State Sen. Frank Lasee (R–De Pere):

The debate over Wisconsin Prevailing Wage law is reaching a fevered pitch. Many are still unclear about what prevailing wage is and how repealing it will save taxpayers millions and help local and state government reduce their building costs for years to come.

Prevailing wage is a mandatory, government-set price for wages on taxpayer funded projects based on the average of the highest paid workers doing the same type of work in that county (that’s right, when a road project crosses a county line the workers all have to paid a different rate for the work they do on each side of the county line). Prevailing wage artificially inflates the cost of construction by setting wages higher than other free market rates for the same work. Whenever government bureaucracy gets in the way of business, experience has shown us that it becomes less efficient and more costly.

The current prevailing wage law costs taxpayers and small businesses more in two different ways:

First, is the increased costs to taxpayers. The artificially high wages drive up the cost of public projects like school buildings, roads, and work on government buildings. Since the price is fixed at the highest union wage in the area, there are no bargains in the competitive bid process like there are on private sector projects that drive down prices. This lack of competition and government-set wages and benefits higher than private sector building projects results in higher costs for projects which use our tax dollars.

Second, the way the system is set up is confusing, complicated, and difficult for business and contractors doing the work. As I have talked with constituents who own contracting or trucking businesses, they always tell me that calculating prevailing wage is an “accounting nightmare”.

Here’s a story that illustrates how overlapping prevailing wage boundaries and rates makes work less efficient and more costly.

Imagine you’re at the grocery store buying milk. You get your gallon, make your way to the front of the store, but there’s an error message when the milk is scanned. The clerk tells you the price is different depending on how you’re going to use it. You pause because that just doesn’t make sense–it’s the same milk in the jug. How does the price change depending on where I pour it? The clerk asks you how much of the milk you plan to use for cereal. Baking? Mac n’ Cheese? Drinking? You end up paying four different prices for four different uses of milk based on the percentage of use in each category. By now your head is spinning, you’ve been at the register for 10 minutes, and you end up paying more money for the same milk. You leave the store angry and thinking about switching to *gasp* pressed soy drink to avoid the hassle over purchasing milk in the future.

Many Wisconsin contractors go through this same, unnecessary headache when calculating prevailing wage job costs. There is a prevailing wage set by the federal government in Washington, DC, and a county-specific wage rate and a job-specific wage rate. Then there is a state prevailing wage rate, different from the federal rate, for use on projects that don’t have federal tax dollars paying for them. The state and federal rates are different.

Workers on road building projects will often work on more than one project with different rates on the same day, with the multiple prevailing wage rates in the same week. The time worked on each project has to be tracked and the worker has to be paid the right government-set prevailing wage rate.

By eliminating prevailing wage mandates, Wisconsin taxpayers win and save hundreds of millions of dollars because smaller, qualified companies that previously couldn’t or didn’t want to handle the administrative burdens of prevailing wage will be able to bid for taxpayer funded construction projects. As with everything else – from TV’s to toasters – competition drives down costs, increases innovation, and allows our government tax dollars to be more wisely spent. We will get more building for our tax dollars.

Labor costs are the number one component of nearly everything we purchase. Reduce labor costs, and you reduce the costs of what you’re buying, including refurbished roads.