West Virginia, which appears poised to become the nation’s 26th right to work state, may soon enact another major labor law reform. The state Senate is set to vote on a bill repealing the state’s prevailing wage laws. The legislation, HB 4005, was voted out of the Senate Government Organization Committee on Monday, February 1, and now moves to the full Senate.
Prevailing wage laws set price floors for contractors working on government-funded projects. This often turns out to be the union wage, which hampers nonunion contractors’ ability to bid for such projects.
Prevailing wage laws—along with project labor agreements, which impose prevailing wage and other requirements that favor union contractors on a per-project basis—disproportionately affect minority contractors, many of whom are not unionized. That impact may be unintended today, but it wasn’t always so. The federal prevailing wage law, the Davis-Bacon Act, was intended to disadvantage African American workers on federal construction projects. Davis-Bacon’s shameful history should make other laws like it similarly suspect.
The West Virginia legislature amended the state’s prevailing wage law during its last session. But ultimately, prevailing wage laws tilt the contracting playing field in favor of unions, at the expense of nonunion workers and taxpayers. Because they increase labor costs for publicly funded projects, prevailing wage laws shortchange taxpayers by forcing them to pay more for public services.
A November 2013 study by the Anderson Economic Group, an economic consultancy based in East Lansing, found that Michigan’s prevailing wage law costs taxpayers and public educational institutions an extra $224 million a year.
Wisconsin enacted a partial repeal of its prevailing wage law in July 2015. The repeal provision, part of a contentious budget bill, lifted the prevailing wage requirement for municipal projects, but kept them in place for state ones. Still, it likely will lead to large savings. Had Wisconsin school districts paid market wages instead of prevailing wages for projects approved by voter referendum, they would have saved at least $163.2 million from 2010 to 2014, according to calculations by the Wisconsin Institute for Law and Liberty.
Prevailing wage laws are bad policy, and unjust to boot. Reform attempts won’t change that. They should be repealed.