Thursday, October 25, 2007

Unions busting you

Here's a follow-up to yesterday's post on local union attempts to make Lansing a closed shop.

The Mackinac Center for Public Policy has some thoughts on Michigan's "prevailing wage" statute, which these unions are urging be supplemented with a similar rule for private development in the City of Lansing. It's a bad idea for everyone except a few union members.

Prevailing Wage Memorandum
We have recently released a major study on the effects of Michigan's
prevailing wage law,, [linked below] in which we found that the
law increased the cost of government-financed construction by 10 to 15
percent, adding $250 million to the cost of government without any
measurable improvement in quality and mixed evidence of improvement in
productivity. We found that the law disproportionately benefited
high-wage workers; workers in Michigan's construction industry
typically earned wages 28.1 percent higher than those of Michigan*s
workforce as a whole, but the prevailing wage law increased those wages
from 40 to 60 percent on state-financed construction. And finally we
found that strict prevailing wage laws like Michigan's were associated
with a lower percentage of a state's workforce engaged in
construction, indicating that prevailing wage laws restricted
opportunities for job-seekers in the construction field.

Sweet Home Alabama
Our research showed that the economies of right-to-work states grew
faster and created jobs at more than twice the rate of states that
allowed forced unionism. Naturally, with so many jobs being created,
right-to-work states had lower unemployment.

...While GM and Ford slashed their payrolls, automakers in Alabama were
building new plants and creating jobs. According to the U.S. Census,
between 2001 and 2006 employment in auto manufacturing in Alabama more
than tripled and employment in parts manufacturing increased by more
than a third.

The Effects of Michigan's Prevailing Wage Law
The prevailing wage law forces the payment of union wages on state
construction projects despite the fact that union workers made up just
22.1 percent of the construction work force in Michigan in 2006. In the
process, the law provides a boost in compensation of 40 percent to 60
percent to construction workers who already receive wages well above the
average for workers in this state. This cost is ultimately passed on to
Michigan taxpayers, who lose $232 million annually - a conservative
estimate calculated in 2002 dollars - without any discernible benefit
for the vast majority of Michiganians.

Prevailing wage laws may limit jobs in the construction industry. In 18
states without prevailing wage laws in 2004, construction workers made
up 5.3 percent of the work force, compared with only 4.2 percent for
states with strong prevailing wage laws. In Michigan, construction
employment made up only 3.7 percent of the jobs in the state*s
economy. Professor Richard Vedder has calculated that the temporary
suspension of Michigan*s prevailing wage law in the mid-1990s was
responsible for the creation of an additional 11,000 construction jobs
between 1994 and 1997.
Higher costs. Fewer jobs. More taxes. Look for the Union Label.

1 comment:

Anonymous said...

The Mackinac Center for Public Policy has it all wrong.

They support a low wage economic development policy which attracts footloose jobs.

Those low paying footloose jobs will come, and leave when another state or country offers them even lower wages.

Lower wages reduce the amount of disposable income, thereby slowing the economy and reducing tax revenues to unacceptable levels.