Walker idea hurts vets

In his budget speech, Gov. Scott Walker proposed a repeal of Wisconsin’s longstanding prevailing wage laws. These laws require that construction workers on state construction projects be paid the wages and benefits prevailing for similar work in or near the locality in which the construction project is to be performed.

The prevailing wage concept arises from the concern that unbridled competition among employers to pay low wages in construction would lead to a less-skilled and less-productive workforce and to shoddy construction practices and unsafe public buildings and infrastructure.

Over the years, these laws have enjoyed bipartisan support. Recent attempts to repeal them are based on the claim that repeal will save dollars on construction costs and bolster state and local budgets. But there is a disconnect.

Consider military veterans. Missing from the debate is the fact that vets pursue jobs in the construction trades at substantially high rates. Nationally, veterans account for 5.8% of the overall workforce but comprise 6.9% of all blue-collar construction workers. In Wisconsin, veterans make up an even larger share of the construction workforce. Approximately, 8.3% of all blue-collar construction workers in Wisconsin are veterans, which is approximately 8,900 workers. This means that any effort to weaken or eliminate these laws would have an outsized impact on them.

In two recent studies published in 2016, Frank Manzo and his co-authors have analyzed the impact of prevailing wage laws on military veterans both nationally and in Wisconsin. They have found that the economic conditions of veterans would be profoundly affected if states with strong-to-moderate prevailing wage laws were to weaken their standards.

Their studies have shown that about 2,000 blue-collar veterans are expected to separate from their jobs in Wisconsin’s construction occupations due to the prevailing wage changes; the total income of all veterans employed in construction jobs will decline by $113 million; about 400 veterans will lose their employer-provided health plan; and about 200 veteran workers will fall into poverty by 2018.

The belief that reducing wages will reduce costs is based on a simple and incomplete understanding of the construction industry. A fundamental problem: Labor costs are a low percent of total construction costs. According to the 2012 Economic Census of Construction, for the type of projects covered by Wisconsin’s prevailing wage standard, labor costs and benefits are about 20% of total costs. As a result, it is not possible to obtain substantial savings.

Consistent with the credible academic research in this area, two years ago, the non-partisan Legislative Fiscal Bureau issued a memorandum concluding that there were no budget savings from repealing the state’s prevailing wage laws. The governor’s proposed budget, likewise, assigns no budget savings to repealing the remaining prevailing wage laws.

The U.S. economy is growing, and construction contractors are scrambling to find skilled workers. Supporting policies that aim to lower wages in an environment where skilled workers are in short supply makes no sense. Prevailing wage laws are vital to all construction worker wages, but are especially crucial for veterans whose post-military service work skews blue collar at a higher rate than other demographics. Repealing these laws would hurt them disproportionately with no cost savings to justify the action.