Study Shows Indiana’s Move to Repeal Prevailing Wage Backfired

A recent study shows the move to repeal Prevailing Wage in Indiana backfired.

The Midwest Economic Policy Institute study found that since Prevailing Wage was repealed, construction wages fell by an average of 8.5 percent in the Hoosier State.

Since Prevailing Wage was repealed in 2015, the lowest paid construction workers in Indiana saw their paychecks decrease by an average of 15.1 percent, while wages for tradesmen and tradeswomen in neighboring states rose 2.8 percent during that timeframe.

Veterans were hurt by the legislation, as there was a 1.2 percent drop in employment of Indiana military veterans in the construction industry, according to the study.

Despite reducing the amount of pay construction workers receive, the cost to build a project did not decline. This decrease in productivity more than offset the benefits of paying lower wages, as Indiana public school construction projects realized no significant savings following the repeal of Prevailing Wage.

Indiana State Rep. Ed Soliday (R-Valparaiso), who voted against the Prevailing Wage repeal, told the The Times of Northwest Indiana the study confirms the legislation has not saved the state a penny.

“When you have the common construction wage … you hire local people and they spend their money locally,” Soliday said to the Times. “When you go out-of-state and so forth, and just chase price instead of the overall macroeconomic contribution, you wind up weakening your own community.”

As the study show, the repeal of Prevailing Wage in Indiana backfired because the loss of prevailing wage led contractors to hire less qualified and less productive workers. Those who earned 2.1 percent less per hour were 5.3 percent less productive per hour.

Researchers also found the claim that repealing Prevailing Wage would increase construction project bid competition to be false. Records showed an average of three bids per school project prior to the repeal. After the law went into effect, projects received an average of 2.9 bids per project.

The Columbus/Central Ohio Building and Construction Trades Council believes this study proves the value of the state’s Prevailing Wage law.

“This study has proven what many of us have known – the repeal of prevailing wage doesn’t relate to cost savings for the state on construction projects,” said Dorsey Hager, Executive Secretary-Treasurer of the Columbus/Central Ohio Building and Construction Trades Council.

“What it does do is create a race-to-the-bottom approach which lowers wages and benefits for workers making construction less desirable when the need for qualified skilled labor has never been greater,” Hager said.

Click here to learn more about Ohio’s Prevailing Wage law.

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