Repealing prevailing wage law will benefit Michigan school districts

John Kennedy is president and CEO of Autocam Medical and an Executive Committee member of the West Michigan Policy Forum, who support this position.

Michigan has made a number of positive strategic moves that are finally getting our state house in order to cut spending, increase transparency and demand accountability for taxpayer dollars spent. The repeal of the prevailing wage law is the next step to keep Michigan moving forward.

While most homeowners and businesses request multiple bids before moving ahead on building a home, remodeling a plant, or even paving their driveway, Michigan's 1965 prevailing wage mandate takes away that option for public schools and state contracts. Instead, this 50-year-old law requires government and schools to pay wages set by union bosses in limited job classifications. This has the chilling effect of limiting the number of bids submitted by contractors of equal or better quality that can do the same work for less money. Many small businesses have skilled people working on contracts that don’t fit into these arbitrary classifications, and also can’t afford the administrative time this law has created.

Basic economics tells us prohibiting competition and adding bureaucracy, whether for a product or service, always drives up costs. Our schools deserve to have all the same options to bid work the same as business and/or homeowners.

Imagine if a family had to fix their furnace or car and were forced to hire a contractor or body shop with set rates, regardless of quality, service or price. Think of the enormous cost that would add. Then imagine if a company had to fix a machine, or contract to expand their plant and the cost of that work was pre-determined by the contractors who are bidding. Prices on goods and services would skyrocket!

So what is the cost to our schoolchildren as a result of this law? $224 million could go directly into the classroom but instead goes to big business profits. Michigan schools spend $224 million more to do the work needed than if they had the option to bid out the work like a regular business or homeowner. Just think for a minute of how that money could be better used in the classroom. It's simple; it equals the cost of 3,500 new teachers and about $140 for every Michigan student.

I'm a manufacturer. I have a passion for education and the talent my company will need in the future to remain strong. My customers from around the globe demand the highest quality products at the best price for every part we create for them. I employ some of the brightest, most talented individuals in the world in order to secure the customers and work that we have. I must pay them well to keep them working for me and ensure that we remain competitive. Our state needs to do the same.

Michigan is ranked 29th in household income (below average) and is one of only 6 states that has a prevailing wage mandate based on union contracts. We also have a shortage of workers to fill skilled trades’ jobs. The 50-year history has proven that a prevailing wage mandate has not better prepared our workers to fill the skilled trades’ needs nor has it significantly changed income levels. Therefore, it makes no sense that we should keep what isn’t working.

I am a member of the 40+ Michigan employers who align with the West Michigan Policy Forum in support of the elimination of this law. Now is the time for our lawmakers to take this next step forward, and eliminate this law. Let’s put additional dollars back in the communities and schools that need them. Neighboring Ohio recently eliminated a similar mandate and it has saved their schools and taxpayers about $480 million. We can do the same.