Economic Research On Prevailing Wage - 2015

The Economic Benefits of Prevailing Wages
Frank Manzo IV, M.P.P.

ILLINOIS ECONOMIC POLICY INSTITUTE
Policy Director
Key Points
1.
Prevailing wage promotes middle class jobs with good wages
2.
Prevailing wage supports high-quality infrastructure that is

safe and durable
3.
Prevailing wage promotes a skilled workforce that completes

jobs right, on-time, the first time
4.
Prevailing wage strengthens state and local economies
5.
Prevailing wage is the best deal for taxpayers

Frank Manzo IV - fmanzo@illinoisepi.org /// Illinois Economic Policy Institute www.illinoisepi.org
Prevailing Wage Preserves and

Promotes Middle Class Jobs
Wage and Salary Income

(Adjusted by Inflation and Regional Prices)
40%
33.8%
29.9%
30%
20%
26.2%
18.8%
18.2%
17.0%
20.7%
16.4%
10%
0%
25th percentile
50th percentile
Strong or Average PWL
75th percentile
90th percentile
Union Membership
Prevailing Wage Supports the

Largest Privately-Financed System
of Higher Education in America
Apprenticeship Training vs.

Typical Bachelors Degree
Source: International Union of Operating Engineers Local 150 Assistant Coordinator-Safety Administrator. Local 150 covers counties in Illinois, Indiana, and Iowa.
PW Helps Build Careers, Not Just Jobs

States with PW: Double the Apprentices
Apprentices earn $124,000 more over career.
Greater annual earnings gain than bachelors degree in: English,
Fine Arts, Education, Physical Fitness and Recreation Activities
Worker training fell by 40% in the nine states that

repealed their PW laws from 1979 to 1988.
Prevailing Wage Supports HighQuality Infrastructure That is Safe

and Durable
Net Effects: Increase in Productivity
Debunks the Cost Myth

Costs =
Business Cycle and Local Conditions +
Materials Costs +
Product Type & Scale
No statistically significant PWL effect

Governor Rauner Claim

Rauner: PWLs raise school construction costs by $160M/yr
Fact-Check: FALSE
Governor assumes no impact of PWL on productivity and does
not factor in school size, type, location, materials, etc.
Real life example: Ohio exempted school construction from its

PWL in 1997 No decrease in construction costs without PWL
regulations, and today schools are no longer exempt.
Prevailing Wage Strengthens State

and Local Economies
High-Road Economic Development

Consumer spending = Job creation
Infrastructure quality = Job creation
-94% of CEOs: Highway accessibility is important location factor
-Every prevailing wage dollar generates $1.50 in economic activity
PW Repeal Economic Effects

Value of Construction
Work
by In-State Contractors
Indiana (PWL)
90.5%
Illinois (PWL)
93.2%
Iowa (No PWL)
88.1%
States with a Strong PWL
91.0%
States without a PWL

85.0%
89.2%
87.5%
90.0%
92.5%
95.0%
Illinois
Illinois
Lost state and local tax revenues annually:
-$45 million
Lost federal tax revenues annually:

-$120 million
Increase in work-related fatalities:
+70 deaths over ten years
Prevailing Wage is the Best Deal for

Taxpayers
PW Reduces Reliance on Public Aid

Earns Less Than
Official Poverty Line
Receives Food
Stamp Assistance
Taxpayers do not save by repealing prevailing wage laws, they subsidize.

Repeal Would Strain Public Budgets

Economic or Public
Sector Budget Outcome
Percentage
Point Change
Workers
Affected
Total Impact on
Public Budgets
Lives below the poverty line
+3.1%
+100,00
--
Has health insurance
-9.8%
-320,000
--
Has a pension plan at work
-3.8%
-120,000
--
Receives food stamp assistance
+3.1%
+100,000
+$310 million
Earned Income Tax Credit (EITC)
+1.1%
+40,000
+$75 million
Federal income taxes paid,

after credits and deductions
--
3,300,000
-$3,400 million
PW is the Best Deal for Taxpayers

PW raises and compresses wages
More income to spend
Less income inequality
More sales and income tax

revenues
Less reliance on government

assistance programs
Prevailing Wage is the Right Choice

We have a choice:
Good Jobs vs Bad Jobs
PWL = foundation for security, careers
Stable supply of skilled labor

Stronger states and local economies
Remember, Remember...
1. Prevailing wage preserves and promotes middle class jobs
2. Prevailing wage supports the largest privately-financed

system of higher education in America
3. Prevailing wage supports high-quality infrastructure that is
safe and durable
4. Prevailing wage strengthens state and local communities
5. Prevailing wage is the best deal for taxpayers
Resources
Illinois Economic Policy Institute (ILEPI): www.illinoisepi.org and
https://twitter.com/IllinoisEPI.
Smart Cities Prevail (SCP): www.smartcitiesprevail.org and
https://twitter.com/CaCitiesPrevail.
Comprehensive lists of economic studies on prevailing wage laws:

http://www.faircontracting.org/studiesandreports
http://www.smartcitiesprevail.org/resources/research-and-case-studies/

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The Economic Benefits of Prevailing Wages

Frank Manzo IV, M.P.P.

Prevailing wage promotes middle class jobs with good wages

Prevailing wage supports high-quality infrastructure that is

Prevailing wage promotes a skilled workforce that completes

Prevailing wage strengthens state and local economies

Prevailing wage is the best deal for taxpayers

Prevailing Wage Preserves and

Frank Manzo IV - fmanzo@illinoisepi.org /// Illinois Economic Policy Institute www.illinoisepi.org

Frank Manzo IV - fmanzo@illinoisepi.org /// Illinois Economic Policy Institute www.illinoisepi.org

Wage and Salary Income

Strong or Average PWL

Frank Manzo IV - fmanzo@illinoisepi.org /// Illinois Economic Policy Institute www.illinoisepi.org

Prevailing Wage Supports the

Frank Manzo IV - fmanzo@illinoisepi.org /// Illinois Economic Policy Institute www.illinoisepi.org

Apprenticeship Training vs.

Frank Manzo IV - fmanzo@illinoisepi.org /// Illinois Economic Policy Institute www.illinoisepi.org

PW Helps Build Careers, Not Just Jobs

Worker training fell by 40% in the nine states that

Frank Manzo IV - fmanzo@illinoisepi.org /// Illinois Economic Policy Institute www.illinoisepi.org

Prevailing Wage Supports HighQuality Infrastructure That is Safe

Frank Manzo IV - fmanzo@illinoisepi.org /// Illinois Economic Policy Institute www.illinoisepi.org

Net Effects: Increase in Productivity

Frank Manzo IV - fmanzo@illinoisepi.org /// Illinois Economic Policy Institute www.illinoisepi.org

Debunks the Cost Myth

Business Cycle and Local Conditions +

Product Type & Scale

No statistically significant PWL effect

Governor Rauner Claim

Governor assumes no impact of PWL on productivity and does

not factor in school size, type, location, materials, etc.

Real life example: Ohio exempted school construction from its

Frank Manzo IV - fmanzo@illinoisepi.org /// Illinois Economic Policy Institute www.illinoisepi.org

Prevailing Wage Strengthens State

Frank Manzo IV - fmanzo@illinoisepi.org /// Illinois Economic Policy Institute www.illinoisepi.org

High-Road Economic Development

Frank Manzo IV - fmanzo@illinoisepi.org /// Illinois Economic Policy Institute www.illinoisepi.org

PW Repeal Economic Effects

Iowa (No PWL)

States with a Strong PWL

States without a PWL

Frank Manzo IV - fmanzo@illinoisepi.org /// Illinois Economic Policy Institute www.illinoisepi.org

Frank Manzo IV - fmanzo@illinoisepi.org /// Illinois Economic Policy Institute www.illinoisepi.org

Lost federal tax revenues annually:

Prevailing Wage is the Best Deal for

Frank Manzo IV - fmanzo@illinoisepi.org /// Illinois Economic Policy Institute www.illinoisepi.org

PW Reduces Reliance on Public Aid

Taxpayers do not save by repealing prevailing wage laws, they subsidize.

Repeal Would Strain Public Budgets

Lives below the poverty line

Has health insurance

Has a pension plan at work

Receives food stamp assistance

Earned Income Tax Credit (EITC)

Federal income taxes paid,

Frank Manzo IV - fmanzo@illinoisepi.org /// Illinois Economic Policy Institute www.illinoisepi.org

PW is the Best Deal for Taxpayers

Less income inequality

More sales and income tax

Less reliance on government

Frank Manzo IV - fmanzo@illinoisepi.org /// Illinois Economic Policy Institute www.illinoisepi.org

Prevailing Wage is the Right Choice

Stable supply of skilled labor