Prevailing Wage Repeal Has Not Reduced Indiana Public Construction Outlays

The Midwest Economic Policy Institute and Colorado State University recently released a study of the economic effects of Governor Mike Pence’s 2015 repeal of Indiana’s prevailing wage law, and report that the repeal has cut craft worker wages by 8.5% in the state, but has not produced any statistical drop in the taxpayer cost of the 335 public school construction projects studied. The report also concludes that the repeal increased employment turnover in the heavy/highway construction sector by 1.2% and that productivity growth in Indiana was 5.3% less than in surrounding states.

Frank Manzo IV, policy director of the Institute says “wages and benefits account for only around 20% of total project costs. It is simply not mathematically possible to wage-cut your way to the project savings that were promised.” It looks like the situation is the same as President Trump’s tax “reforms:” public works contractors have cut craft worker wages, and pocketed the difference as additional profit on public works projects in Indiana.