LANSING – Voting on a party-line

basis, the Senate Michigan Competitiveness Committee on Wednesday reported a

controversial three-bill package repealing the state’s prevailing wage laws

which dictate wage and fringe benefit rates to be paid to construction workers

on state projects.

Although Governor Rick Snyder has previously stated that

he has no interest in signing a repeal, the package (SB 1*, SB 2* and SB 3*) is on general orders in the chamber for Thursday. The

tentative agenda sent out by Senate Majority Floor Leader Mike Kowall‘s (R-White Lake

Township) office did not indicate whether it would go all the way.

The debate among proponents and

opponents of the legislation was exactly how much it might save, if anything,

and at what cost. Proponents of the package said it would simply save money and

that there would be no compromise in the safety or quality of the product.

“I believe repealing prevailing

wage will result in millions of tax dollars saved,” said Senate Majority Leader Arlan Meekhof (R-West Olive),

sponsor of one of the bills. “I don’t think taxpayers should have to pay

more for their building than the private sector does.”

Meekhof pointed to numerous studies

to make his point, all of which Sen. Rebekah Warren (D-Warren) tried to refute.

Among the most discussed studies for

proponents, legislators and organizations alike, was one by the East Lansing-based

Anderson Economic Group, released in 2013, charging that Michigan could save

about $225 million a year if it were not for prevailing wage. That study was

commissioned by the Associated Builders and Contractors, who were on Wednesday

supportive of the legislation in front of the committee.

“When you spend more money on

something, it’s more expensive,” said Chris Fisher, president and CEO of

ABC of Michigan. “It’s simple math.”

Opponents of the legislation

distributed a study by Peter Philips, a professor of economics at the

University of Utah, who asserted that the Anderson study was “based on a

simple back-of-the-envelope calculation.”

“In a small section called Limitations, (the study admits it) does not consider any effect on labor

productivity or the mix of skilled to unskilled labor due to dropping wages and

benefits by 25 percent after repealing Michigan’s prevailing wage,” Philips

said in his analysis of the Anderson report.

But Fisher said because

Michigan’s prevailing wage law was limited to only a wage and benefit mandate,

all standards of safety would be maintained, since the law effectively has

nothing to do with that portion of work.

“Both prevailing wage and

non-prevailing wage products are subject to the same standards of safety,”

Fisher said, quoting the Department of Licensing and Regulatory Affairs.

REPEAL OPPONENTS: Warren pressed Fisher on the initial cost of projects and

the final cost of projects, which became a theme for opponents of the repeal

thereafter.

“I lived through the ’90s when

the Legislature (suspended) the prevailing wage laws in Michigan, and I never

want to return to those days. Bidding public work became all about price – how

cheap could a contractor bid for work?” said Michael Stobak, central

region vice president of the Barton Malow construction company, which opposed

the bills. “Initially, we witnessed an immediate exodus of public

contractors for public work. As a result, prices quickly rose to where they

were prior to repealing prevailing wage.”

Stobak warned the committee that if

the bills were to be enacted and prevailing wage repealed, there would be a

reduction in public bidders and “our workforce will become inconsistent

and transient.”

Ed Haynor, secretary of the Newaygo

County Regional Educational Service Agency, echoed these concerns, telling the

committee that oftentimes, schools will take the lowest bids in order to make

their budget, but the bid is not the final cost. He said his school started

tracking the bid cost and the final cost, and there were “big percentage

differences.”

“If you look at the history of

bidding – the ones that typically low-bid are where you see the most

change-orders,” Haynor said.

Also in opposition to the package

was the Michigan Infrastructure and Transportation Association. Mike Nystrom,

executive vice president of MITA, said its entire board voted unanimously to

take that position. He said his membership is made up of about 65 percent union

and 35 percent non-union, and in terms of the volume of work, those numbers

flip, so this issue was not a union or non-union one.

“Any contractor, union or

non-union, can bid on prevailing wage contracts. The competitive bidding

process required on all publicly funded projects awards to the lowest, most responsible

bidder,” he said. “A prevailing wage ensures there is a level playing

field when using the competitive bidding process.”

And Nystrom said that if the goal is

to protect taxpayer dollars, then the Legislature needs to think more

long-term, especially as Governor Rick Snyder is calling for increased

investments in skilled trades.

“Good, skilled labor will go

elsewhere to find work,” he said of the consequences of repealing

prevailing wage.

Patrick “Shorty” Gleason

of the Michigan Building Trades Council also spoke in opposition to the bills,

saying it would be irresponsible for the Legislature to “create an

environment that incentivizes less training, less health care and less interest

in the skilled trades as a career choice.”

REPEAL SUPPORT: But Wendy Block with the Michigan Chamber of Commerce said

Michigan is at a competitive disadvantage when it comes to prevailing wage

because it is one of only a handful of states that has such a law. Repealing

the law, she said, would make Michigan more competitive, ensure the state is

searching for the best deal and will eliminate the “bureaucratic red

tape.”

The system currently is complex, Block

said because a worker has to be compensated differently based on the task they

perform. So if a worker picks up a paintbrush in the morning and a hammer in

the afternoon, she explained, that person has to be compensated accordingly.

Also supportive of the repeal was

Charlie Owens, the state director for the National Federation of Independent

Businesses.

“While state and local

governments are looking for ways to stretch resources and be good stewards of

taxpayers’ dollars, we would be remiss if we did not examine the impact of

Michigan’s outdated and wasteful prevailing wage law on the cost of

construction projects financed with state dollars,” he told the committee. “We would be remiss because we would be missing the opportunity to

increase the buying power of the state, school districts and local governments

without any new taxes or increased state spending.”

Although they did not testify in

committee, Americans for Prosperity-Michigan was also supportive of the repeal

in a statement applauding the reporting of the bills from committee.

“This represents an enormous

opportunity for our lawmakers to protect taxpayers, control government

spending, and strengthen a fair and free market in our state,” said Annie

Patnaude, deputy state director for the group. “It’s about good government

plain and simple. It’s about making our state more competitive for job

creation. It’s about ending the stereotype that anything government touches

becomes more expensive.”