legislation in 2018.
Whitmer announced this plan in an October 2021 press release. Even though prevailing wage was repealed by the Legislature, the governor claimed the Department of Technology, Management and Budget could require state contractors and subcontractors to pay prevailing wages on projects above $50,000. No subsequent executive order or directive was given. The only known public record of official instruction to the department was the governor’s press release. The new prevailing wage requirements were, nevertheless, posted on the department’s website on March 1, 2022.
These actions directly harm employers, contractors, subcontractors, suppliers and taxpayers alike. At a time when the cost of construction is skyrocketing, prevailing wage further raises the cost by creating an arbitrary wage floor. This policy prices out the thousands of nonunion contractors and subcontractors in the state. Rather than choosing the highest quality bidder for the lowest cost, state policy will once again unfairly favor unionized labor, resulting in a much higher cost to taxpayers.
“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.”
The prevailing wage requirement prevents many contractors from even bidding on state projects. The costs of following the prevailing wage directive also include the obligation to collect, process, and disseminate the thousands of prevailing rates needed each year, enforcement costs, and administrative costs on the part of contractors to comply with the record-keeping requirements.
“In her latest act of unilateral governance, Gov. Whitmer has arbitrarily raised the price of state projects and cast thousand Michigan workers to the sidelines,” said Steve Delie, director of labor policy at the Mackinac Center. “These actions directly violate the separation of powers and circumvent the will of the people as expressed only four years ago.”
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