Michigan Repeals Prevailing Wage, and Missouri Should, Too

Good policy doesn’t have to be complicated. That’s the lesson we should take from the way Michigan legislators took on their prevailing wage (sometimes called a “public construction minimum wage”) law. Here in Missouri, some action was taken in the 2018 legislative session to lightly modify Missouri’s version of it. But last week in Michigan, they showed us how it should be done, achieving an important victory for good governance and free markets by simply repealing the state’s prevailing wage law.

With the legislative initiative process Gov. Rick Snyder, who supports the prevailing wage law, does not have to sign the measure. Instead, by meeting a signature threshold and being approved by both chambers, it becomes law immediately.

Rep. Lee Chatfield, R-Levering, said the measure eliminates a carve-out.

“The success of the United States of America was not made by a government mandate of a prevailing wage. The success of our state did not occur because we had a government mandate and a government carve-out,” he said.

Prevailing wage laws force taxpayers to spend more than they should have to on construction labor for public projects. In fact, the research on prevailing wage laws suggests they significantly inflate the cost of public construction projects. At best, the consequence is an inefficient use of taxpayer money. But in some cases, the increased cost is prohibitive, meaning that a potentially beneficial project never even gets started. That could mean putting needed improvements to public services, including schools, on an indefinite pause while additional funds are sought out. Creating special advantages or, as the Michigan legislator put it, “carve-outs,” for particular industries doesn’t just hurt taxpayers in the short term. It also causes long-term, compounding damage as services that might be necessary today are put off.

It was disappointing that in an otherwise successful session, the legislature failed to repeal Missouri’s prevailing wage. As I’ve said before, reconstituting how the wage is conjured is not the same thing as repeal, and yet that is mostly what the legislature passed in 2018. It is true that HB1729 may provide some relief to local governments by exempting projects below $75,000 from the prevailing wage, but that strikes me more as a way of preserving a bad system by reducing the number of communities damaged by it. Rather than being trimmed, the prevailing wage needs to be pulled out of the law, root and stem.

If Michigan (!) can do it, Missouri can, too. I hope repeal will be on the docket in 2019.

Michigan Repeals Prevailing Wage, and Missouri Should, Too

Patrick Ishmael