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The Michigan Senate on May 14, 2015, approved a package of bills that would repeal the state’s prevailing wage law. The proposals are now before the House Committee on Commerce and Trade. The prevailing wage law requires contractors on state funded construction projects to pay union-scale wages.
Senate Bill 1 would repeal the prevailing wage law as it applies to school construction projects; Senate Bill 2 would repeal its application to construction of public economic development projects; and Senate Bill 3 would apply to all state-funded construction projects, including state buildings, universities, roads, and public schools.
According to a legislative memo, by freeing construction employers from paying that level of wages, the bills could produce potential savings on these types of projects.
The Michigan Chamber of Commerce testified in support of the bills, and the organization has identified repeal of the prevailing wage as a 2015-2016 legislative priority.
The Michigan Building and Construction Trades Council, a union group, maintains that the prevailing wage law does not increase costs and that it creates local quality jobs for a local workforce. The council called the passage of the bills a sad state of affairs and a real slap in the face for Michigan workers.
“To say that those in favor of repealing prevailing wage are dangerously naïve about the construction trade is a major understatement, said Building and Construction Trades Council legislative director Patrick “Shorty” Gleason. “Quite frankly, it is irresponsible for Michigan’s leaders to consider the creation of an environment that incentivizes less training; less safety; less health care; less retirement care; and less interest in the skilled trades as a career choice.”
“The model in place now delivers a quality, safe construction project on time and on budget,” Gleason continued. “The need for health care, retirement care and training are very real concerns for us, and the financial burden to pay for those benefits should not be passed on to the hard-working taxpayers of Michigan.”
The Associated Builders and Contractors of Michigan, an employer group, says that prevailing wage laws artificially inflate wages, make public construction uncompetitive, and put an undue strain on contractors and state budgets.
“Repealing the state prevailing wage mandate would create more good paying jobs and help the construction industry compete with the 44 other states that either have no such artificial mandates or that have at least chosen to base wage determinations on more accurate and reliable measures,” the association stated. “Right now, Michigan is tied for worst in the country. We need to do better! “
But as reported by MLive.com, Gov. Rick Snyder has said he has serious problems with the bills that would repeal the laws. To get around a possible veto from the governor, a group called Protecting Michigan Taxpayers is reportedly about to begin collecting signatures for repeal. The Builders and Contractors support that effort, as does the Michigan affiliate of the National Federation of Independent Business (NFIB), a small employer group.
“Michigan taxpayers can no longer afford the outdated and wasteful Prevailing Wage Law, said NFIB State Director Charlie Owens. “The law forces taxpayers to be overcharged anywhere between 10 and 15 percent more than what a competitively bid job would cost without the Prevailing Wage Law mandated union wage requirement.”
Gleason of the Building and Construction Trades Council countered by telling MLive, "Let me tell you one thing, we're not going to take this lying down by any means.”
Diane Cadrain is an attorney who has been writing about employment law issues for more than 20 years.
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