Want more construction jobs? Dump the prevailing wage, study says.

If Illinois didn’t have a prevailing wage, there could have been an additional 14,000 construction jobs during the last 10 years in the state, according to a recent study released by the right-leaning Illinois Policy Institute.

The findings are contrary to a study released in 2013 by the University of Illinois, which said lack of a prevailing wage would lead to job losses in the state.

The prevailing wage is the minimum rates contractors can pay on public construction projects. Each county has its own prevailing wage, which is determined by the Illinois Department of Labor, and based on the prevalent wage paid to workers on similar public projects.

According to the Illinois Policy Institute, the prevailing wage is usually about 40 percent higher than the average wage for private construction jobs in the same area.

The report said 21 states don’t have prevailing wage laws, including nine that had repealed their prevailing wages laws, and saw an 8 percent increase in construction sector employment.

The Illinois Policy Institute also said a repeal of the law could save 10 percent on public construction projects. The study also estimated there would have been more than 14,000 construction jobs in 2015 if the prevailing wage law had been repealed a decade earlier.

“Illinois’ prevailing wage law is an unfair policy that benefits a few at the expense of the many. Given the sluggish construction sector recovery from the Great Recession and the state’s weak labor market, it's unreasonable for the government to artificially raise labor costs,” said Illinois Policy Institute Chief Economist Orphe Divounguy.

“By repealing Illinois’ prevailing wage law, not only can we save hard-earned tax dollars, but we can boost construction employment, which struggling Illinoisans need desperately. Faster job creation will lower the unemployment rate and lead to wage growth.”

If Illinois didn’t repeal its prevailing wage law, then it should adopt a practice held in Vermont, the Illinois Policy Institute said. Vermont ties its prevailing wage to local averages reported by the Bureau of Labor Statistics.

“This would ensure that prevailing wage rates remain in line with market averages rather than being inflated upward to the advantages of a select group of construction workers,” the study said.

Randy Harris, Midwest director of the Laborers’ International Union of North America Management Fund, questioned the validity of the Illinois Policy Institute’s study.

“In many cases, when they’re funded by a think tank ... they’re very partisan and there’s an agenda to them,” Harris said. “They don’t go in there with an open mind, and say, let’s let the data speak for the data.”

He said the prevailing wage for a particular area is worth paying for when it comes to public projects because the quality of work will be better.

“When you pay a prevailing wage, you’re paying for very high-skilled, very well-trained professional construction workers. You’re not getting a fly-by-night outfit, or somebody who does this part time. It’s a value proposition as well,” Harris said. “(If) you want to do a building, especially when you’re talking public dollars, what’s the most important thing? Is it to get the fastest, cheapest and quickest product, or is it to get the best bang for our buck so we don’t have to rebuild something three different times, we do it once?”

Harris points to a study done by the University of Illinois in 2013, which said repealing the prevailing wage would lead to a net overall job loss and a contraction of gross domestic product in the state, as well as a loss in tax revenue, and could make job sites more dangerous.

It also found a prevailing wage helps support apprenticeship programs.

“Prevailing wages for public construction projects in Illinois provide numerous positive economic and social impacts for both construction workers and the state on the whole. This study predicts that repeal of Illinois’ prevailing wage law would not result in savings for taxpayers or the state or lead to increased employment of African-American construction workers.

“Rather, repeal of Illinois’ prevailing wage would result in job losses throughout the state’s economy, increased construction worker fatalities, and declines in valuable social impacts such as construction worker benefits and training opportunities,” the University of Illinois study said.

He added money that is paid to construction workers ultimately will be spent in the same community where the project is done.

“Construction workers, by and large we don’t have trust funds, we don’t have most types of things where we have expendable income. But when we do make money, we tend to spend it locally, and it keeps local workers in the local communities spending their local wages,” Harris said.

This story was originally published December 14, 2017 at 2:06 PM with the headline "Want more construction jobs? Dump the prevailing wage, study says.."