Sean O'Leary: Remember Facts in Prevailing Wage Debate
Huntington Herald-Dispatch - The debate over West Virginia's prevailing wage law continues months after the Legislature passed S.B. 361, which required Workforce West Virginia to develop a new methodology for determining prevailing wage rates using all available economic evidence. Read
Recently, the Joint Committee on Government and Finance rejected the proposed new methodology, in part because it did not rely only on wage data from U.S. Bureau of Labor Statistics surveys to set prevailing wage rates.
With all the controversy surrounding the determination of prevailing wage rates, it's important to keep the facts about the issue in mind. And the facts are clear on not only the impact of the prevailing wage in West Virginia, but how prevailing wage rates are best determined.
Fact No. 1: The prevailing wage has not been shown to increase construction costs in West Virginia. A growing amount of empirical research has consistently found there is little to no evidence that prevailing wage laws inflate public construction costs. In fact, West Virginia's school construction costs are lower than our surrounding states without prevailing wage laws.
Fact No. 2: Bureau of Labor Statistics surveys are unsuitable for determining prevailing wage rates. The prevailing wage requires wages paid on public construction projects to be no less the wages paid on similar work in the area where the construction is performed. But the surveys used by the BLS do not collect data separately for residential and nonresidential construction, which require greatly different skills and pay rates. Further the BLS surveys do not distinguish between where the work is done and where the construction business is located, making it impossible to determine an accurate wage for public construction projects in a particular area. That's why 31 of the 32 states with prevailing wage laws conduct their own survey.
Fact No. 3: Weakening the prevailing wage could weaken our economy. Prevailing wage laws help attract and retain highly skilled and experienced workers. States with prevailing wage laws have more apprenticeship programs for their workers and are associated with fewer workplace injuries and lower workers' compensation costs. Prevailing wage laws can also strengthen the economy, by helping ensure public construction projects are done by local workers at a fair wage. This helps grow the economy, as local workers spend their wages in their community, as well as helping grow the local tax base. Studies have also shown that prevailing wage laws increase the wages and benefits of all construction workers, not just those working on a prevailing wage project.
Fact No.4: Since government is the largest purchaser of construction services, it does not operate in "free market." Since no one expects government to stop building schools, roads, and municipal buildings, the real question becomes how government procurement policies should level the playing field and support the local economy.
With these facts available, it's hard to see what the controversy is about. Instead, the facts make it clear that West Virginia's prevailing wage law creates a more productive and efficient construction industry. The savings and benefits promised to states that repeal or weaken their prevailing wage laws have always failed to materialize. Doing so in West Virginia would hurt local workers, send tax dollars out of state, and provide the public with a poorer return on its investment.