Indiana's recent repeal of its prevailing wage law—31 states still have them—is no cause for celebration from the public's or the industry's point of view. For taxpayers, such laws may add initially to the cost of public works, although how much is debatable. From the industry's point of view, prevailing wages provide union construction workers with pay packages sufficient for a middle-class life and retirement. With construction badly in need of more skilled craft workers, prevailing wages and a strong union sector provide a valuable standard for what workers can earn. The roughly $70-an-hour state prevailing wage and fringe-benefit cost for a carpenter in union- dominated Cook County, Ill., which includes Chicago, isn't completely out of line with the expenses faced by a middle-class family. Of that compensation, $43.35 is the basic wage. It won't easily cover the cost of two private-college tuitions or unexpected, uncovered medical emergencies or home care for an elderly parent.
Unions have been forced since the inflationary early 1970s to adjust to the new realities of business and to cooperate more closely with employers to stay competitive. As for the workers, they are never guaranteed year-round, nine-to-five employment. The image of the union construction worker as a pampered and overcompensated blue-collar aristocrat is undeserved and misleading.
A Wisconsin Example
For perspective, a carpenter who works under state prevailing wages in Adams County, Wis. (population: 21,000), where prevailing wages also have been under fire, takes in about $48.72 an hour total, of which $16 is fringe benefit. That rural Wisconsin rate, it's clear, is significantly higher than the mid-to-high $20-an-hour range for open-shop journey-level salary and fringe benefits. The fringe benefits provided in many prevailing wage determinations and the overly complicated problems of complying assure that open-shop contractors won't do those jobs.
In the private sector, open-shop employers have outstripped their union rivals. Freed from the limits imposed by union pay rates and work rules, nonunion contractors offer jobs and chances for advancement to millions of workers who never joined, were not welcome or rejected life within the union system. But retirement security has been pared in the private sector, and unions provide richer benefits. In Indiana, prevailing wage opponents, helped by political-action-committee funds, seem to have overcome the unions' political muscle and turned squeezed taxpayers who have less against union building-trades workers, who have a bit more.
In the best of all worlds, reforms that require prevailing wages to be based on accurate surveys and reasonable project thresholds are best. But in general, state prevailing wages keep union craftworkers' footing solidly in the middle class.
