Study: Repeal of prevailing wage produced no significant savings to WV

“There are no savings to the taxpayers from repeal of the prevailing wage law,” Steve White, director of the Affiliated Construction Trades, said a news conference to release the report.

ACT and the West Virginia State Building Trades Council commissioned the report by Michael Kelsay, economics professor at University of Missouri-Kansas City, and Frank Manzo of the Midwest Economic Policy Institute.

The authors concluded that repeal of prevailing wage, in May 2016, has not had a statistically significant impact on school construction costs, based on analysis of 107 school construction projects bid between July 1, 2015, and June 13, 2018, valued at more than $500,000.

It notes that a report by the state School Building Authority in 2017 also reached a similar conclusion, finding that school construction costs declined marginally, from $255 per square foot to $252 a square foot.

White said the report focused on school construction because it provides an “apples to apples” comparison, as opposed to the diversity of other publicly funded construction projects.

The authors of the study said the West Virginia findings are consistent with the results of 19 of 20 national studies on prevailing wage, which found that prevailing wage had no significant impact on construction costs.

Since repeal of the state prevailing wage, the study found that hourly wages have declined for three of the four largest construction trades, while apprenticeship training has plunged nearly 20 percent, from more than 5,400 apprentices to fewer than 4,400.

The study concludes that, with the repeal of prevailing wage, contractors — increasingly, out-of-state companies that are underbidding local contractors — have less incentive to invest in training skilled workers.

It also finds that state workplace injury rates for construction workers have increased 17 percent since the repeal of prevailing wage, and cites examples of projects hampered by construction delays and shoddy workmanship, although White said those are preliminary findings that require additional study.

White said he hopes the “data-driven report” will persuade legislators to consider reinstating the state prevailing wage law.

“Our strategy is to engage with both sides of the aisle to try to fix this problem,” he said.

However, state AFL-CIO President Josh Sword said a more realistic goal is to make prevailing wage a campaign issue in 2020.

“I don’t think any people in this room have confidence that this Legislature [will do] anything about this,” he said at the news conference.

Prevailing wage was one of the first issues the newly Republican-controlled Legislature addressed in 2015.

That year, now-Senate Finance Chairman Craig Blair, R-Berkeley, sponsored legislation to repeal prevailing wage outright, declaring that “without prevailing wage, you could build five schools for the price of three” and predicting savings of $200 million to $300 million a year on publicly funded construction projects.

During that session, Blair’s proposal was ultimately modified to require WorkForce West Virginia to survey contractors and to recalculate prevailing wage rates for all categories of construction work.

However, when the recalculated wage rates did not decrease wages significantly, the Legislature came back during the 2016 session and on mostly party line votes, repealed prevailing wage outright.

Prior to that repeal, leadership in both the House and Senate rejected requests for studies of the fiscal and economic impact of repealing prevailing wage.

The state Prevailing Wage Act was enacted during the Great Depression in an effort to prevent out-of-state contractors paying low wages to itinerant workers from under-bidding local contractors for state-funded construction projects.