Service + Solidarity Spotlight: Study: Prevailing Wage Repeal Shrinks Pay, Increases Dangers and Leads to More Workers on Public Assistance

Prevailing wage boosts the economy by over $1 billion annually.

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According to a new study from the Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign, repealing prevailing wage laws leaves workers with less earnings, less productive, more likely to rely on public assistance and at an enhanced risk of dying on the job.

The bipartisan infrastructure bill passed last year designated billions of dollars for construction projects across the nation. Contractors in states that have repealed prevailing wage laws are facing problems staffing up that are likely to increase. Six states repealed their prevailing wage laws between 2015–2018: Arkansas, Indiana, Kentucky, Michigan, West Virginia and Wisconsin. The three states with full prevailing wage repeals saw hourly wages decline at the same time prevailing wage states saw an average wage growth of more than 12%.

“What prevailing wage does, it kind of standardizes and stabilizes the industry of a local market,” said researcher Larissa Petrucci. “When you repeal that, what you have is contractors who are able to undercut wages and pay workers far below the training that they have developed to get these kinds of jobs. Naturally, you’re gonna see wages decrease.”

In repeal states, worker productivity and hours worked grew at a much slower rate than states that kept prevailing wage laws in place. Similarly, repeal states saw an increase in the on-the-job fatality rate.