Kentucky’s 2017 repeal of prevailing wage failed to provide any cost savings on road construction projects.
That’s the takeaway from a new peer-reviewed article in Public Works Management & Policy authored by ILEPI’s Frank Manzo IV, former ILEPI Midwest Researcher Jill Gigstad, and Colorado State University-Pueblo Distinguished Professor of Economics Kevin Duncan, PhD.
Researchers used data on 2,155 Kentucky Transportation Cabinet highway projects between 2014 and 2020 and found no statistically significant impact of the 2017 repeal of prevailing wage on bid costs and competition. State-funded highway projects averaged about 1.6 bidders both before and after repeal. The analysis accounted for project size and complexity, the location of the project, the asphalt price index, and other important factors.
“The wave of repeals of prevailing wage laws in six states between 2015 and 2018 was largely motivated by desires to reduce public construction costs,” the researchers write. “This study finds that repeal of prevailing wages in Kentucky did not alter relative bid costs or bid competition between state and federal highway pavement projects. Even after repeal, there is no difference in bid costs or competition between state projects that are not covered by prevailing wage regulations and federal projects that are covered by the Davis-Bacon Act and the Disadvantaged Business Enterprise policy.”
These findings are consistent with the preponderance of peer-reviewed academic research. Including this new paper, there have been 20 studies on the impact of prevailing wage laws on the cost of school construction, highway construction, and municipal building projects since 2000—which have cumulatively analyzed more than 24,000 traditional public works projects. In total, 17 of these peer-reviewed studies (85 percent) find that prevailing wage laws have no effect on total construction costs.
The data show that, in addition to the negative consequences of repeal of prevailing wage on construction worker earnings and injury rates, repeal also fails to generate any meaningful savings for taxpayers.
The permanent link to the journal article is here: https://journals.sagepub.com/doi/10.1177/1087724X221088887