A new Economic Commentary by the Illinois Economic Policy Institute details how prevailing wage is the local market rate in Winnebago County.
Report: Building a Strong Winnebago County: How Prevailing Wage Works [PDF]
As part of his “turnaround agenda,” Illinois Governor Bruce Rauner has proposed allowing local units of government to opt out of paying prevailing wages to construction workers employed on public projects. In April 2015, the Winnebago County Board voted to endorse most of the Governor’s agenda, but excluded the provision to eliminate prevailing wage. Going forward, localities across Winnebago County- including the County Board- should not vote to repeal prevailing wage.
Reason #1: Median housing costs are 30.9% of the typical income for a laborer earning the prevailing wage in Winnebago County. Government agencies consider housing affordable only if costs are below 30 percent of household income. If the suggestion that labor costs would be significantly lower without prevailing wage is true, then construction workers would not be able to afford a home in Winnebago County without the wages supported by the law.
Reason #2: Public works construction projects require skilled workers. Apprenticeship programs often require at least 6,432 total hours of training over four or five years. By contrast, the typical 120-credit hour bachelor’s degree requires just 5,760 hours of classroom training over four years.
Reason #3: In Illinois, public works construction workers are more productive than the average construction worker. Heavy and civil engineering construction workers who build roads, bridges, highways, public parks, wastewater systems, and other public projects produce $164,012 in value added to the economy on average. This $164,012 per-worker contribution to Illinois’ GDP far exceeds the average payroll cost of a worker earning the prevailing wage.
Reason #4: Prevailing wage is not a union wage, but unionized contractors submit 100% of the bids on public projects in Winnebago County. In the twelve months from April 2014 through March 2015, union contractors had a market share of 100%. It therefore makes sense for the union wage to prevail in Winnebago County.
Reason #5: In Winnebago County, prevailing wages generate $36.3 million in economic output. Prevailing wages also support $1.5 million in state and local tax revenues that otherwise would not occur. Prevailing wage is good for public budgets, good for veterans, and good for Illinois.
Prevailing wage is necessary to prevent government bodies from undercutting the established labor market, and drives economic development in the county. Prevailing wage is the best deal for Winnebago County taxpayers.