Michigan’s two leading construction trade groups find themselves on opposite sides of one key industry issue: prevailing wage.
Lansing-based Associated Builders and Contractors of Michigan (ABC) and its various local chapters wish to repeal the law that mandates union-level pay for all state-funded, public construction projects, claiming that the law wastes taxpayer dollars, said President and CEO Chris Fisher.
“We believe — and experience has shown — that prevailing wage repeal will save taxpayers hundreds of million of dollars a year,” Fisher said. “These are funds that can be used for additional construction or reinvested in our state.”
Specifically, Michigan is one of only a handful of states where the prevailing wage is set by union agreements.
“We think that it’s time for Michigan to keep pace with the rest of the country,” Fisher said.
His counterparts at Lansing-based Associated General Contractors of Michigan (AGC) take a different view. Instead, the organization sees prevailing wage as a “fairness issue and not a money-saving issue,” said Damian Hill, vice president of operations, communications and government relations at AGC.
Hill added that the law keeps construction wages higher and that the savings from repealing the law aren’t as high as they’re often made out to be. Reports from policy groups and academics have also noted that the repeal of prevailing wage could result in 11,320 job losses and lead to a decrease in Michigan’s overall gross domestic product.
Michigan lawmakers have tinkered with prevailing wage laws in the past. The state enacted the law in 1965 and it remained in place ever since, except for a roughly three-year period in the mid-1990s when prevailing wage was repealed.
ABC’s Michigan chapter and the affiliated Protecting Michigan Taxpayers (PMT) are currently leading the charge for the campaign to repeal the law once more.
Fisher, who is also reported to be a member of PMT, said there’s a “terrific chance” the law gets repealed this year. The organization is currently collecting approximately 250,000 signatures that it will then present to the legislature for a straight up or down vote. Should the legislature take up the issue and vote in favor of repeal, it would immediately become law.
Because PMT is pushing the issue as a citizen-driven initiative, it would not require the governor’s signature to become law if passed by the state Legislature.
Gov. Rick Snyder repeatedly has said he does not support repealing prevailing wage.
AGC’s Hill acknowledged that the competing industry association has a good chance of repealing the law if it’s done through the legislature, but said his organization has been working closely with lawmakers to educate them on the importance of keeping prevailing wage intact.
There’s also a possibility that a repeal could be taken directly to the voters through a ballot initiative, Hill said. In that instance, he said he’s far more confident that prevailing wage would remain in place.
Contractors are split on whether the repeal of prevailing wage would be good, bad or neutral, as MiBiz has previously reported.
In an October 2015 report in MiBiz, Mike Stobak, vice president at Southfield-based general contractor Barton Malow Co., said that a large amount of construction work that uses prevailing wage goes to public schools, necessitating well-paid, well-trained workers.
“These are buildings that our kids use, and you want top-tier, top-skilled craftsmen building these buildings,” Stobak said of Barton Malow’s work on K-12 schools. “It’s kind of the old joke (that) the low bid isn’t always the best bid. So when people are talking about the savings, I don’t agree that the savings are there the way they tout they are.”
Supporters of repeal, however, believe the savings will come from less onerous regulations versus a reduction in wages.
FILLING THE GAP
While the two trade groups duke it out over prevailing wage, executives at both organizations say that a continued focus on workforce development and narrowing the skills gap remain crucial for the state’s construction industry.
“Michigan is facing the perfect storm of robust economic activity, an aging workforce and a population that is smaller than it was 10 years ago,” Fisher said. “These three factors coming together means there is a skilled trades shortage.”
Fisher and Hill separately said that they support the Snyder administration’s focus on skilled trades training and workforce development for all industries.
The AGC credits Snyder’s visit to one of the organization’s Career Day events as putting an increased emphasis on the topic, Hill said.
Both groups acknowledge that one of the most important aspects of an enhanced workforce development policy needs to be done at the federal level. Specifically, they’re pushing the federal government to open up more scholarship opportunities for trades schools, as opposed to just for traditional four-year degrees.
“As Michigan’s economy gets better, we’re not going to have the people to do the work. That’s going to be a problem,” Hill said. “We don’t want to turn down jobs and the state doesn’t want to lose economic activity where projects don’t get built because there isn’t an available workforce. I think the state is moving in the right direction but there’s still more to happen.”
Sidebar: Policy - Construction
- The Michigan chapter of ABC and its affiliates are working to repeal the law that mandates union-level wages for publicly-funded construction projects.
- The group is trying to get the required number of signatures to put the issue before the state Legislature for a simple up or down vote that would not require the signature of the governor.
- AGC is working with legislators to educate them on the importance of maintaining prevailing wage.
- Both ABC and AGC have invested heavily in furthering skilled trades training and workforce development. The groups are working closely with high schools, career technical training centers and four-year universities to bolster capacity for their initiatives.