Delaware Prevailing Wage Law Kills Public School Projects
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FOR IMMEDIATE RELEASE CONTACT: John Kartch
20 MARCH 2008
202-785-0266
Delaware Law Kills Public School Projects
Labor economists warn against expansion of state prevailing wage laws
Washington, D.C. — Today, the Alliance for Worker Freedom (AWF), issued a statement supporting the conclusion made by the governor-appointed Leadership for Education Achievement in Delaware (LEAD) Committee to exempt public school projects from prevailing wage laws.
State prevailing wages are determined by self-reported surveys. These surveys create a market bias and distort true market wages. According to AWF Policy Director Brian Johnson, “Inaccurate and out of date self-reported surveys, with an error rate of 100 percent, hardly reflect true prevailing wages. With overwhelming evidence supporting prevailing wage at least reform, if not abolition, expanding these distorting practices will continue to skew the labor market against the average American worker and penalize the state-funded school district.”
The LEAD report highlights Ohio saving around 11 percent on total school capital projects by removing the prevailing wage requirement. This saved capital is better spent on actual school operation costs, textbooks, playgrounds, etc. “The argument against eradicating prevailing wage laws is that the quality of construction is lowered,” says Johnson, “this is utterly flawed. All prevailing wage does is skew prices due to statistically flawed calculations.” Other experts seem to agree.
A Heritage Foundation study by James Sherk estimated that prevailing wage laws cover roughly 20 percent of all construction projects, and 25 percent of all construction workers. And a Beacon Hill Institute paper contends federal prevailing wage mandates cost taxpayers $8.6 billion per year and inflate wages by 22 percent nationwide. However in some states, Florida for example, the prevailing wage is 32 percent below the market wages for certain sectors.
According to Johnson, an interim solution is simple. “Passing legislation that requires the Department of Labor to calculate prevailing wages using proper statistical techniques, and using larger geographical areas rather than civil divisions, will generate valid random samples that will actually reflect a true market wage.”
The Alliance for Worker Freedom urges Gov. Minner to oppose the expanded application of this flawed wage control system.
