‘Prevailing Wage’ law a bad deal for taxpayers, most workers

Pro-Right to Work legislators in Jefferson City are now proposing suspension of Missouri’s so-called “prevailing wage” law for reconstruction projects in tornado-devastated Joplin and flood-ravaged Maryland Heights. This would be a step in the right direction for independent-minded workers and taxpayers.

Missouri’s and other state prevailing wage laws were inspired by New York Republican Congressman Robert Bacon’s federal “prevailing wage” measure. Bacon first introduced what ultimately became known as the Davis-Bacon Act in 1928, in the midst of booming job and wage growth, as a means of restricting competition in the construction industry. In fact, a key purpose of this legislation, as supporter Miles Allgood (D-AL) bluntly admitted on the U.S. House floor, was to prevent “colored labor” (emphasis Mr. Allgood’s) from coming into “competition with white labor throughout the country.”

Davis-Bacon and similar state prevailing wage laws undermine construction employees’ Right to Work by requiring all contractors and subcontractors on taxpayer-funded projects, union and nonunion alike, to submit to rigid job classifications, work rules, and wage rates that are, in reality, union-dictated. The huge volume of paperwork and other compliance costs foisted on employers by prevailing wage laws deter countless smaller, typically nonunion firms from submitting bids on taxpayer-funded construction.

For decades, prevailing wage laws promoted white supremacy as well as union monopoly, because plumbers, electricians, sheet metal workers, ironworkers, and other building trades union bosses “used local ordinances controlling licensing and apprenticeship to keep blacks out of their trades,” as historian Paul Moreno observed in his 2006 book, Black Americans and Organized Labor. Ultimately, facing intense pressure from federal authorities, building trades union kingpins gave up on white supremacy, but prevailing wage laws continue to do a lot of damage.

Prevailing wage laws promote wasteful union work rules, featherbedding and, all too often, outright corruption. An investigation launched in Oklahoma by former state Labor Commissioner Brenda Reneau uncovered hundreds of fraudulent and forged wage survey reports. Taxpayers have saved millions of dollars thanks to Reneau’s tenacious and successful investigation, but similar abuses outside the Sooner State almost certainly continue, undetected, to this day.

A 2010 analysis in Cato Journal by attorney George Leef, director of research at the John W. Pope Center for Higher Education Policy and the author of many scholarly articles concerning labor policy, noted that decades of studies on Davis-Bacon’s impact have “consistently found that it adds significantly” to federal construction costs. For example, a 2008 study published by the Beacon Hill Institute at Suffolk University in Massachusetts concluded that “costs on projects” subject to Davis-Bacon “are increased by 9.9 percent.” Another 2008 study prepared for the Citizens Housing & Planning Council in New York City found that extending the Empire State’s prevailing wage mandate to low-income housing construction would drive up the cost per unit by up to 25 percent.

Leef’s analysis soundly refuted several rationalizations commonly offered by apologists for prevailing wage laws such as the University of Utah’s Peter Philips. For example, one labor union-financed study by Philips and other researchers tried to justify Davis-Bacon by suggesting that, without union apprenticeship programs, construction workers would never be properly trained.

In reality, open-shop apprenticeship programs, community college and technical institute classes, and on-the-job training as a construction “helper” can all be good alternatives for construction trainees who choose not to join a union. That helps explain why roughly two-thirds of private-sector construction workers in Missouri today are union-free.

Across the country from 2000-2010, unionized construction employment fell by 33.5 percent, a decline 14.5 times as severe as that experienced in union-free construction. The current job climate is very tough for hardhats of all kinds, but it’s easy to understand why the vast majority of workers in the sector now see unionization as a career opportunity killer and opt against it. Independent-minded construction employees and the firms for which they work shouldn’t be denied a fair shot at participating in Joplin and Maryland Heights reconstruction, or any other taxpayer-funded projects, simply because they are union-free.

That’s why all fair-minded Missourians should support the suspension of the state prevailing wage law for emergency reconstruction, as a first step towards getting rid of this discriminatory and anti-taxpayer statute altogether. Another, even more important advance for hardhats’ freedom would be enactment of a state Right to Work law to protect them (and other employees) from being fired for refusal to pay dues or fees to an unwanted union.

(Editor’s note: Mr. Greer is senior research associate for the National Institute for Labor Relations Research in Springfield, Va.)