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State mum on prevailing wage policy as construction group pushes back

BY Friday, July 29, 2022 02:03pm

The Whitmer administration’s announcement last year to reinstate prevailing wages on state projects costing more than $50,000 quickly gained support among union construction companies while opposing contractors called the policy a “waste” of public funding. 

“For the state to waste taxpayer money to pay a premium serving union shops does not seem fair or appropriate to me,” EV Construction Co. President and CEO Mike Novakoski told MiBiz. “We are paying a fair wage and doing all the training necessary to have highly skilled, competent workers.”

Associated Builders and Contractors of Michigan — a trade group representing about 900 construction firms across the state — made its opposition formal last week when it filed suit in the state Court of Claims against the state Department of Technology, Management and Budget. The Mackinac Center Legal Foundation joined ABC of Michigan in the suit challenging the state’s policy that union wages be paid to contractors working on state projects costing more than $50,000.

The lawsuit claims Whitmer violated the separation of powers by unlawfully reinstating a policy that was repealed by voter-initiated legislation in 2018. ABC of Michigan led the signature-gathering process to put the measure on the ballot in 2018, an effort that cost the trade association more than $3 million, said ABC of Michigan President Jimmy Greene. 

“We solicited that answer right from the time (Whitmer) brought the issue up in October,” Greene said. “None of that makes sense to me and the question is: Can the governor vacate state law? If it is decided that she can, then for us at ABC, we have to go back and close whatever loophole that allowed her to be able to do that.”

Whitmer announced her plan to reinstate union-rate wages for state projects in an Oct. 21, 2021 press conference. The prevailing wage requirements were posted on the Department of Technology, Management and Budget’s website on March 1, 2022. Greene claims the new policy has been part of two contracts so far for new state projects.

Officials from the Michigan Department of Technology, Management and Budget (DTMB), as well as the governor’s office, did not respond to a request for comment on the lawsuit.

State discretion

“By reinstating prevailing wage, we are ensuring that working people get treated with dignity and respect, which starts with a fair wage,” Whitmer said in a statement announcing the policy in October. “As governor, I am proud to stand shoulder to shoulder with working people and unions who built the middle class. By reinstating prevailing wage, we are ensuring working people can earn a decent standard of living, saving taxpayers money and time on crucial infrastructure projects, and offering Michigan a highly-trained workforce to rely on as we build up our roads and bridges, replace lead pipes, install high-speed internet, and more.” 

Tom Lutz, executive secretary-treasurer of the Michigan Regional Council of Carpenters and Millwrights, previously applauded Whitmer’s decision to restore the prevailing wage requirements on certain state projects. 

“This decision protects Michigan’s investments in infrastructure because when prevailing wages are the expectation, contractors have to compete on a level playing field based on the quality of their skilled work, not on the exploitation of their workers,” Lutz said in a statement after Whitmer’s announcement in October.

The Detroit News also cited two attorneys at the time who believed Whitmer had the authority to enact the policy based on the state DTMB’s discretion in getting the “best value” when awarding contracts. 

Greene said ABC of Michigan has yet to hear a response from the state since Whitmer’s October 2021 announcement about reinstating prevailing wages for state projects. Freedom of Information Act requests also have been filed to get answers, so far without success, Greene added. Filing a lawsuit against the state was a “last resort,” he said.

‘Political statements’

Greene said about 10 to 20 percent of ABC of Michigan’s members work on prevailing wage projects. He added that the state’s requirement still allows ABC’s members to bid on projects, but companies that don’t currently use prevailing wages would have to increase their costs by 30 to 40 percent to manage all of the class categories to adopt the new operating structure.

“The idea that non-union workers are making subpar wages is an absurdity,” Greene said. “They vary from trade to trade, it’s impossible to figure out what the discrepancies are. It’s a cheap way for people to advance a political statement. The elimination of prevailing wage does not lower the standards for construction. We’re not talking about a lack of quality, timeliness or safety. We believe the job should go toward the lowest qualified bidder.”

Novakoski echoed Greene’s comments, adding that union shops are equally skilled as non-union contractors. EV Construction occasionally participates in prevailing wage jobs, which tend to cause tension within the company because workers are paid at different rates, he said.

“People feel slighted that they aren’t able to go to this higher paying job and nobody really understands why, they just look at it as free money,” Novakoski said. “It creates challenges in our own rank and file of employees being upset.”

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