Wisconsin Public Radio

Construction Pay Dropped After Prevailing Wage Law Repealed

Study finds worker wages are lower, but total public project costs are not.

By , Wisconsin Public Radio - Oct 4th, 2020 09:41 am
Interstate 94 Construction. File photo by Jeramey Jannene

Interstate 94 Construction. File photo by Jeramey Jannene

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 Scott Walker along with GOP lawmakers in the state Legislature repealed Wisconsin’s prevailing wage law for local construction projects in 2015. Two years later, the GOP repealed Wisconsin’s prevailing wage law for state construction projects.

Using data from the U.S. Census Bureau, the study shows that before the laws were repealed, the average annual income for full-time construction and extraction workers was close to $49,000. After the laws were repealed, average annual income was a little over $46,000, a drop of more than 5 percent.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CEOs in Wisconsin saw slightly more than a 54 percent increase in inflation-adjusted total income after the laws were repealed.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 it inflated 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.

Listen to the WPR report here.

Study: Repeal Of Wisconsin’s Prevailing Wage Law Led To Drop In Wages For Construction Workers was originally published by Wisconsin Public Radio.

2 thoughts on “Construction Pay Dropped After Prevailing Wage Law Repealed”

  1. blurondo says:

    “repealing the laws would save taxpayers money.” Any time a politician says those words, an alarm should go off.

    This is another glaring example of the damage that the Tea Party, Walker and Republicans have done to Wisconsin. This damage will continue to mount until they are removed from the State Capitol.

  2. frank a schneiger says:

    If you assembled a compendium of Urban Milwaukee articles in the past week, it would be a useful history of Wisconsin’s decline. And of how the far right and its corporate and plutocratic allies, using sycophantic politicians, have played the long game in bringing the state – and much of the nation – to where we are today. Whether it is about prevailing wages, the extraordinary article about Briggs, our deteriorated public health systems amid the Covid pandemic, or even lead pipes, violence and the deep pessimism and racial animosity that are now the norms, the thread of the story leads back to “shareholder value.” And, in particular, to its evil outcomes, especially extreme inequality, economic insecurity, deep pessimism and frightening levels of racial animosity.

    My dad was an immigrant from the former Yugoslavia. He went to the 9th grade. He spent his entire working life in a single department (paint) in the same factory, (the Nash-Kelvinator/American Motors body plant on Capital and Richards), for 43 years. In that time, with a grade-school diploma, but as a member of UAW-CIO/Local 75, he raised four kids, bought a house, had a car (okay, they were Rambler,s but they were still cars.), took regular vacations and got a real pension. As a young kid, with close to zero skills (well, it actually might have been zero), starting in 1959, I made the 2020 equivalent of $25/hour working as a 17-year old night janitor at AP Controls, $45/hour working as a construction laborer, $36/hour working as a paint mixer at PPG, and $20/hour working on Milwaukee playgrounds and driving a liquor truck during winter school vacations. I probably even had benefits that I wasn’t aware of because you took them for granted.

    In the ensuing decades, our economy has more than tripled, with virtually all of that wealth going to the top 1%. They have proceeded to buy whole political systems and people like Walker, Vos, Fitzgerald and to occasionally spit up one of their own in the form of a Ron Johnson. As their major distraction, they have worked feverishly to crank up racial animosity, whether it’s “welfare queens” starting with Reagan, or the more open racism of the modern Republican Party. And, they have worked to convince white people that government is their enemy and never to be trusted. It has been a great success, at least for them.

    In the process, they have successfully convinced white workers that they are the victims of immigrants and “affirmative action,” and that their hard-earned tax dollars are going to minorities. And that unions are evil, except, of course, for the cops. The goal is to make certain that workers remain divided across racial lines, that “liberalism,” whatever its flaws, is the focus of their hatred, and that states like Wisconsin remain under the control of the Koch Brothers/ALEC, Hendricks, Menard and the various private equity creeps. And again playing the long game, they have successfully populated our courts with corporate and plutocratic tools at every level.

    As a result of the ongoing decline, with many children now making less than their parents did, the Trump fans continue to see things in zero-sum/ if it’s bad for the liberals, it’s good for me, terms, and to vote to assure that hyper-gerrymandered legislative districts remain in Republican hands so that the dirty work can continue, along with inserting people like Walker and Trump into executive offices.

    If there is a road back, it will be long, painful and conflict ridden. And even that is a big “if.” The historian Walter Scheidel has recently written a book titled “The Great Leveler.” In it, he reports that there are no examples in history of the levels of inequality that we now have in the United States ending peacefully. Let’s hope that we’re the first.

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