Minn. Prevailing Wage Law Raises Taxes & Skews Wages
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FOR IMMEDIATE RELEASE CONTACT: John Kartch
14 MARCH 2008
202-785-0266
Prevailing Wage Laws Will Hurt Minnesota Taxpayers & Skew Local Wages
Prevailing Wages Cost Taxpayers $8.6 Billion Extra per Year
Washington, D.C. — Today, the Alliance for Worker Freedom (AWF) condemned the recent efforts in Mankato, Minnesota where they are considering a “prevailing wage” ordinance.
Prevailing wage laws are most often synonymous with the federal legislation, known as the Davis-Bacon Act, established in the 1930s to prevent African Americans from entering the construction industry in large numbers.
According to AWF, these laws are not only outdated, but racially based and use statistically inaccurate wage calculations.
“Current inaccurate prevailing wage calculations, used by the Wage and Hour Division, inflate wages above the market rate in some states and send rates up to 30 percent below the market wages in others,” says Johnson. “This type of nation-wide wage disparities could be ameliorated if the law mandated statistically valid Bureau of Labor Statistics data is used in the calculations.”
The Alliance for Worker Freedom cites examples where carpenters in Sumter, S.C. are paid 57 percent below the market wages; while those in Suffolk, NY are paid 74 percent above the market rate. The group points to these and other wage gaps, as well as the racial motivation for the establishment of prevailing wage laws, as evidence that reform is needed.
“Just look at the justification used to pass this law. Rep. John Cochran of Missouri said in the 1930s that he had ‘received numerous complaints in recent months about Southern contractors employing low-paid colored [sic] mechanics getting work and bringing the employees from the South.’”
Economists estimate that the Davis-Bacon Act artificially inflates wages over 22 percent nationwide and costs taxpayers an extra $8.6 billion to cover inflated construction costs.
