/ Articles / Assembly committee passes motion to repeal prevailing wage

Assembly committee passes motion to repeal prevailing wage

Issue lays bare GOP divisions between moderates, conservatives

June 02, 2015 by Richard Moore

A conservative revolt against legislative leadership continued last week within the Republican Party, as the Assembly Labor Committee voted to repeal the state’s prevailing wage laws.

Conservatives want the laws gone, saying they artificially inflate government construction costs, but both Assembly speaker Robin Vos (R-Rochester) and Senate majority leader Scott Fitzgerald (R-Juneau) have resisted moving the legislation through their respective chambers.

Several weeks ago, Sen. Steve Nass (R-Whitewater) tried to bypass Fitzgerald by scheduling debate and a vote in the Senate Labor Committee. However, his bid failed 3-2 when Sen. Howard Marklein (R-Spring Green) jumped ship and voted with committee Democrats.

In Round Two, over in the Assembly, Rep. André Jacque (R-De Pere), chairman of the Assembly Labor Committee, also scheduled the vote for deliberation, and this time the bid to repeal the prevailing wage prevailed.

After the 5-4 vote, Gov. Scott Walker indicated he would sign a full-repeal measure if it reached his desk.

Under the law, the state’s Department of Workforce Development determines the prevailing wage for each affected industry for state and municipal projects. Typical projects include public infrastructure and schools.

Regional wage differences are factored in, and prevailing-wage supporters say the law ensures that workers are paid a decent and fair wage, while remaining sensitive to geographic cost differences.

Opponents, though, say the law stamps out competition in project bids by taking away any incentive for companies to compete and by blocking companies that could perform work for a lower cost, driving wages higher than what a private-sector market would pay. They also say government is biased toward higher wages in its calculations.


Protection or reform

After the committee vote, Vos essentially said he wanted to kill the bill to save it. That is, he doesn’t have the votes to repeal prevailing wage and it could doom a reform package he and legislative leaders are preparing.

Conservatives aren’t buying that; they want to see the details of any such package and fear a proposal will be slipped into the budget at the last minute without substantive debate.

Meanwhile, the bill’s co-author, Sen. Leah Vukmir (R-Wauwatosa), continued to stress the benefits of repeal.

“The potential savings that would be achieved by repealing Wisconsin’s prevailing wage laws are staggering,” Vukmir said. “A study by the Wisconsin Taxpayers Alliance estimates that state and local governments could have saved as much as $299 million in 2014. When you consider the possible savings from eliminating prevailing wage, it is important to remember that those savings could be redeployed in a multitude of ways, ranging from additional projects to tax relief depending on the local circumstances.”

Vukmir said supporters of the current law seem to believe they are entitled to artificially inflated salaries and profits.

“When you consider the financial impact of Wisconsin’s prevailing wage laws, it is difficult to rationalize how preserving these antiquated laws could possibly be a priority in the context of the local and state budget,” she said. “That reason alone ought to be enough to ensure that this Legislature moves to repeal Wisconsin’s prevailing wage laws. This bill provides a clear path to providing taxpayers, municipalities, and school districts in Wisconsin further relief.”

Americans for Prosperity Wisconsin has entered the fray as well, announcing a campaign of radio ads around the state. The ads ask citizens to contact Vos to encourage a full vote by the Assembly.

Democrats were voicing their opposition to repeal, but, given their entrenched minority status, Republican allies seemed better positioned to block repeal. Nonetheless, Rep. David Bowen (D-Milwaukee) said prevailing wage ensures that Wisconsin’s tax dollars go to Wisconsin companies and Wisconsin workers, though he didn’t explain how it did that.

“I wish the Republican majority had the same sense of urgency for bringing good jobs back to the city of Milwaukee as they have for taking protections away from Wisconsin’s workers and Wisconsin companies,” Bowen said. “Repealing prevailing wage will not create jobs, and it will do nothing to address the $2.2-billion budget deficit that their irresponsible fiscal policies have created; it will only lead to a flood of low-quality contractors and less-skilled workers from out of state, at the expense of Wisconsin workers and their families.”

Also weighing was the Wisconsin Institute for Law & Liberty, which called the prevailing wage a super minimum wage for the few. Using figures of cost savings estimated by the Wisconsin Taxpayers Alliance if market wages rather than prevailing wages are used, WILL said it calculated savings around the state for school projects approved by referenda over the past five years.

Specifically, WILL stated, the Taxpayers Alliance estimated that savings from capital projects under market wages would have ranged from 9 percent to 13.5 percent. WILL applied that range to school bond amounts.

“Using our methodology, we conclude that districts would have saved at least $163.2 million and $244.8 million over the last five years,” WILL stated.

The study broke down the potential savings by school district. In the Northwoods, WILL estimated savings for the Rhinelander school district at between $1.2 million and $1.8 million if market rather than prevailing wages had been used.

The Wisconsin Contractor Association, a pro-prevailing wage group that also fought against the state’s new right-to-work law, argues that the prevailing wage guarantees higher-quality work, and that wages aren’t the main reason for excessive costs anyway.

“Prevailing wages are not driving construction costs higher — construction materials are,” the group states on its website. “Key construction materials like steel, concrete and liquid asphalt have increased more than 200 percent — sometimes as high as 300 percent — in the past decade and are the primary driver for escalating costs on projects. And in road construction, for instance, wages only comprise about 25 percent of construction costs.”

And about that higher quality?

“Prevailing wages fund worker-development and skills-training and create cost-saving efficiencies,” the website states. “Workers that are better trained can utilize the latest technologies, save time and, ultimately, save money for taxpayers.”

Richard Moore may be reached at [email protected]

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