Wisconsin Taxpayers Alliance Study Concludes Law is Flawed, Annually Costing Taxpayers Hundreds of Millions of Dollars
Representative Rob Hutton (R-Brookfield) and Senator Leah Vukmir (R-Wauwatosa) have introduced Assembly Bill 32/Senate Bill 49, companion bills to repeal the state’s prevailing wage law. Wisconsin’s prevailing wage law requires state and local units of government to pay “prevailing wages” – not market wages – to workers who work on certain public works projects. To determine prevailing wages in Wisconsin, the Wisconsin Department of Workforce Development (DWD) collects wage data via employer surveys and uses a statutorily-set process to set wages to be paid on public works projects. Prevailing wage law opponents contend the state’s prevailing wage laws inflate the cost of public works projects and suppress contractor competition for such projects. Supporters of the law argue such laws ensure workers are paid a fair wage and that there is insufficient evidence that repealing the prevailing wage law would result in meaningful savings on public construction projects.
Monday, the Wisconsin Taxpayers Alliance released a report concluding that Wisconsin’s prevailing wage law costs taxpayers up to $300 million annually in inflated public construction costs. The report attributes these higher costs, in part, to the low response rate to DWD’s surveys, ultimately skewing the state-set prevailing wages. The Wisconsin Taxpayers Alliance noted DWD’s employer survey to set prevailing wages received a response rate of only 10 percent, compared to 76 percent for the federal government. The Wisconsin Department of Administration, in its fiscal estimate of the legislation, acknowledged this low response rate. In addition, rather than using all wage survey responses to calculate prevailing wages, Wisconsin, uniquely according to the Wisconsin Taxpayers Alliance, averages only the upper portion of the wage distribution it receives. As a consequence, the report determined Wisconsin’s prevailing wage law results in overall compensation packages which are 44 percent higher than Bureau of Labor Statistics package rates.
During a Wednesday press conference on the Wisconsin Taxpayers Alliance report, Rep. Hutton said legislative Republicans are considering whether action on reforming, and possibly repealing, the state’s prevailing wage laws should be included in the 2015-17 biennial state budget bill or as stand-alone legislation. Echoing comments he had made earlier in the week, at the press conference Bill Smith, NFIB Wisconsin state director, called upon Wisconsin legislators to repeal Wisconsin’s prevailing wage law and to allow the free market to determine wages in the public construction industry.
Supporters of the legislation include Associated Builders and Contractors of Wisconsin, the National Federation of Independent Business-Wisconsin Chapter, Americans for Prosperity, the Metropolitan Milwaukee Association of Commerce and the Wisconsin Rural Waters Association. Opponents include the Wisconsin Transportation Builders Association, One Wisconsin Now and a number of trade unions. A full list of supporters, opponents, and other interested parties may be found at the Government Accountability Board’s website.