Illinois Prevailing Wage Costs Taxpayers

Prevailing-Wage2Illinois first passed its prevailing wage law back in 1941. It was passed to help protect employee salaries being reduced during bidding for a public project. It was also used as a mechanism to ensure that a labor dispute did not stop work on a public project. Unions once had a majority of construction employees as members. This has drastically plummeted with it down to 14% as of 2013. So it begs the question, in the year 2015 do we still need a prevailing wage law in the State of Illinois?

Has the prevailing wage laws changed over this same time period to reflect the new membership realities? The answer is no. Wages continue to be set at a union rate while 86% of the work force is not part of the union. There are many studies that show prevailing wage laws raise the cost of a project by 30-40 percent. Matt Crumb from Maclver Institute stated “As it turns out, prevailing wages can be up to 40 percent higher than competitive market wages, meaning taxpayers are hit with an extra cost burden on many government projects.” Reed the full story at Wisconsin Prevailing Wage:

Prevailing wage is a backward policy designed to ensure government contract workers are paid wage rates and receive benefits that are “prevailing” in a given industry or region. As it turns out, prevailing wages can be up to 40 percent higher than competitive market wages, meaning taxpayers are hit with an extra cost burden on many government projects.

Illinois is only one of nine states that require prevailing wage to be applied for every public project. The additional costs to county, towns, and villages are significant with this requirement. These same governmental bodies are all likely to have a reduction in state funding under Governor Rauner’s budget so eliminating the requirement of prevailing wage could be a key way for these types of governmental bodies to save money. It would also encourage governments to continue with long anticipated building projects.

Although the Governor does plan to cut back some revenue to smaller governments it appears with the elimination of prevailing wage and the institution of right to work, municipalities will be able to make up the difference.

As you can see the savings potential with the elimination of prevailing wage could help cover the cost of budget cuts for governments around Illinois.