By Marc Kilner
If there was a law that increased the cost of government projects, deprived Ohio companies of work, and was used as a tool for businesses to harass rivals, you would think there would be a strong push for its repeal. But if that law is Ohio’s prevailing wage law, you find little effort from legislators to eliminate it. This law is simply a way to divert taxpayers’ money to union-controlled construction firms and damage non-union companies. It’s time for Ohio policymakers to help the state’s economy by getting rid of the prevailing wage law.
Enacted in 1931, the law requires companies to pay workers on most government construction projects what a government-mandated “prevailing wage.” This wage is determined by a complex set of bureaucratic guidelines, and violating these guidelines — even if the violation is only for a few dollars and is unintentional — can lead to big fines.
The intended purpose of the prevailing wage law is to keep government construction projects from depressing local wages. Its real effect, though, is to increase the cost of these projects to taxpayers since by mandating higher wages than would otherwise be paid and decreasing the number of bids for the project. Taxpayer-funded construction could be done for less money if this law was repealed, helping both local governments and the state during this period of severely decreased tax revenue.
Not only are taxpayers hurt, but so, too, are the companies which unintentionally violate the law’s complex regulations. There are many instances of companies filing complaints against other businesses in order to stifle competition.
The misuse of this law to harm competition (and taxpayers) was on clear display last year when non-union companies lost bids on the construction of the Huntington Park Stadium. Although their bids were lower than unionized competitors, the companies had a few prevailing wage violations in previous years, making them ineligible for county work. So companies that submitted higher bids won while taxpayers lost.
The latest fight on the prevailing wage front comes with the Ohio Valley Associated Contractors and Builders levying complaints against union firms for violating the law. They are doing this to show just how ridiculous the regulations are and in the hope that it will lead to reform. While it may be poetic justice that union firms are now suffering under a law long used to hurt nonunion companies, in the end no one wins in this battle.
This political jockeying could be ended if the prevailing wage law were repealed. Businesses would no longer have to worry about unintentionally violating the law. And with the increased competition on government construction projects and the ability of local governments to accept the lowest bid for these projects, taxpayers would see significant savings.
This law’s repeal would be a winning proposition for most Ohioans. Some businesses would no longer be as competitive for these contracts, though, and some union bosses would no longer have the leverage they possess today. Protecting inefficient businesses and the power of Big Labor should not be a priority for Ohio’s legislators, though.
The prevailing wage has a long and dark history in Ohio. It has caused almost eighty years of wasting taxpayer money and conflict between union and nonunion businesses. In the midst of deep economic difficulties for the state, repealing the prevailing wage law would help stimulate the economy and reduce government spending. It’s time for this pernicious law to go.
Marc Kilmer is a policy analyst with the Buckeye Institute for Public Policy Solutions, a research and educational institute located in Columbus, Ohio.