A representative from WMC recently spoke to the Waukesha County Business Alliance Economic Development Committee to provide insight on the Prevailing Wage Laws in Wisconsin.
Established by the Davis Bacon Act of 1931, prevailing wage laws were geared to stop outside contractors from undercutting local businesses. Wisconsin actually has three separate prevailing wage rate laws, each covering a different type of public works project:
- Section 66.0903, Wisconsin Statutes covers projects bid or negotiated by a local governmental unit.
- Section 103.49, Wisconsin Statutes covers projects bid by a state agency, except state highway and bridge projects.
- Section 103.50, Wisconsin Statutes covers state highway and bridge projects bid by the Department of Transportation.
The Wisconsin Department of Workforce Development states “These laws mandated that most workers employed on public works projects must receive wages which are representative of the wages normally paid to workers on similar private projects in an area. Employers were required to base their bids on prudent planning, good management and supervision and the skill and efficiency of their workers and not solely on the wages paid to their workers.”
According to a recent study however, WISTAX stated that the formula for calculating prevailing wages in Wisconsin is flawed. The study showed prevailing wage rates are overestimated by 23% compared to Bureau of Labor Statistics (BLS) wage data for the same Wisconsin workers. When worker benefits are added in, taxpayers are paying for labor costs that are inflated by 45%. The current formula requires companies to submit data on wages, etc. They typically receive approx. 10% response rate.
Opponents of the potential reforms site concerns with outside contractors slashing prices and undercutting the marketplace, safety, and training. They are also operating under Union contracts that have prevailing wage laws taken into account.
Reform options that are being discussed and considered include:
- Repeal 1, 2 or all 3 laws
- Make an adjustment to increase the threshold for when prevailing wage applies
- Reform the formula
- Minimize Davis Bacon impacts
The situation currently at hand regarding the deficit with transportation fund in Wisconsin has elevated the importance of finding savings. The prevailing wage law will continue to be a discussion point. It is important to note that currently WMC has not taken a position on the pending legislation and it will continue to be a hot topic in the State of Wisconsin.
