The topic of Common Wage has been studied for over twenty years with similar results indicating common construction wage laws are a benefit to the state, the worker and the local economy.

STUDIES

Below is a compilation of case studies collected from cities and states which have kept or eliminated prevailing wage.

 

Indiana's Common Construction Wage: An Economic Impact Study

Summary: This study demonstratesWhile all agree that apprenticeship training is key to a productive construction labor force and the maintenance of middle-class careers in construction, in Indiana, only the joint labor-management programs invest serious money in the training of Indiana's youth. Only 6% of the annual investment in apprentice training comes from non-union apprenticeship programs while under collective bargaining, Indiana's union contractors provide 94% of annual apprenticeship training expenditures. This difference plays out in higher productivity on the union side of Indiana construction, higher construction worker incomes, greater health insurance coverage and more secure retirements for Indiana construction workers. Read More

 

Union Contractors Have 75% Share of the Non-Residential Construction Market in Indiana 

Summary: The ABC of Indiana claims that non-union Contractors control 65% of the construction market in Indiana.  In fact, while non-union contractors dominate the residential market, union contractors account for 75% of the non-residential market in Indiana. READ MORE

Common Construction Wage: The Economic Impacts of Indiana's Common Construction Wage

Summary: This study demonstrates how Indiana's Common Construction Wage (CCW) promotes positive labor market outcomes for both construction workers and contractors. READ MORE

 

Self Sufficient Construction Workers: Why Prevailing Wage Laws are the Best Deal for Taxpayers

Summary: This study explores the impact of Prevailing Wage Laws (PWLs) on tax revenues and government assistance.  Prevailing wage law supports the local economy and contributes to government budgets. READ MORE

 

The Effect of Prevailing Wage Regulations on Contractor Bid Participation and Behavior

Summary: This study debunks the myth that prevailing wage laws reduce the number of bidders on a project. An analysis of bidding data from five Bay Area cities shows that prevailing wage requirements in public works contracts have no adverse effect on bidding behavior. The academic journal Industrial Relations has published a new paper by Drs. JaeWhan Kim, Chang Kuo-Liang, and Peter Philips that tackles long standing questions of whether âprevailing wage regulations reduce the number of bidders on projects by discouraging non-union contractors from bidding on projects, alter the dynamics of the bidding project, or fatten the bid relative to the engineers estimate. READ MORE

 

Davis-Bacon Prevailing Wage Requirements: Evidence From Highway Resurfacing Projects in Colorado

Summary: A new study from Dr. Kevin C. Duncan of Colorado State University uses data from highway resurfacing projects in Colorado to examine the cost implications associated with the payment of Davis-Bacon Act prevailing wages on projects funded by the federal government. Dr. Duncan's conclusions are that "...prevailing wage requirements do not play a statistically significant role in cost outcomes." Additionally, Dr. Duncan notes that a prevailing wage requirement is not associated with a reduction in the number of bidders on a project. READ MORE                                               

 

Economic, Fiscal and Social Impacts of Prevailing Wage in San Jose, California

Summary: Municipal building projects covered by a prevailing wage policy employ a higher proportion of local contractors and local workers. Prevailing wage laws therefore help reduce the leakage of local taxpayer dollars by directing public construction expenditures into the local economy. If prevailing wage coverage is removed from a municipal building project, then roughly 6% of the projectâs value leaks from the Santa Clara County economy. If prevailing wage had not applied to San Jose's 2007-2012 municipal building projects: Total economic activity in the County would have fallen by $164 million and 1,510 fewer local jobs would have been created in the County. In addition to construction, the economic sectors with the greatest job loss induced by the loss of prevailing wage include retail and food service (88 jobs) and health (57 jobs). READ MORE

 

Prevailing Wages and Government Contracting Costs: A Review of the Research, Economic Policy Institute

Summary: The report concludes that prevailing wage regulations have no effect one way or the other on the cost to government of contracted public works projects. Workers on prevailing wage projects tend to be higher skilled, better trained, more productive, and less prone to serious and fatal injuries on the job site. Prevailing wage regulations contribute to enhanced tax revenues, and higher wages support local consumer spending. Prevailing wage regulations discourage unscrupulous contractors who typically cheat on payroll taxes, employ low skilled workers and shirk health and safety requirements on the job site. Prevailing wage regulations also help expand apprenticeship training programs which enrich the community by offering avenues for residents to secure good paying middle class jobs. Removing prevailing wage regulations and thereby lowering wage and benefit standards on local projects shifts substantial costs onto the tax payer by pushing workers into requiring more subsidies in healthcare, housing and other social services. READ MORE

 

Quality Construction and the Effect of Prevailing Wage Regulation on the Construction Industry in Iowa

Summary: Prevailing wage regulations increase construction apprenticeship training by both union and nonunion contractors. That training leads to higher quality construction and lower downstream maintenance costs. READ MORE

 

The Economic Development Benefits of Prevailing Wage

Summary: Prevailing wage in construction means more cost-effective construction, and more skilled and better-paid workers. Skilled construction workers who receive higher wages are about 20 percent more productive than less skilled workers. All else being equal, higher productivity means lower unit costs. Prevailing wage laws result in greater health and pension coverage, greater apprenticeship opportunities for less educated workers, and the more effective functioning of the construction labor market overall. READ MORE

 

An Analysis of School Construction Costs in Ohio and Indiana

Summary: In 1997, Ohio exempted school construction from its prevailing wage law. A comparison of Ohioâs school construction costs to that in Indiana reveals that construction cost is higher in Ohio, despite the repeal of prevailing wage requirements. READ MORE

 

The Adverse Economic Impact from Repeal of the Prevailing Wage Law in Missouri

Summary: An independent research study conducted by the University of Missouri at Kansas City indicates that repeal of the prevailing wage statute in Missouri would not save dollars on construction costs and would result in a negative economic impact on the stateâs families and taxpayers as well as the state and regional economies. In addition, the study indicates negative impact in these areas: READ MORE

 

  • Lower productivity of the construction workforce

  • Increased construction work done by out-of-state contractors in Missouri.

  • Increased occupational injuries and their associated costs in Missouri.

  • Weakened system of construction apprenticeship training in Missouri.

  • Reduced corporate income taxes for the State of Missouri.

  • Reduced sales tax revenues to the State of Missouri and regional economies in Missouri.

  • Reduced health and pension benefits for construction workers in Missouri

 

 

Construction Labor Research Council, Federal Highway Administration.  Do Higer Wages Raise Labor Costs?

Summary: An updated study on highway construction in the United States, 1994-2002, was conducted with the same conclusion from the previous 14 year study of highway construction: Both studies concluded that skills and productivity, not differences in wage rates, are the critical determiner of bottom line labor costs. The federal study found that the payment of prevailing wages and the use of higher paid, higher skilled workers reaped an average of $123,057 per mile in savings. The study found that "There is no basis to the claim that lower wage rates result in lower construction costs." READ MORE

 

A Comparison of Public School Construction Costs in Three Midwestern States that Have Changed Their Prevailing Wage Laws in the 1990s.

Summary: A study of public school construction costs in Kentucky, Ohio and Michigan over the period 1991-2000, found that the use of prevailing wages raised school construction costs by less than 1%, a statistically insignificant result. Instead of raising costs, the study found that the payment of prevailing wages and benefits forces contractors to hire and train a more skilled and productive labor force. The failure to pay living wages reduces wages, training and health and pension benefits. As a result, trained workers migrate to other areas and young, less trained workers have an injury rate 15% higher than trained workers. READ MORE

 

Health Care and Pension Benefits for Construction Workers. The Role of Prevailing Wage Laws

Summary: This article examines the effect of state prevailing wage laws on the amount and mix of wages and benefits paid to construction workers over a decade. When comparing the experiences of different states, prevailing wage laws enhance both wages and benefits, with the largest percentage increase going toward employer pension contributions and benefits to active construction workers and retirees. READ MORE

 

Health Care Subsidies in Construction. Does the Public Sector Subsidize Low Wage Contractors?

Summary: A study of the University Medical Center (UMC) in Las Vegas (Clark County, Nevada), found that the failure to pay prevailing wages and health benefits shifts the burden of health care from employers to public health "safety nets." This adds costs to taxpayers as it allows employers to "free-ride" at the public's expense. The additional cost of this shift represents one-third of all uncompensated care at UMC, costing the taxpayers over $10 million per year. READ MORE

 

Prevailing Wage Laws & School Construction Costs. An Analysis of Public School Construction in Maryland & the Mid-Atlantic States

Summary: A study for the Prince George County's County City Council in Maryland compared school construction in three mid-Atlantic states (Delaware, Pennsylvania and West Virginia) with prevailing wages between 1991-1997 with two states (North Carolina and Virginia) that did not pay prevailing wages. The study found that the slight increase in costs for states with prevailing wages was statistically insignificant. Further, future savings in maintenance costs because of higher quality construction produced additional savings for the states. READ MORE

 

Kentucky's Prevailing Wage Law: Its History, Purpose & Effect. 

Summary: The comprehensive report on Kentucky's prevailing wage law analyzes actual construction cost data, historical information, training, and health and safety statistics to rebut the myths surrounding prevailing wages. Beyond its focus on Kentucky, the author includes a lengthy chapter on the history and economic impact of prevailing wage laws on minorities in the national construction industry. The report also examines the positive impact the Kentucky prevailing wage law has had on improving worker benefits, training and job safety. The study concludes that not only are prevailing wage jobs not more expensive, but they achieve solid benefits in the form of lower injuries, greater minority employment, a larger pool of skilled workers, and increased health and welfare benefits. READ MORE

 

Kansas and Prevailing Wage Legislation, Prepared for the Kansas Senate Labor & Industries Committee

Summary: After repeal of Kansas' prevailing wage law in 1987: READ MORE

 

  • construction wage incomes fell by 10% throughout the construction industry

  • employer health insurance and retirement contributions fell by 17%

  • apprenticeship training fell by 38%

  • minority apprenticeship training fell by 54%

  • serious injury rates in Kansas construction increased by 21%

  • the projected 6%-17% saving rates on state construction costs used to sell the repeal failed to materialize.

 

Losing Ground: Lessons from the Repeal of the Nine 'Little Davis-Bacon' Acts

Summary: A major study of nine states (Alabama, Arizona, Colorado, Florida, Idaho, Kansas, Louisiana, New Hampshire, and Utah) that repealed prevailing wages found that the repeals had negative impacts on all state budgets. The loss of construction earnings and sales tax revenues had an adverse impact, and cost overruns on road construction also increased costs. In Utah, for example, these cost overruns tripled after the repeal. Training was reduced by 40%, minority representation was reduced in training programs and injuries increased by 15%. READ MORE