Repealing the Prevailing Wage Would Cost IL 3,300 Jobs, $1B in GDP, $44M in Taxes, Says New Study

Construction on Chicago's Spire, circa 2008. Flickr/Charles Carper.Beginning January 1st, Tennessee eradicated the prevailing wage. Throughout California, cities are attempting to charterize in order to do the same thing. In Illinois, growing budget deficits and underfunded pensions have some lawmakers on the right calling for the repeal of this age-old wage protection in the name of “taxpayer savings.”

This broad, counterproductive strategy does more to benefit special interests groups than the labor market on which prevailing wages have a clear, positive effect. A Quincy Journal opinion piece highlights research conducted by labor experts from the University of Illinois, that shows repealing the prevailing wage in Illinois would weaken the state’s economy:

According to Robert Bruno, a professor of labor and employment relations on the Urbana campus, prevailing wages for public construction projects in Illinois provide numerous positive economic and social outcomes for construction workers and the state.

“A policy like the prevailing wage law is one of those safeguards that protects Illinois’ economy and workplace,” said Bruno, also the director of the Labor Education Program in Chicago. “Any efforts to change, alter or weaken it would put one of the most important pillars of a middle-class economy in the state at risk. There are enormous implications when you attempt to undermine a standard for compensation and health and safety, especially in an occupation as dangerous as construction work.”

The findings fall in line with many other studies which suggest taxpayer savings are a myth, while job loss and safety concerns relating to repeal are real. According to Bruno, prevailing wages “serve to establish minimum or community standards in labor markets.”

Here, “minimum” is the operative word. Prevailing wages don’t create a surplus to be reaped. They are a protection, without which workers are left vulnerable to all manner of unscrupulous conduct by owners.

Moreover, without prevailing wage laws, contracts are more likely to go to out-of-state contractors who would bring in workers instead of hiring locally.  Because of this, many Illinois workers would find themselves unemployed, placing new strains on state programs, Bruno writes:

According to the research, the indirect effects of the law’s repeal would result in about 3,300 net jobs lost; a contraction of more than $1 billion in state gross domestic product annually; and more than $44 million in lost state and local taxes as well as roughly $116 million in lost federal tax revenue.

“This is one of the key policies that allows the state of Illinois to sustain a high-wage economy,” Bruno said.

Illinois is currently ranked 18th in average income.

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