The call by McHenry County Board Members to partner with other county governments to challenge Illinois’ prevailing wage determinations would be a waste of government resources, according to a new study by the Illinois Economic Policy Institute. The report, Building a Strong McHenry: How Prevailing Wage Works [PDF], finds that prevailing wage is necessary to prevent government bodies– such as the McHenry County Board– from using their massive purchasing power to undercut the established labor market. The policy is also necessary to drive economic development: in McHenry County, prevailing wages generate $57.6 million in economic output and support $2.4 million in state and local tax revenues each year.
Evidence in the Economic Commentary concludes that, in Illinois, labor costs account for just 20.9 percent of total heavy and civil engineering construction costs– a majority of these projects are publicly-assisted and require the payment of prevailing wages. Meanwhile, payroll costs on workers in heavy and civil engineering construction in McHenry County reflect both the wages paid in the regional labor market and the higher cost of living in the Chicago area: median housing costs are 40.0 percent of the typical income for a laborer earning the prevailing wage in McHenry County.
Public works construction is not low-skilled work. Building high-quality infrastructure that is safe and durable for the public requires an experienced, educated workforce. Accordingly, many public works construction employees go through rigorous registered apprenticeship programs. These programs require more classroom and on-the-job training than the minimum requirements to receive a typical bachelor’s degree. The result of a highly trained workforce is a highly productive workforce: in Illinois, heavy and civil engineering construction workers each produce $164,294 in value added to the economy on average (a multiplier of about 1.6 times their payroll cost) and are more productive than the average construction worker.
Additionally, the prevailing wage is determined by private actors in the local labor market. Arriving at a prevailing wage is the result of certified payrolls from contractors and employees which show that the majority of workers have agreed to a certain wage rate. Prevailing wage is not necessarily a union wage. However, nonunion contractors are not even bidding on public projects in McHenry County. In 2013, unionized contractors submitted 92.3 percent of all bids on public projects in McHenry County in 2013 and were awarded 95.3 percent of the lettings. Thus, it is understandable if a union wage prevails.
On June 17, 2014, the McHenry County Board voted against adopting a statutorily mandated prevailing wage. Results from ILEPI’s study convincingly demonstrate that the Board should adopt its prevailing wage ordinance. Prevailing wage is the best deal for McHenry County taxpayers.
- Available at this link.
- Why Prevailing Wage is Good for Illinois.
- How Workers are Subsidizing the Low-Quality System in States without a Prevailing Wage Law.
- Why Common Construction Wage is Good for Indiana.