Sunday, July 26, 2015

End prevailing wage laws.

The Sunday 7/26 Detroit Free Press caries an oped by Detroit Mayor Mike Duggan titled "Paying fair wage is right way to rebuild Detroit and state." The fair wage he's talking about is the prevailing wage put into place by law. It forces companies building public works projects to pay their workers wages equal to union wages whether workers are union or not. It's nothing but a special interest worker benefits plan giving some workers wages not available on the open market. Politicians do this in order to win the labor vote and no other reason. The idea that it guarantees a higher quality of worker is debatable. It implies that non-union workers are less than qualified and less trustworthy. Nonsense.

But a real problem is the cost to taxpayers for this special interest program. An article in the Detroit News in May of this year reports:

"A 2013 study from the Anderson Economic Group highlights just how costly the prevailing wage law is for the state.
Public universities, community colleges and school districts — or rather taxpayers — have to pay an additional $224 million a year, thanks to the law.
In addition to the support of many GOP lawmakers, the Michigan Chamber of Commerce and Associated Builders and Contractors of Michigan favor repealing the law."
So we see that there is $224 million per year that could be going to Michigan roads, or schools or returned to taxpayers.

But the real problem with the prevailing wage is that it violates the rights of businessmen and workers to negotiate among each other for the fairest wage. The law tries to force workers to be worth more to their employers that they would be in a open market. Of course it is the taxpayers who have to cough up the money not Mr Duggan or the unions.

In another News article from January of this year

"During the mid 1990s, the law was suspended by a federal district court ruling and, according to the U.S. Department of Labor, as non-union construction companies competed on an equal footing for the first time in decades, the state gained 11,000 construction jobs.
Under prevailing wage, union bosses get richer while non-union builders and contractors lose money, taxpayers get charged more, and school children have to do with less."
I agree. It is time to do away with the prevailing wage law and let the benefits of competition ensue.