REPORT: Prevailing Wage and Military Veterans in Minnesota: Applied Policy Brief

A new study released today finds that prevailing wage greatly improves economic outcomes for veterans. As many as 2,300 blue-collar veterans in Minnesota would be expected to separate from their construction jobs if Minnesota were to weaken or repeal its prevailing wage law.

Veterans are more likely to work in construction than non-veterans. Nationally, veterans account for 5.8% of the overall workforce but comprise 6.9% of all blue-collar construction workers. In Minnesota, veterans make up an even larger share of the construction workforce. Approximately 9.6% of all blue-collar construction workers in Minnesota are military veterans, above neighboring states and well above the 6.9% U.S. average.

Construction companies are also more likely to be owned by veterans than non-construction businesses in Minnesota. Economic data reveals that 10.9% of all construction firms with paid employees in Minnesota are owned by veterans. By contrast, veteran business owners only account for 8.0% of non-construction companies throughout the state, a 2.9 percentage-point difference.

The U.S. military has responded to these employment projections through the United States Military Apprenticeship Program (USMAP), which now accounts for 21.4% of all registered apprentices in the country. The typical construction apprenticeship through USMAP requires 8,000 hours of both classroom time and on-the-job training. As the construction industry grows and replaces retiring workers, apprentices from the military will become an increasingly important source of skilled construction labor.

Minnesota veterans who return home to become blue-collar construction workers and open construction companies have benefited substantially from prevailing wage. By preventing governmental units from undercutting privately-negotiated local wages, prevailing wage creates a level playing field for local businesses competing with out-of-area or foreign bidders.

The economic outcomes of Minnesota’s veterans would be significantly altered if the state decided to weaken or outright repeal its prevailing wage standards:

  • Construction occupations would become less attractive because the middle-class careers would be converted into low-paying jobs;
  • Over 2,300 blue-collar veterans would separate from their jobs in construction;
  • The total income income of all veterans employed in construction jobs would decline by $126 million;
  • Approximately 450 veterans would lose their employer-provided health plan; and
  • About 100 veteran workers would fall into poverty by 2018.

There are significant costs to repealing prevailing wage for Minnesota’s veterans. Construction will increasingly offer blue-collar veterans the best opportunity to earn a middle-class lifestyle as the manufacturing industry continues to experience long-term decline. Weakening or repealing prevailing wage standards reduces the attractiveness of employment in construction occupations for veteran workers.

By decreasing veteran worker incomes, reducing the number of veterans with employer-provided health insurance, worsening veteran poverty, hindering apprenticeship training, and shrinking the market share of veteran-owned construction companies, repealing state prevailing wage laws increases taxpayer costs on the backs of veteran workers who served their country. Strong prevailing wage laws, on the other hand, promote a middle-class economy.