Could Doing Away With Wisconsin's Prevailing Wage Fix The Transportation Budget?

Dec 5, 2016

Wisconsin is facing a $1 billion deficit in its transportation fund.

Gov. Walker has proposed delaying road projects because he does not support upping the gas tax or vehicle registration fee. Republican lawmaker Rob Hutton plans to reintroduce legislation that would eliminate the state’s prevailing wage when it comes to road projects.

The state of Wisconsin has had a prevailing wage law since the early 1930s. It requires companies that contract with the state to pay their employees the certain wage, benefits and overtime, based on the area in which they’ll be working.

The Department of Workforce Development sets the wage annually by surveying companies about how much they're paying their workers.

Last year, Republican Rob Hutton proposed doing away with the prevailing wage for all state projects, but in the end, state leaders only allowed schools to pay less than the mandate. Back then, Hutton said the prevailing wage prices out too many companies.

“And so as taxpayers, we are seeing the net effect and paying for the net effect of a smaller number of participants that aren’t providing a competitive bid in many, many cases,” he said.

Hutton estimated that projects could cost 20 to 40 percent less if Wisconsin did away with its prevailing wage. (Assembly Speaker Robin Vos points to an analysis from the Legislative Fiscal Bureau indicating an appeal of the state's prevailing wage would save the DOT only one-percent.) No matter what the figure, Democrat Rep. Peter Barca says getting rid of the law is a horrible idea.

“Wisconsin has the most diminished middle class in the entire country, and this will only make it worse. Secondly, for tax payers over the long run, this will hurt the taxpayers of this state. And third, it hurts jobs in this state,” he says.

Barca points to a study the Midwest Economic Policy Institute conducted in Indiana.

“When they eliminated their prevailing wage, what it ended up doing was reducing jobs in Indiana and increasing jobs in Kentucky as low  wage workers came into their state,” Barca says.

“They’re going to get what they pay for," says Dave Branson. He’s executive director of Building Trades Council of South Central Wisconsin.

“Here in Wisconsin, our building trades union spends $30 million a year training our people to make sure that they’re the best qualified people to go out and do the work. When they start bringing in these lower wage construction workers they don’t have the training and they don’t have the knowledge that that our people do to go out there and do the work,” Branson says.

Representative Rob Hutton has yet to introduced his plan to repeal Wisconsin’s prevailing wage for transportation projects, but GOP leaders have said everything is on the table.