Michigan construction is set to be more lucrative, higher quality, and more local. It’s all because of a tried-and-true state practice that’s coming back.
Need to Know
- Michigan is bringing back a law that will pay construction workers more for state projects, leading to better-quality work and more local opportunity.
- Prevailing wage ensures that construction workers receive a fair amount based on where they live and what they do.
- After the Michigan legislature removed prevailing wage in 2018, more national companies could bring poorly paid, out-of-state laborers to complete jobs.
LANSING, Mich.—Don’t expect shoddy craftsmanship on state construction projects, thanks to a reinstated rule that will pay laborers fair wages and potentially increase the share of local companies that take on state jobs.
Michigan brought back a law that requires companies who take on state projects to pay fair, competitive wages to contractors they hire on the job, beginning in March. The rationale for the order, which is widely known as prevailing wage, can best be boiled down to a kitchen-table saying: “You get what you pay for.”
“Reinstating prevailing wage ensures that contractors bidding on state construction projects will pay fair wages, guaranteeing that these projects will be built to the highest standards by skilled craftspeople,” said Price Dobernick, business manager of the United Association of Plumbers and Pipefitters Local Union 333.
Prevailing wages, which are the minimum hourly pay that people in certain positions must receive on a government-contracted job, are a long-tested work practice in the United States, dating back to The Great Depression.
But in recent years, 24 states—including Michigan—repealed these laws, meaning that any company could swoop in to take on a contract as long as it had the people to do it.
As a result, out-of-state companies flooded out the market for contracts, using poorly paid labor to undercut local competition. Michigan’s government believes that by reinstating prevailing wage, not only will residents get better-quality work, but it will also open the door to local firms to win contracts.
“I’m proud to get this done, especially as we create jobs by fixing roads and bridges, replacing lead pipes, expanding high-speed internet, and installing electric vehicle chargers,” Gov. Gretchen Whitmer, who passed the order last fall, said.
Prevailing wages are calculated based on average local pay, benefits, and the cost of training. They can increase wage significantly for highly skilled workers who have a shortage of local employers to choose from.
For those thumbing up their glasses and asking, “Doesn’t that mean more taxes?”, fear not. Studies conducted by the Midwest Economic Policy Institute and similar organizations have found that prevailing wage does not increase state expenditures, and conversely, eliminating prevailing wage doesn’t lead to savings, the state says.
Prevailing wage only applies to state contracts, which companies have no obligation—but every right—to bid for. The new order applies to all contracts posted after March 1 of this year.
In press releases, workers’ unions welcomed the development.
“Requiring a prevailing wage to be paid in state contracting means safe, quality construction projects completed by highly skilled workers,” said Michigan AFL-CIO president Ron Bieber in an October press release. “It means working women and men getting paid a decent wage that can support a family. It means no more race to the bottom to find the cheapest labor while companies pad their bottom line. It also means a fair competitive bidding process for contractors.”
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