Study: Inflated pay rates on public projects cost $200M

March 31, 2015

MADISON A study from the Wisconsin Taxpayers Alliance says the state's mandated inflated pay rates on public projects cost taxpayers more than $200 million in 2014.

Gannett Wisconsin Media (http://oshko.sh/1abdXVD ) reports the group looked at the state's laws on prevailing wages, which set minimums for worker wages and benefits on big government projects. The group found it would have saved state and local governments $200 million to $300 million if they paid market-based rates.

Prevailing wages were 45 percent higher than local market rates on average, according to the study.

The study was paid for by an industry group that backs repealing prevailing wage requirements. The Wisconsin Taxpayers Alliance did not take a position on whether they should be repealed.

Contractor groups say there were problems with the study's methodology, and that getting rid of prevailing wages would result in lower pay and quality.

"They assume savings for the taxpayer by lowering wages in construction," said Wisconsin State Council of Carpenters executive director Mark Reihl. "The problem with that is if you have lower wages you're not going to get the same level of efficiency, productivity and quality."

A state legislature bill to repeal prevailing wages is awaiting a committee hearing. The bill is authored by state Rep. Rob Hutton, R-Brookfield.

"They need to be repealed so we can let the free market as the private sector does determine the cost of wages and the cost of projects that have a direct impact on the taxpayers," Hutton said.

There are laws on prevailing wages in 32 states, with rules in Wisconsin dating back to the 1930s. The Wisconsin Department of Workforce Development calculates prevailing wages using a survey of construction contractors, although only about 10 percent of surveys are filled out properly and returned.

 


Associated Press