Prevailing Wage Under Attack; The Usual Tools of Choice: Lies, Greed, Misinformation & Bogus Studies

Robbie Column

Prevailing wage is under attack again, and workers' enemies are dragging out an old tool chest of lies, greed and deception to try to destroy it in the states of Michigan and Kentucky, in an effort to join other states that in the last few decades have removed prevailing wage.

A favorite tactic of anti-worker lobbying groups like Associated Builders and Contractors (ABC) is to manufacture legitimate-looking "studies," claiming that great economic benefits to society will result from cutting workers' wages.

If the Building Trades respond collectively and with unity, we can prove these studies are bogus, consisting of manufactured data and invalid assumptions, and accordingly, they get quickly debunked by reputable economists. Nonetheless, the conservative-leaning media loves this fake research and publicizes it in an effort to convince society and elected officials that all our problems are the result of those blue-collar construction workers that they claim earn too darned much money.

You may recall that a few years back they tried to trick policy makers here in California with a "study" that purported to show that project labor agreements made school construction more expensive. Reputable economists took a good look at this piece of work and tore it to shreds, and the State Building Trades was able to show media outlets beforehand that the study was a crock, and it therefore went virtually ignored.

So it shouldn't surprise us now that the Michigan ABC is touting a new study that it bought and paid for, which concludes that Michigan would save $2.25 billion over ten years in school and higher education construction if  state officials would just repeal Michigan's nearly 50-year-old prevailing wage law. That law, by the way, was signed by Michigan's then Governor, Republican George Romney, father of recent Republican presidential candidate Mitt Romney, who himself utilized a project labor agreement with the Building Trades in Utah to meet the schedule and budget of the 2002 Winter Olympics.

The study was paid for by ABC and carried out by Mr. Alex Rosean, an employee of Anderson Economic Group, which earns money by producing studies for corporations and other clients seeking reliably right-wing conclusions. After its release, the study was reviewed and analyzed by reputable economist Peter Philips of the University of Utah.

What did Dr. Philips discover? "Mr. Rosean's assumptions are wrong; and worse, his method is inappropriate for the task he has set himself," Dr. Philips reported. In short, he found the study had overstated the share of labor costs on construction, had included non-labor costs such as land purchases and interest payments in its "labor" calculations, and had failed to consider any effect whatsoever on labor productivity resulting from substandard wages and less-skilled workers.

So when Dr. Philips corrected all those errors, what did he conclude? Repealing Michigan's prevailing wage law would cut labor costs by no more than 4%. But worker productivity is up to 16% lower in states without prevailing wage than those with it. So, Dr. Philips reported: Using those facts in "Mr. Rosaen's back-of-the-envelope calculation would wipe out all his estimated cost-savings and turn the estimated effect  of repeal into an actual increase in Michigan public school construction costs." In a nutshell, Michigan will be able to afford to build fewer, not more, schools if it repeals prevailing wage as the Michigan ABC  hopes.

In addition, Dr. Philips noted, there are many more societal costs to repealing prevailing wage. "These include reduced apprenticeship training, less retention of trained and experienced workers, higher injury rates and worker compensation costs, loss of quality workmanship, loss of benefits, loss of local income, loss of a level playing field for local contractors, loss of honest contractors paying their fare share of unemployment insurance and worker comp premiums, increase in under-the-table wage payments and other costs associated with driving wages down sharply and opening public construction to cutthroat bidding practices."

Nevertheless, ABC's bogus study may help it get its way in Michigan, where bills to repeal the prevailing wage are pending in the Legislature. In fact, a Detroit newspaper reported the study as news and then used the deeply flawed and deliberately deceptive study to justify an editorial supporting prevailing wage repeal.

There is a valuable lesson in this for California Building Trades construction workers. Protecting our wages and quality of life depends on our willingness to fight tenaciously and with absolute unity and solidarity among all our workers in all of our trades.

In a separate study of economic challenges facing California construction unions, Dr. Philips cites an old "Sea Parable," about an aging warship under attack by cannon fire from an approaching enemy. Crew members respond by fighting among themselves for survival, each individually seeking but ultimately just preventing one another from reaching the perceived safety of the highest rigging as the ship goes down.

Finally, the old ship wallowed and pitched. The sailors realized that all was lost, and that they should have been working together all along, to mend the holes, fix the planks, pump the bilge and fire at the enemy. But it was too late.

In California, we are united and we are strong. We can debunk their lies and every bogus study they throw at us. But if we're not always united, fighting together for the same worthy goals, like those old sailors we could also be lost.



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