MN Prevailing Wage Works
MN Prevailing Wage Works
Those that want to weaken prevailing wage make the following arguments:
· Prevailing Wage raises construction costs
· Prevailing Wage is just an arbitrary union wage
· Prevailing Wage prevents local contractors from getting work
· Prevailing Wage rates are not calculated properly
All of these arguments are proven false by looking at the facts which are:
Construction Costs are NOT Higher with Prevailing Wage
MNDOT projects in 2010 came in $67,433,269 UNDER budget WITH PREVAILING WAGE
Anyone that says costs are higher because of prevailing wage is not talking about what is really happening in the construction industry – this number clearly shows that labor costs are not the driver of construction costs. Materials, safety, project completion time, and many, many other issues are much bigger factors in the cost of a project.
This information was obtained directly from MNDOT – it is public information – simply ask them for it and they will show it to you.
Prevailing Wage is NOT always the Union wage
The Legislative Auditor studied this very issue and determined that 51% of the time the union rate is the same as the prevailing wage.
The report also determined that the percentages are a lot higher in metropolitan areas –this makes sense, union density in these areas is higher – so it is an accurate reflection that the union rate would prevail more when there is higher density of union contractors.
This information can be found be found on pages 35-42 of the Legislative Auditor’s Report
http://www.auditor.leg.state.mn.us/ped/pedrep/prevailingwages.pdf
Prevailing Wage DOES NOT Negatively Impact Local Contractors
In fact the opposite is true if you look at the data:
In SD – 55% of DOT dollars spent in 2010 were awarded to out of state contractors
In ND – 46% of DOT dollars spent in 2010 were awarded to out of state contractors
In MN – 8% of DOT dollars spent in 2010 were awarded to out of state contractors
These numbers speak for themselves – MN prevailing wage is working very well to protect local contractors from cheap labor out of state competitors.
Prevailing Wage IS Calculated Properly
Those that wish to weaken prevailing wages often will point to the way it is calculated in MN – they will argue the way we calculate it is way out in left field and doesn’t work.
The fact is every state that calculates their own prevailing wage rate does it slightly differently, but almost all of them use some form of the Mode – which is what Minnesota uses.
The Legislative Auditor looked at this issue and actually ran the numbers using 4 different methods of establishing the prevailing wage used in other states:
“The four alternatives for calculating prevailing wages that we evaluated would have resulted in the same 2005 prevailing wages in the majority of cases, but could have moderated some of the less representative 2005 rates.”
Page 40 – Legislative Auditors Report
http://www.auditor.leg.state.mn.us/ped/pedrep/prevailingwages.pdf
This is hardly a finding that shows the way we calculate prevailing wage in Minnesota is producing way out of line results.
The bottom line is that there is no problem with the way MN prevailing wage is calculated – and proponents of changing the calculation simply want the rate lowered for their own benefit.
Conclusion:
The claims by those that wish to change or eliminate prevailing wage in MN are easily proven to be false by looking at actual data. Prevailing wage in MN is working well – as evidenced by the low rate of outstate contractors getting work here, the savings to taxpayers seen on 2010 MNDOT projects, and the accurate way local prevailing wage rates are set here.
Those that claim there are problems with prevailing wage really only have one problem:
They want to pay workers less money. Proponents of repealing or changing prevailing wage want to drive down the prevailing wage rate so contractors can keep more money by paying workers less.
It’s that simple – and a number of public officials both in Minnesota and Congress, both Democrats and Republicans, recognize this fact, and that is why they do not support weakening prevailing wage in Minnesota.