Report: Indiana prevailing wage repeal decreased worker pay

Indiana prevailing wage repeal decreased worker pay

Interesting story on POLITICO Pro that claims the repeal of Indiana’s prevailing wage law decreased worker earnings by an average 8.5 percent, according to a study released today by the Midwest Economic Policy Institute.

The repeal, approved by the state legislature in 2015, decreased wages of the lowest-paid workers by 15 percent, the report found.

The study analyzed data from the Labor and Commerce departments and the U.S. Census Bureau comparing Indiana to three neighboring states — Illinois, Michigan and Ohio — that have prevailing wage laws in place.

“Middle class wage cuts were never good politics, but this report underscores the more important fact that they are not good policy either,” Indiana GOP Rep. Ed Soliday said in a statement. “I hope my colleagues in other states will learn from our experience and avoid making the same mistake.”

Executive Summary (Midwest Economic Policy Institute)

On July 1, 2015, Indiana lawmakers completely repealed Common Construction Wage, which was a minimum
wage that supported blue-collar construction workers employed on public construction projects. Repeal of
Common Construction Wage has led to a host of negative impacts on workers and the construction industry–
including lower wages and more income inequality– while failing to deliver any meaningful cost savings or
increased bid competition promised by those in favor of repeal.

Actual economic data reveal that:

1. Repeal decreased the wages of blue-collar construction workers by 8.5 percent, on average.
2. Repeal decreased the wages of the lowest-paid construction workers by 15.1 percent, contributing to
greater wage inequality in construction.
3. Repeal was statistically associated with a 4.5 percentage-point increase in the share of workers in
construction occupations without a high school diploma or equivalent.
4. The share of construction workers who are military veterans fell by 1.2 percentage points post-repeal.
5. Construction worker productivity growth was 5.3 percentage-points slower in Indiana than in
neighboring Midwest states following repeal.
6. Relative worker turnover increased by 1.2 percentage points in Indiana’s heavy and highway
construction sector following repeal.
7. Employment growth in public works construction was 1.5 percentage-points slower in Indiana than in
neighboring Midwest states following repeal, and evidence suggests that repeal has resulted in more
out-of-state workers employed on public projects in Indiana.
8. The average number of bidders on public projects in northern Indiana was 3.0 before repeal and 2.9
after repeal.
9. Common Construction Wage did not favor union contractors, as the union share of northern Indiana’s
public construction market stayed the same or even increased following repeal.
10. Repeal had no statistical impact on the average cost per public school project in northern Indiana