In Illinois, the Prevailing Wage Act requires construction contractors to pay workers employed on publicly-funded projects the wage that is most commonly paid to construction workers in the county in which the work is being done. The rate varies from trade to trade and county to county.
It is a good wage—a wage which can support a family. Those who want to eliminate Prevailing Wage want to shift money from workers’ pockets elsewhere. But the facts show that the promised gains are never realized.
Doesn’t Prevailing Wage make the bidding process for public projects less competitive and cost governments, universities and school districts more money?
This is the most popular Prevailing Wage myth. Ohio, for example, repealed its Prevailing Wage law for school construction in 1997. A 2013 study found no evidence to support the assertion that Ohio saved money on school projects in the following decade. Schools are not “wasting” money on higher construction costs. In fact, investing in new infrastructure and in education are two sure ways to stimulate Illinois’ economy.
Doesn’t eliminating Prevailing Wage help the economy?
In a 2015 study analyzing the probable impacts of West Virginia repealing its Prevailing Wage law, researchers estimated that there would be a loss of income and revenue between $55.81 million and $84.06 million annually. Additionally a recent report showed Wisconsin’s upcoming Prevailing Wage repeal will cost the state nearly 9,000 jobs, $1.2 billion in economic output, $77 million in tax revenue and will export an estimated $500 million in construction investments out of state.
Also, Prevailing Wage laws actually stimulate the local economy. When local workers are paid Prevailing Wage on a local project, they spend their dollars at local businesses. The chart below shows what has happened in states that don’t maintain the Prevailing Wage—more work goes to out-of-state contractors.
Wouldn’t repealing Prevailing Wage level the playing field for all contractors?
The Prevailing Wage Act forces all contractors to bid based on the skill and efficiency of their workforce, saving taxpayer dollars by getting the job done right the first time. Eliminating Prevailing Wage just enables contractors to drive down wages and benefits. Studies have shown a drop in productivity in non-Prevailing Wage states.
Labor productivity is a critical component to the long run economic health of the United States. Given the size of the construction industry in the United States, productivity changes within the construction sector have large direct impacts on the national productivity and economic wellbeing of the United States. In 2014, new construction accounted for a 6.0% of the Real Gross Domestic Product in the United States. (United States Bureau of the Census).
How does Prevailing Wage help Illinois?
Studies across multiple states show reducing or eliminating Prevailing Wage has no impact on construction costs. According to The Chicago Reporter, “Lost wages and reduced consumer demand—as well as lost work, as low-wage contractors come in from out of state—would cut the state’s GDP by over $1 billion if the prevailing wage was eliminated.”
How can downstate companies afford to pay Chicago-set Prevailing Wages?
Prevailing Wages are set by county averages not by the state as a whole. Therefore wages for construction projects in Cook County differ from those in Sangamon County (Central Illinois) or Jackson County (Southern Illinois).
How does Prevailing Wage protect workers?
Without Prevailing Wage laws in place, contractors are able to hire unskilled and untrained workers which not only puts the worker at risk, but also other individuals who could be around the construction site. In Florida, a 19-year-old high school student who was working for a contractor was killed after falling off of a beam at a bridge construction site. It was his first week on the job and the contractor had not informed his team of the dangers prior to putting them to work. Prevailing Wage laws create a working atmosphere of skilled, knowledgeable, and drug-tested workers which in turn makes for a safer work site.