The three chapters of the Associated General Contractors of America (AGCA) in the state of Missouri (AGC of Missouri, The Builders’ Association in Kansas City, Heavy Constructors Association of Greater Kansas City) are in opposition to either the repeal of or massive changes to the existing prevailing wage statutes. We are, though, willing to discuss well thought-out reforms to improve the law.
Combined, our associations represent over 1,435 companies – commercial, industrial, heavy and highway contractors, industry partners and related firms – spanning the entire state of Missouri, making the AGC chapters combined the largest construction industry association team in the state.
The companies represented by these three AGC chapters employ over 38,000 workers in Missouri.
The issue of prevailing wage is often presumed to be a Union vs. Open Shop issue. We would like to dispel that presumption. Statewide, approximately 40% of our members are open shop. Open shop contractors appreciate and support the merits of Missouri’s prevailing wage laws just as much as our union contractors.
Construction jobs are not the same as manufacturing jobs. Construction jobs are controlled by weather, seasons and availability of work in a competitive marketplace. For example, Boone County recently announced the location of a new manufacturing plant and the creation of dozens of high-paying jobs above the Boone County wage average of $36,225 per year. These are the same kind of jobs the all candidates promised during their campaigns and that Governor Greitens feels is critical to improving Missouri’s economy.
The real issue at hand here is that prevailing wage provides good paying jobs and secures economic benefits to the state of Missouri that would not otherwise be provided in a low wage economy. The current system’s benefits include the following:
1. A worker’s pay includes health insurance, so they will not become a user of costly government-mandated health programs.
2. A worker’s pay includes retirement benefits that can provide a comfortable retirement. They will not be solely dependent on government programs.
3. The state of Missouri will have increased tax collections from prevailing wage employees.
4. Workers will have increased consumer spending power that will create a ripple effect in the economy.
5. Labor productivity is a critical component of the long-term economic health of the United States. A well-trained, fairly paid construction labor sector contributes to a motivated, productive and safe workforce that expands output.
Prevailing wage provides a measure of job security to Missouri workers. University of Utah Economic Professor Peter Phillips, a labor economist specializing in the construction labor market found that 11 years after Kansas repealed its prevailing wage law in 1987:
-Wages and benefits dropped for working families whether or not they belonged to a labor union.
-Workplace safety declined as worker injuries increased 19%. Lost time means project delays and additional costs to taxpayers by way of more workers’ comp claims.
-It drastically reduced the size of the skilled workforce, particularly among minorities; apprenticeship training fell by 38% and minority apprenticeship training dropped by 54%.
Prevailing wage statutes maintain the economy. A January 2015 commentary published by the Illinois Economic Policy Institute using data from the U.S. Department of Commerce reports that states with no or weak prevailing wage laws contributed $272.2 billion towards the U.S. economy in 2012. Conversely, states with average to strong laws saw a construction industry GDP of $308.9 billion. Dividing industry GDP by the number of employees in each type of state, we find workers in states with no or weak prevailing wage laws each contributed $106,505 toward the economy in 2012.
Construction workers in states with average to strong prevailing wage laws contributed $114,178 per worker – 6.7% more value added to the economy.
Minor changes to the law could have major unintended consequences that could alter the current public works construction marketplace. Some of these consequences have been documented in other states and include lower wages, less skilled workers and more dependence on government social safety-net programs.
Edward R. DeSoignie, Executive Director - Heavy Constructors Association of Greater Kansas City
Don Greenwell, President - Builders’ Association in Kansas City
Leonard Toenjes, CAE, President - Associated General Contractors of Missouri