Opponents of prevailing wage say the law increases construction costs on all projects: federal projects, state projects, city projects, and even school projects.
In reality, school districts and their communities would benefit from passing a prevailing wage ordinance. Prevailing wage does not increase construction costs, but rather increases worker earnings and grows the economy.
80 percent of all peer-reviewed studies over the last 15 years find that prevailing wage has no statistical impact on school construction costs. Using state-of-the-art statistical methods, the studies have found no cost difference between schools built with prevailing wage and those built without prevailing wage.
A study by Peter Philips finds that both schools in rural and urban areas are not costlier with prevailing wage (figure below). Additional studies found that Ohio did not save money from exempting schools from paying the prevailing wage in 1997, that there was no difference in construction costs for elementary schools, secondary schools, and universities between jurisdictions with and without prevailing wage laws in West Virginia and its neighboring states, and that new school construction costs in Kansas and neighboring states that eliminated prevailing wage did not find a difference in construction costs per square foot.
A new Economic Commentary by the Midwest Economic Policy Institute (MEPI) [PDF] discusses how prevailing wage increases economic outcomes for workers, communities, and the state as a whole. Due to higher personal incomes, blue-collar construction workers in the 25 states with average or strong prevailing wage laws contribute $1,325 more per year in federal income taxes than states with weak or no prevailing wage law. Construction workers who are paid the prevailing wage are 5.8 percentage-points less likely to earn incomes below the official poverty line and are 4.1 percentage-points less likely to receive food stamp benefits.
All groups of people in communities benefit from prevailing wage. Prevailing wage lowers income inequity, closes the employment gap between racial or ethnic groups, and supports veterans who are disproportionately more likely to be construction workers. Construction workers in prevailing wage states and communities are highly trained. Prevailing wage ensures construction workers will want to stay and use their craft in the field long-term because of the middle-class wage.
Prevailing wage promotes better quality schools that are built at no additional cost to the public, ensures workers earn a middle-class income, and improves economic outcomes. While earning a prevailing wage, construction workers can support their families and use their skilled craft to create sustainable, safe public infrastructure for the community. School districts across the United States should pass a prevailing wage ordinance to build strong, middle-class careers.
Cover Photo: “Rogers High School” by Bill Klotz, Finance & Commerce (2014).
Midwest Economic Policy Institute 