Prevailing Wage Showdown Coming to Michigan

Michigan’s Rick Snyder is one of a number of Republican governors in Midwestern states that have stood up to the overwhelming power of the union leaders who protect the status quo of budget deficits and uncompetitive job markets – and won.

The fight is not over, however, as unions are poised to oppose a petition that would repeal the prevailing wage. (It should be noted that Snyder himself is not a supporter of the petition, which has been circulated by Protect Michigan Taxpayers.)

What is the prevailing wage? Essentially, it is a government-mandated wage for construction workers that applies to all tax-payer funded projects and which is negotiated exclusively through union agreements.

As the vast majority of Michigan construction workers are not part of the union, they have had their wages negotiated for them and cannot choose to offer a competitive price even if they want to – the union-negotiated wage “prevails.”

Like all union actions aimed at artificially restricting the workforce, it means that the unions have their cake and eat it too: they can be uncompetitive and still keep their jobs, since it is illegal to go elsewhere for labor – such as to the 84% of Michigan construction workers whose freedom to ask for their own wage has been taken.

Repealing the prevailing wage would save taxpayers money by making the cost of projects equivalent to the market value. One example of such a project would be schools.

Another effect would be to end the regulatory hoops created by the prevailing wage law, such as the existing 300,000 wage classifications which must be sorted through. Large companies can navigate them well enough, but it can be a nightmare for small businesses.

But of course, because it protects the big union interests, they are coming strongly against it, employing the usual scare tactics and economically illiterate arguments.

For example, Michigan Building and Construction Trades Council is “countering” the “propaganda,” releasing flyers that evoke the predictable sentiments: the race card, the minimum wage, school funding and out-of-state worker fears.

Additionally, they are passing out flyers with a hotline number listed, telling its members to call if approached to sign the prevailing wage petition. The recording asks for specific information about the time, location and number of people asking for signatures, stressing that the information is “very important.”

What reason could there be to obtain such information if the unions did not want a physical presence there?

(The flyers also ask those opposed to the petition to provide that information about the petitioners.)

Michigan’s economy and fiscal health have been on the mend for the last few years – a huge accomplishment during the Obama presidency. Let’s hope free markets and small government win the day in the battle over prevailing wage.