Prevailing wage law rife with problems

By MIKE NICHOLS | May 2015

Four months ago, only 31% of Wisconsinites had ever heard of the term “prevailing wage,” according to the January WPRI Poll of Public Opinion. And it’s a pretty safe bet most of the rest of us had a superficial understanding.

I know I did. I thought the prevailing wage law used surveys of contractors in various parts of Wisconsin to set an average wage that the state, local governments and school districts had to pay private contractors for public construction jobs.

In fact, because of flaws in the surveys, prevailing wages are not averages, the Wisconsin Taxpayers Alliance (WTA) pointed out in a paper released in March. If prevailing wages reflected average wages and benefits, taxpayers in this state could save hundreds of millions of dollars each and every year. If state and local project managers were able to work out deals with reputable contractors who were willing to work a little harder for a little less than most of their competitors, it stands to reason, the savings would be even more dramatic.

But WPRI has found that’s far from the only issue.

While the WTA took a look at prevailing wage issues from the 30,000-foot level, we asked several veteran Wisconsin journalists to take a closer look at how the prevailing wage law impacts Wisconsin businesses, workers and government employees each and every day. And what we heard is that the prevailing wage law is often somewhere between a burden and a nightmare.

The law makes some contractors spend hundreds of hours filling out forms, trying to communicate with bureaucrats, lodging appeals and scratching their heads when they’d rather be working. Those who land the contracts have to deal with internal issues that arise from paying normal wages to some employees and government wages to others. Other contractors just give up trying to compete for government projects altogether.

It’s not fair, at the same time, to pretend “government” is some sort of monolithic sinkhole full of bureaucrats who just don’t care. We found smart elected officials and administrators who have a hard time planning projects because of ever-vacillating prevailing wage rates, who want to provide better schools for kids but struggle to explain the exorbitant costs to taxpayers, who have a hard time even determining which projects are subject to prevailing wage requirements and which ones are not. Wisconsin’s prevailing wage law, we found, applies to a lot more than just construction projects.

There’s ample evidence, in sum, that Wisconsin’s prevailing wage law is harming taxpayers and contractors, frustrating good government servants and diverting resources away from those in need. Some legislators pondering the prevailing wage issue right now think the law can somehow be “fixed” rather than repealed.

Having read the stories that accompany this piece in PRImings – all part of a WPRI Special Report that we will be adding to in the days ahead – it’s hard to see how.

Mike Nichols is president of WPRI.