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Study: Repeal Of Wisconsin’s Prevailing Wage Law Led To Drop In Wages For Construction Workers

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A new study from the Midwest Economic Policy Institute (MEPI) released exclusively to Wisconsin Public Radio finds the repeal of Wisconsin’s prevailing wage laws has resulted in lower wages for construction workers in Wisconsin, despite having no statistically significant impact on the cost of public construction projects.

Prevailing wage laws set minimum pay requirements for wages paid to workers on public construction projects, like school buildings or highway construction. 

Former Gov. Scott Walker along with GOP lawmakers in the state Legislature repealed Wisconsin’s prevailing wage law for local construction projects in 2015. Two years later, the GOP repealed Wisconsin’s prevailing wage law for state construction projects. 

Using data from the U.S. Census Bureau, the study shows that before the laws were repealed, the average annual income for full-time construction and extraction workers was close to $49,000. After the laws were repealed, average annual income was a little over $46,000, a drop of more than 5 percent. When the study removed factors such as education and age, the average annual income for workers was 6 percent less than income pre-repeal.

“Prevailing wage provided ladders of access into the middle class for Wisconsin construction workers,” Frank Manzo IV, policy director for the MEPI, said, adding that repealing it has had negative consequences for those same workers. 

Two of Wisconsin’s neighboring states with prevailing wage laws in place showed a smaller drop in annual average income between 2015 and 2018. In Illinois and Minnesota, annual incomes dropped by under 2 percent combined.

The study further found that at the same time, construction industry CEOs saw an increase in pay after the repeal of the prevailing wage, worsening economic inequality, according to the authors. Researchers estimate construction industry CEOs in Wisconsin saw slightly more than a 54 percent increase in inflation-adjusted total income after the laws were repealed.

The data also showed that, following repeal, there was a decrease in the likelihood that skilled construction workers had employer-sponsored health insurance. 

“Repeal has lowered wages and reduced health coverage for skilled construction workers, and resulted in less work for local contractors,” Manzo said. “At the same time, repeal has failed to deliver cost-savings on public projects and to increase bid competition — both of which were promised by politicians.”

Kevin Duncan, an economics professor at Colorado State University-Pueblo who was part of the study’s research team, said when construction workers have a lower income and less health insurance coverage, it has broader effects on local economies.

“When income goes down for construction workers they have less to spend in local retail and service industries,” Duncan said. “And then also with a decrease in health insurance … benefits, that results in greater reliance on public assistance. When construction workers are paid less they have to rely more on public assistance — (food stamps), that sort of thing — so that tends to increase the taxpayer burden.”

Fewer Wisconsin Contractors, No Effect On Construction Costs

At the time of the repeal on state construction projects, many Republicans criticized the law, saying itinflated the costs on public projects, and arguing that repealing the laws would save taxpayers money. 

But researchers with MEPI said the data shows repealing prevailing wage had no statistically significant effect on the costs for public construction projects.  

Researchers also found that the Wisconsin Department of Transportation saw fewer bids from Wisconsin-based contractors after the laws were repealed compared to before. Between January 2015 and September 2017, more than 2,600 bids for DOT projects came from Wisconsin contractors. But between October 2017 and December 2019, following the repeal of the laws, that number dropped to a little over 1,700 bids.

The drop meant the share of bids from out-of-state contractors increased from 9 percent to 13 percent in the same timeframe.  

“What that means is … Wisconsin tax dollars that previously went to Wisconsin contractors and construction workers, (are) now being used to pay workers from out of state,” said Duncan. “When that happens, Wisconsin tax money leaks out of Wisconsin and it stimulates economies in neighboring states instead of supporting the local economy.”

The MEPI study also found there was no statistically significant impact on the racial or ethnic diversity of construction workers before and after repeal. The study did find a drop in the share of women working in construction in Wisconsin after the repeal of prevailing wage, despite that number being extremely low prior to the repeal. 

This blog originally appeared at Wisconsin Public Radio on October 2, 2020. Reprinted with permission.

About the Author: Rachel Vasquez is a producer at Wisconsin Public Radio.


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Davis-Bacon Is Not Racist, and We Need to Protect It

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In 1931, a Republican senator, James Davis of Pennsylvania, and a Republican congressman, Robert Bacon of New York, came together to author legislation requiring local prevailing wages on public works projects. The bill, known as Davis-Bacon, which was signed into law by President Herbert Hoover, also a Republican, aimed to fight back against the worst practices of the construction industry and ensure fair wages for those who build our nation.

 Davis-Bacon has been an undeniable success—lifting millions of working people into the middle class, strengthening public-private partnerships and guaranteeing that America’s infrastructure is built by the best-trained, highest-skilled workers in the world.

Yet today, corporate CEOs, Republicans in Congress and right-wing think tanks are attacking Davis-Bacon and the very idea of a prevailing wage. These attacks reached an absurd low in a recent piece by conservative columnist George Will who perpetuated the myth that Davis-Bacon is racist.

“As a matter of historical record, Sen. James J. Davis (R-PA), Rep. Robert L. Bacon (R-NY) and countless others supported the enactment of the Davis-Bacon Act precisely because it would give protection to all workers, regardless of race or ethnicity,” rebutted Sean McGarvey, president of North America’s Building Trades Unions, on the Huffington Post.

“The overwhelming legislative intent of the Act was clear: all construction workers, including minorities, are to be protected from abusive industry practices,” he continued. “Mandating the payment of local, ‘prevailing’ wages on federally-funded construction projects not only stabilized local wage rates and labor standards for local wage earners and local contractors, but also prevented migratory contracting practices which treated African-American workers as exploitable indentured servants.”

The discussion surrounding Davis-Bacon and race is a red herring. The real opposition to this law is being perpetrated by corporate-backed politicians—including bona fide racists like Rep. Steve King (R-Iowa)—who oppose anything that gives more money and power to working people. For decades, these same bad actors have written the economic rules to benefit the wealthiest few at our expense. King and nine Republican co-sponsors have introduced legislation to repeal Davis-Bacon, a number far smaller than the roughly 50 House Republicans who are on record supporting the law. King and his followers simply cannot fathom compensating America‘s working people fairly for the fruits of their labor. Meanwhile, after promising an announcement on Davis-Bacon in mid-April, President Donald Trump has remained silent on the issue.

So the question facing our elected officials is this: Will you continue to come together—Republicans and Democrats—to protect Davis-Bacon and expand prevailing wage laws nationwide? Or will you join those chipping away at the freedom of working men and women to earn a living wage?

We are watching.

This blog was originally published at AFLCIO.com on June 28, 2019. Reprinted with permission.

About the Author: Tim Schlittner is the AFL-CIO director of speechwriting and publications and co-president of Pride At Work.


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Mad Again: Illinois AG Tracking Down Paving Co. That Skirted $100,000 in Prevailing Wages

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Steve CooperA lawsuit filed against Thoele Asphalt Paving by Illinois Attorney General Lisa Madigan claims the contractor underpaid its employees by over $100,000 on a public works project.  The Department of Labor had demanded back pay for the workers from the contractor but Thoele failed to pay.  Now, they are demanding the back pay plus “penalties of 23 percent of the compensatory damages, punitive damages of 2 percent of the compensatory damages per employee, costs, attorney’s fees and other relief the court deems just.”

According to the Madison-St. Clair Record:

The Department of Labor alleges Thoele Asphalt Paving was a subcontractor that general contractor Baxmeyer Construction hired to repair rip rap along Illinois Route 100 between Alton and Grafton. The construction company also transported materials to work sites for the completion of the project, according to the complaint filed Oct. 4 in Madison County Circuit Court.

Later, the Department of Labor received a complaint about Thoele Asphalt Paving in which a person reported that it did not comply with the Prevailing Wage Act, the suit states. The Department of Labor conducted an investigation and found that Thoele had violated the act, the complaint says.

According to the lawsuit:

“Thoele Asphalt Paving failed to comply with the provisions of the Prevailing Wage Act because it failed to pay the claimants in the amounts as indicated,” the suit states. “The aggregate sum of underpayments owed to all claimants for the work performed on the public works project and required by the Prevailing Wage Law is $108,392.95.”

This article was originally printed on We Party Politics on October 15, 2013.  Reprinted with permission.

About the Author: Steve Cooper is the editor of We Party Patriots. He manages its Twitter (@WePartyPatriots) and Facebook (/WePartyPatriots) accounts, so there are many ways to contact him. Cooper is an avid chef and musician.


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