Michigan Gov. Gretchen Whitmer reinstated prevailing wage requirements on state projects Oct. 7.
The move came in the form of an executive order, overriding the Republican-led Michigan legislature’s 2018 repeal of prevailing wage laws. Whitmer cited the Management and Budget Act as her source of authority for the order.
The prevailing wage law requires private contractors to pay union rates on state projects. Union leaders, such as Tom Lutz of the Michigan Regional Council of Carpenters and Millwrights, said this allows for a “level playing field” between unionized and non-unionized contractors, according to the governor’s office.
Free-market advocates claim that the higher rates on prevailing wage contracts cost taxpayers more and reduce the amount of work that can be completed.
In a statement released by the governor’s office, Lutz claimed that prevailing wage laws also prevent the exploitation of workers.
The Public Service Research Foundation, a national group, said in a press release that unions use prevailing wage laws to increase pay rates for their members. The group cited an Oklahoma case where a union official reported fake workers, at fake rates of pay, on fake projects. The PSRF also cited a 1983 Carter Administration study that found prevailing wage laws result in additional inflation of nearly 0.25 percent.
Michigan Senate Majority Leader Mike Shirkey, a Republican representing the district that includes Hillsdale County, said Whitmer’s order is purely a political ploy, saying that it “smells of desperation.” Shirkey also pointed to recent electoral trends, which he claims show that union members are “migrating to the Republicans.”
“At the end of the day, Gov. Whitmer has to live with the fact she cast aside the will of the public and the Constitution to attempt to purchase public favor,” Shirkey said in a statement.
Maxford Nelsen, Director of Labor Policy at the Freedom Foundation, said private sector unions have an interest in government policies because of issues like the prevailing wage.
“It is a requirement that artificially increases the cost of government construction projects and makes things more expensive for taxpayers than they need to be,” he said. “It’s taking money out of the economy, especially at the state level.”
According to Nelsen, states don’t have the same spending and borrowing ability as the federal government. To institute a prevailing wage requirement, he said, the state will have to cut spending or increase taxes.
“It is a benefit to a small group, but the broader population of taxpayers and government service recipients will be paying for it,” Nelsen said.
Logan Washburn contributed to this report.