Find Prevailing-Wage Laws Not Hiking Tab Of Gov't Construction

Prevailing-wage laws do not automatically equal higher government spending for construction projects, according to a study by the Washington-based Economic Policy Institute issued July 8.

NOOSHIN MAHALIA: 'Wage laws change landscape.' The report seeks to dispel the claim by opponents of prevailing-wage laws that they mean added costs, and it purports that the methodology these advocates use lacks empirical evidence that prevailing-wage laws pass the burden on to taxpayers.

"It just makes an assumption that all contractors are going to hire lower-wage workers," said the report's author, Nooshin Mahalia, in a phone interview. "That isn't necessarily the reality."

Ms. Mahalia's report states that the labor costs account for 25 percent of construction costs and that improved productivity in projects offset the costs of higher wages. She also noted that contractors may provide wages at prevailing rates even if those do not apply to them.

"Prevailing-wage laws may very well change the landscape of the competition, but that doesn't mean that they raise costs," she said. "They may affect the guy that pays very low wages to workers and may not be able to compete as successfully as the guy who pays decent wages and offers benefits. There is always an interest in keeping wages down for workers."

Ms. Mahalia added that any public contract could have various factors adding to its cost, but that it was unfair to focus the blame prevailing-wage laws.

"We need to explore those reasons," she said, "but we don't need to go into this waste bin of ideas and scrimmage through for theories that fit a purpose."