An Illinois Economic Policy Institute study regarding the effect of prevailing wage laws shows the pay regulations increased take-home pay for African-American construction workers by 24 percent, according to www.constructiondive.com. White construction workers had a 17 percent increase in net pay, indicating prevailing wage laws help to close the income gap between African-American and white construction workers.
The study also revealed that when prevailing wage laws are in place, African-American, blue-collar construction workers earn an average of 88 cents for every dollar their white counterparts earn; in states without prevailing wage regulations, African-American workers make only 74 cents for every dollar their white counterparts earn. Additionally, the income gap between African-American and white workers is 12 percent less in states with prevailing wage laws.
The institute conducted the study in part to dispute claims from critics of prevailing wage laws that the regulations discriminate against African-American construction workers. In fact, the study found that prevailing wage laws did not hinder underprivileged and minority participation in construction and improved all blue-collar incomes, regardless of race.
A Midwest Economic Policy Institute study released in January regarding prevailing wages found that a 2015 Indiana repeal of that wage protection on publicly funded projects—in the form of the Common Construction Wage—hadn't delivered the benefits the public was promised. Supporters of the 2015 repeal said taxpayers could expect a 10 percent to 20 percent cost reduction on public works projects, which did not happen. The institute says since the law was repealed, wages fell 8.5 percent; productivity fell 5.3 percent; and job growth fell 1.5 percent.
However, some states want to eliminate prevailing wage laws so they are viewed as pro-business by companies looking to build factories or provide investments. For example, when aluminum manufacturer Braidy Industries announced it was building a $1.3 billion rolling mill in Kentucky, company officials cited the state's repeal of its prevailing wage laws as one of the reasons it decided to build there.
States such as California and Oregon have moved in the other direction, keeping prevailing wage laws and taking extra steps to safeguard worker pay. On Jan. 1, a California law took effect that requires general contractors to follow through on their subcontractors' unpaid wages if presented with a valid claim. The Oregon House just passed a similar law, which now goes to the state Senate for consideration.