A new study released by researchers at the University of Missouri-Kansas City (UMKC) and the Midwest Economic Policy Institute (MEPI) showed the loss of Prevailing Wage is hurting the state’s construction workers and individual communities, while also not providing any meaningful savings for taxpayers.
The report titled “The Impact of Repealing West Virginia’s Prevailing Wage Law: Economic Effects on the Construction Industry and Fiscal Effects on School Construction Costs,” evaluates economic and school construction project data in order to assess the effects of the loss of Prevailing Wage in the Mountaineer state.
In 2016, West Virginia legislators repealed the state’s Prevailing Wage law, arguing the change would allow the state to build five schools for the price of three by reducing the hourly salary of construction workers.
Less than three years into the repeal, the UMKC study shows those claims were false, only serving to hurt construction worker wages, reduce the number of registered building trades apprenticeships and make jobsites less safe. As for the school projects, they have been plagued by cost overruns, poor quality of work and a decrease in bid competition.
Members of the building trades have been directly affected by the repeal, as the average hourly wages of construction workers grew slower in West Virginia than compared to neighboring states where Prevailing Wage laws exist. Between May 2016 and May 2018, average inflation-adjusted wage for West Virginia construction and extraction workers (miners) grew by 0.8 percent to $23.31 per hour. (The report notes mining and construction is lumped into the same category by the Bureau of Labor Statistics. Since coal production has increased in the past two years, this has resulted in marginal wage increases for miners, which ultimately affects the average inflation-adjusted wage.) During this same time frame, the average inflation adjusted hourly wage for construction and extraction workers in Ohio, Pennsylvania and Maryland grew by 1.2 percent, from $24.52 to $24.82.
When looking at specific trades, West Virginia operating engineers saw an 8.1 percent drop in
hourly pay, compared to their counterparts in neighboring states with Prevailing Wage. Hourly wages for carpenters grew 2.9 percent slower, laborers 1.2 percent slower and electricians 2.2 percent slower.
Besides taking a hit on wages, the construction industry also suffered a major blow in developing a future workforce, as fewer apprentices began construction careers.
From 2016 to 2018, the number of individuals in registered apprentice programs dropped by 1,055 apprentices, which was a 19.5 percent decrease in apprentices, while neighboring states with Prevailing Wage laws realized an 8.1 percent increase in apprentices. This resulted in a net difference of -27.6 percent in apprenticeship growth.
Not surprising, the repeal of Prevailing Wage repeal also made the construction industry more dangerous.
“Relative to the regional trend, the construction worker injury rate increased by 26.4 percent in West Virginia following repeal of Prevailing Wage,” the report stated.
When it came to saving the taxpayers money, the repeal of Prevailing Wage fell short.
According to the report, three new-build school construction project bids (Shady Springs High, Williamstown Elementary and Chapmanville Intermediate) were awarded after repeal of the state’s Prevailing Wage law.
In each case, the projects had significant change orders, which cost taxpayers more than $1 million over the original bid, along with construction delays and cost overruns.
Two projects – Shady Springs School and Williamstown Elementary were hampered by more than 80 change orders, with one project still ongoing, which combined cost taxpayers more than $1.5 million.
The Chapmanville Intermediate project was plagued by poor quality workmanship and delays in construction resulted in the building not being ready for the first day of the school year. Scheduled to open in June, work did not wrap up until November– six months after the original due date. Among the craftsmanship problems cited by the Clerk of Works Weekly Report were voids discovered in walls with steel columns, brick haunches and brick anchors incorrectly installed and stairwell walls built in the wrong dimensions.
Additionally, a safety audit by Mountaineer Safety Consulting, LLC revealed the project had nine state and federal OSHA violations, among them were propane hoses placed in unsafe areas, workers not using personal protective equipment such as hard hats or safety glasses and ladders not tied off correctly.
The Cleveland Building and Construction Trades Council strongly defends the use of Prevailing Wage. Visit our Prevailing Wage page to learn more about Ohio’s Prevailing Wage law and the impact it makes to building trades members.