West Virginia May Reform Prevailing Wage

Hoppy Kercheval, West Virginia Metro News Online, discusses the economic impact of the state’s prevailing wage law, and the importance of SB 361, a bill which would modify the current law.

West Virginia State Code 21-5a, enacted in 1933 and amended in 1961, mandates that state construction projects pay “no less than the prevailing hourly rate.†The contractor couldn’t pay the painter less than $40.49 an hour including benefits even if he was willing to work for less.

George Leef, director of research at the John W. Pope Center for Higher Education Policy and author of Free Choice for Workers: A History of the Right to Work Movement, writes, “The most salient effect of prevailing wage laws is to raise the cost of public construction.†That’s because prevailing wage rates tend to be union scale, which are generally higher than nonunion.

In West Virginia, a research-based argument can be made for simply eliminating prevailing wage and letting the marketplace determine the value of labor, just as it does in the private sector. However, lawmakers struck a reasonable compromise.

SB 361, which cleared the Senate Thursday 23-11 with bi-partisan support, makes two important changes to the prevailing wage law: It provides a more accurate method of determining the hourly wages* and it exempts any state project under $500,000 from prevailing wage.

Some Democrats and labor leaders would have you think the bill signals the coming of the apocalypse, and they have some reason to fuss because when the prevailing wage more accurately reflects the market, our painter isn’t going to be making the equivalent of $40 an hour. Instead, he’ll be paid closer to what he would receive on a privately-funded project.

Meanwhile, the taxpayers will have increased confidence that their hard-earned tax dollars are being spent wisely.