Michigan Prevailing Wage Update

Posted by: Hilger Hammond On: 15th February 2017 | no responses.

By: Mark A. Rysberg

Michigan’s prevailing wage law faces potential repeal in 2017. The first three bills proposed by the Michigan Senate are directed at repealing the laws that require labor on Michigan public construction projects be paid at prevailing wage rates akin to union-level wages. This is not the first time this issue has surfaced in Michigan and in other states across the country.

Proponents of repealing prevailing wage contend that requiring higher labor costs is passed through to the taxpayers whereas the opposition claims that prevailing wage results in higher-quality public improvements and a fair wage for the people of Michigan that perform the improvements. The debate over these issues is expected to be heated and continue throughout the year. Check back for additional updates about this issue and the future of Michigan’s prevailing wage legislation on public construction projects.

Mark A. Rysberg is a construction lawyer who maintains a local and national practice representing owners, contractors, subcontractors, and suppliers on a variety of issues affecting all aspects of the construction industry.

Michigan’s Prevailing Wage Act – Committee Report on Fiscal Impact

Posted by: Hilger Hammond On: 16th September 2015 | no responses.

bank-check-scanning-2-1259527By: Mark A. Rysberg

Earlier this year, the Michigan Senate voted to approve bills repealing Michigan’s prevailing wage laws. Eventually, those bills were submitted for fiscal analysis by the Senate Committee on Michigan Competitiveness. That analysis was recently completed and a written summary issued. Therein, the Committee issued the following statement regarding the fiscal impact of the bills:

FISCAL IMPACT

The bills would have an indeterminate, but likely positive, fiscal impact on the State and local units of government. The bills would eliminate the requirement that workers on State-funded construction projects be paid wages and fringe benefits that meet or exceed levels established by the Wage and Hour Division within the Department of Licensing and Regulatory Affairs. Affected construction projects include State buildings, universities, roads, and public schools. Additionally, projects undertaken by economic development corporations, public school academies, and certain other types of schools are currently subject to these requirements as well. The bills would remove the prevailing wage requirements, and could produce potential savings on these types of projects. The amount of potential savings is indeterminate and dependent on the wages ultimately paid to workers who otherwise would have been paid at the prevailing wage rates. Lack of available data makes it difficult to estimate with any certainty how much would be saved if the bills were enacted. Factors that could affect the amount of actual savings include the degree of competition among contractors in bidding on projects and the strength of the labor market.

Missing from that statement is any quantifiable cost or benefit of prevailing wage. Instead, the message is clear that it is difficult to quantify the extent of the benefits or costs of prevailing wage.

Michigan Prevailing Wage Act – Where Things Stand

Posted by: Hilger Hammond On: 16th September 2015 | no responses.

writing-1238365By: Mark A. Rysberg

When the Michigan Senate voted to approve bills repealing Michigan’s prevailing wage laws, the future of those bills became uncertain in the face of a likely veto by the governor. Advocates of repealing wage then turned to a provision of the Michigan Constitution which allows laws to be enacted without being subject to the governor’s veto power. Under that provision, a proposed law may be submitted to the Michigan Legislature by obtaining enough signatures on a petition which proposes enacting a specific law.

One such petition was recently submitted to repeal Michigan’s prevailing wage laws. That petition is currently being reviewed by the Michigan Secretary of State. If the Secretary of State verifies that the petition contains enough signatures, the proposed law will be submitted to the Michigan Legislature. The Legislature then has 40 session days to enact the law by simple majority. If the proposed law is not enacted, it will be placed on the ballot for decision in the next general election.

In sum, a proposal to repeal prevailing wage laws in Michigan will likely be submitted to the Legislature. There is no issue of potential veto. Rather, whether Michigan’s prevailing wage laws are repealed will likely depend on whether a simple majority of the Legislature votes to repeal them. While the ultimate resolution of this issue may not occur for some time, there will likely be further develop of this issue before the end of the year.

House Bill Proposes to Repeal Michigan’s Prevailing Wage Law

Posted by: Hilger Hammond On: 9th June 2011 | no responses.

By Mark Rysberg

Earlier this year the Michigan House of Representatives introduced HB 4224, which if passed into law would repeal the law that requires, among other things, that public construction projects be awarded to contractors paying prevailing wage rates and providing fringe benefits.  Representative Amanda Price, as the primary sponsor for the HB 4224, advocates that Michigan’s prevailing wage law needs to be repealed because it “increases construction costs by 10 percent to 15 percent, costs that are passed on to taxpayers.”  (Here).   Union proponents such as the Michigan Building and Construction Trade Council oppose the bill and argue that “[w]ithout a prevailing wage on which to base their bidding, contractors will be tempted to under-bid others by employing a lower-cost, out-of-state workforce, and oftentimes, an undocumented workforce that doesn’t pay taxes.”  (Here).  HB 4224 has been referred to the House Committee on Oversight, Reform, and Ethics.

Competitive Bidding on Prevailing Wage Projects

Posted by: Hilger Hammond On: 13th September 2010 | no responses.

by Mark A. Rysberg

 

Contractors can reduce-wage related costs and gain a competitive edge in the bidding process by developing creative compensation methods.  soft cialis The Davis-Bacon Act requires contractors on federally-funded projects to pay laborers and mechanics prevailing wage and fringe benefits.  pay for someone to write your essay Michigan has a similar law that applies to state funded projects.  MCL 408.551.  Traditionally, fringe benefits have been paid as cash wages.  However, for every dollar spent on cash wages employers incur additional payroll taxes (FICA, FUTA, SUTA) and insurance-based expenses such as worker’s compensation and liability insurance.  The bottom line is that every dollar spent on wage-based compensation can cost employers 25% more.

 

Although prevailing wage laws eliminate the competitive advantage from the labor rate aspect of the project cost, employers can choose how to fund the fringe benefits.  By providing employees with fringe benefits as a bona fide benefits package rather than paying them wages to purchase or contribute to the same benefits, employers can eliminate some of the unnecessary payroll taxes and insurance costs.  By getting creative, contractors can become more competitive in an ever-tightening bid process.