An inconvenient truth (about prevailing wages, not global warming)

Steve Buckstein

Cascade has researched, written and testified about what’s wrong with prevailing wage laws for a long time. Basically, these laws require that higher than market wages be paid to workers on “public works” projects such as roads, schools, courthouses, etc.

Supporters of Oregon’s prevailing wage laws, primairly trade unions, defend them by claiming that the prevailing wage is really just the market wage for a given skill in a given region of the state. The wage rates are set after a compulsory survey is returned to the Oregon Bureau of Labor and Industries stating wages paid by the responding construction firms.

Now, a bill before the Legislature seeks to exempt certain projects, primarily the construction of low-income housing units. Both agencies commissioning such projects and trade unions testified in favor of this exemption. What isn’t clear is why the unions would support such an exemption. If, as they claim, prevailing wage is the market wage, then what difference would exempting some projects make? For that matter, if prevailing wage is the market wage, why impose by law that which the market would demand anyway?

When I testified* on this bill before the House Business and Labor Committee on February 21st, I asked the committee members a simple question. “If prevailing wage is really the market wage, why are we all here? I’m confused. What difference will this bill make?” Not one committee member would answer my question. Not one!

I followed up by stating the obvious; that clearly prevailing wage rates are above the market. That’s why exempting low-income housing projects would allow them to be built with lower-cost labor, thus allowing more units to be built. Again, no member of the committee would even agree with that assessment.

One legislator asked if I was really questioning the whole concept of prevailing wage. Of course I question the whole concept, but I told her that I knew abolishing the prevailing wage law was not on the table, and that was not the purpose of my testimony. I simply favored exempting as many categories of projects as possible because that would reduce the cost to taxpayers of building them. This bill would be a good step in that direction.

Another legislator implied that “in my world” Oregon could import out of state workers and pay them “slave wages.” I assured the esteemed representative that I was firmly against slavery. Of course, all private construction jobs in Oregon don’t fall under the prevailing wage laws already, so was he implying that all those projects pay “slave wages” already? I didn’t ask him that question, but am pretty sure he wouldn’t have answered even if I had thought to ask.

I must have asked those legislators four or five times to please explain to me the purpose of this bill, and what difference it would make if the prevailing wage rates they were considering waiving were really market rates after all. All I got at the end was silence. Stares, in fact. Not one legislator even began to try to answer my question.

Of course, legislative hearings are designed for citizens to speak to their legislators, not ask them “inconvenient” questions. But I still would like an answer.

*Listen to the entire hearing. My testimony, including questions and lack of answers from legislators, begins at 01:07 into the hearing.

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