On Prevailing Wage

Bear with me because this issue is boring, difficult to explain, even more difficult to listen to someone explain it, and most of all…incredibly important to your community.

Included in the budget that Rep. Garthwaite supported was a provision to expand the state’s prevailing wage requirements. The prevailing wage law, first passed in 1931 mandates that workers on public projects with a certain cost be paid “prevailing wage rates.” These rates essentially equate to union-scale wages, which are very, very high.

When Governor Doyle drafted his budget, he proposed expanding the use of prevailing wage to many private projects which had never been covered before. Furthermore, he proposed dropping the minimum cost threshold from $48,000 to $2,000. The legislature’s Joint Finance Committee later amended this budget provision, improving it slightly but the basic gist remained. Most public construction projects will cost much more. That means property tax increases. Most private construction projects that are donated, sold, or transferred to a public unit of government will cost much more. Volunteer work on public projects would often be prohibited.

It goes without saying that this is a very, very bad idea, especially during these difficult economic times. Prevailing wage mandates increase the cost of construction. The Heartland Foundation found that prevailing wage laws in the US increase the cost of labor on the average project by 22% and the overall cost by 9.91%. Other studies have found that prevailing wage mandates can drive up costs by as much as 37%.

The current economic downturn has already led to a reduction in development. Expanding the scope of the prevailing wage would be a major deterrent to economic development and job growth. Furthermore, reducing the threshold for prevailing wage projects will cost municipalities tens of thousands of dollars if not more. That means some important projects in your neighborhood won’t get done while others will require increased property taxes to fund them.

It makes absolutely zero sense to increase the cost of construction at a time when that sector of our economy is bleeding employees. It makes even less sense to do so when it will increase costs on local governments that are strapped for cash. Unfortunately, Rep. Garthwaite did not see things that way and voted to maintain significant, job killing changes to Wisconsin’s prevailing wage law in the budget.

The changes to the prevailing wage law are found in AB 75, the biennial budget bill. Here are the facts on how he voted:

Assembly Amendment 5 to AB 75 would have deleted all prevailing wage related provisions from the budget. This amendment failed by a vote of 51-47. Rep. Garthwaite voted against the amendment and in favor of the expanded prevailing wage mandate.

Assembly Amendment 6 to AB 75 would have exempted vacant industrial properties from the expanded prevailing wage law. This would have given governments a tool to rebuild shuttered factories like GM in Janesville. This amendment failed by a vote of 51-47. Rep. Garthwaite voted against the amendment and in favor of the expanded prevailing wage mandate.

Assembly Amendment 114 to AB 75 would have exempted company paid volunteers from the prevailing wage. This amendment would have allowed a construction company owner to pay his employees to volunteer for a day at a Habitat for Humanity site for example. This amendment failed by a vote of 51-47. Rep. Garthwaite voted against this amendment and thus voted against allowing a construction company to volunteer their workers for a charitable construction project.

Assembly Amendment 115 to AB 75 would have allowed the Department of Commerce to grant a waiver on some prevailing wage projects. For instance, a municipality could have applied for a waiver on a project that would create a significant number of jobs in the community. This amendment failed by a vote of 50-48. Rep. Garthwaite voted against the amendment and in favor of the expanded prevailing wage mandate.

Finally, Rep. Garthwaite voted in favor of the passage of AB 75. AB 75 passed by a vote of 50-48, making Rep. Garthwaite the deciding vote on passage of the expanded prevailing wage mandate.

These are the facts. Rep. Garthwaite can try to run from them all he wants but in the end he will fail. The prevailing wage mandate passed by one vote - Rep. Garthwaite's vote.

Side Note --- Since passing the Assembly, the prevailing wage mandate has been altered by Democrats in the State Senate. It is now much worse than what Governor Doyle originally drafted. The new mandate combines a low threshold and coverage of private projects with several new ideas. Under the Democrat budget as it is now written, your local town or municipality would no longer be allowed to contract with your county for many construction projects. The purpose of this change is to force local units of government to contract with expensive union contractors even when working with their county would save money and make sense. This means that your local road won’t be maintained as well or as often and that when it is, it will cost you more.

Rep. Garthwaite has not yet committed to opposing this change despite requests from local officials in the municipalities he represents.