Prevailing Wage protects cities from unnecessary costs over the lifetime of a project. Research shows that lowering local standards for construction wages tends to attract a lower skilled, out-of-area workforce which results in large productivity losses on the construction project. These workers require more supervision and their work often needs additional review and repair before it can be deemed safe and secure.
Cities also may lose revenue through lower tax income and higher social service costs for workers who are not paid a Prevailing Wage.
Labor Share of Non-Residential Construction Value
Labor only accounts for 24% of overall job costs. Workers on prevailing wage projects are more productive, prone to less accidents and use less materials so cutting wages does not produce savings and only creates problems.
A recent national study confirms that states without prevailing wage laws not only undermine workmanship, productivity, and workforce development programs that promote construction career pathways for racial minorities and veterans, but millions more is spent in these states on food stamps, EITC (Earned Income Tax Credit), and public forms of insurance for low income blue-collar construction workers, with smaller overall economic output, higher income inequality, and millions less in tax revenue. Read the full report here.
Source: 2007 Economic Census, Construction Industry Series