Did Repealing Indiana’s Prevailing Wage Law Work? (It Didn’t)

Matt NYFFC

Nick Dmitrovich
October 12, 2018

A few weeks ago, Indiana passed the third anniversary mark since state legislators repealed the common construction wage law. Back in July of 2015, when the repeal went into effect, the intent was to provide financial relief for taxpayer-funded projects by reducing costs associated with construction wages.

At the time, former Governor Mike Pence, a major supporter of the repeal, said that “wages on public projects should be set by the marketplace and not by government bureaucracy.” During the campaign to get the repeal passed, supporters said the bill would help “cash-strapped” schools and other institutions keep project costs down.

So, now that a few years have gone by and data has had the chance to be developed, the big question is: Did it work? Did the repeal save public institutions the money it was supposed to?

Earlier this year, a report from the Midwest Economic Policy Institute (MEPI) straightforwardly titled “Effects of Repealing Common Construction Wage in Indiana” detailed the types of changes the repeal brought about across ten different construction market attributes. MEPI specializes in infrastructure investment and construction industry research.

To put it plainly, their report was a brutal look at the decision’s shortcomings and the damage its done to the construction industry.

“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,” researchers wrote.

Let’s take a look at the ten construction outcomes that researchers studied and how they have been impacted.

Construction Wages

Right off the bat, it’s fairly plain to see the people most impacted by the repeal are Indiana construction workers themselves, and vicariously their families. Just how much? A straight-up loss of 8.5 percent, even accounting for all the various factors that affect a person’s hourly wage (such as age, race, union membership, and other factors).
This wasn’t just a fact reflected in this report alone, it was actually predicted in additional research reports published at various times before and after the repeal went into effect (MEPI, Manzo, Bruno, Littlehale, et. al)

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Results of the Repeal – Did It Work?