AGC of Ohio Chief Debunks Prevailing Wage Detractors

By Richard J. Hobbs, Executive Vice-President - AGC Columbus

After 36 years at the helm of the Associated General Contractors of Ohio (an organization composed of open shop/nonunion and union commercial contractors throughout the state), I’ve heard many outrageous, false claims about significant savings by removing Ohio’s prevailing-wage law. I respond to the Aug. 19 op-ed by Butch Valentine, Laurelville’s volunteer fire chief, blaming the Ohio wage law for the inability to build a new fire station.

Valentine contended that the law inflates the cost of a new facility by 37.5 to 50 percent. This is an outrageous statement. Construction labor represents on average 22-25 percent of a project cost, depending on complexity. Valentine indicated that the cost of a $800,000 fire station would be increased by $300,000 to $400,000. Either his original architectural plans excluded labor costs or he was counting on volunteer construction labor.

He went on to cite inaccurate claims as factual. His referred to the Legislative Service Commission study of 2002 that was thoroughly debunked by Ohio State University Professor Herbert Weisberg, and by a 2017 study from researchers at Bowling Green State, Kent State and Colorado State universities. It found that “LSC had no valid basis” to its claimed cost savings. Valentine further asserted that prevailing-wage projects had less competition. Wrong again. The 2017 study found that projects covered by prevailing wages had more competition, and that more of those contracts went to Ohio construction companies, not out-of-state firms.

Valentine also suggested that Indiana has seen significant savings by repealing its prevailing-wage law. Once again, false. The Indiana Republican assistant House majority leader candidly admitted this year that his state hasn’t “seen a dime of savings out of it,” and that claims of huge savings from repeal, like Valentine’s, were just “rhetoric.”

Ohio has been blessed with a skilled workforce thanks to robust apprenticeship and training programs. A trained workforce is vital to high-quality projects and economic development. In Ohio, the organized sector contributes almost $50 million each year to ensure contractors have a viable workforce; and that amount doesn’t include investments by open-shop companies. Prevailing-wage law allows those contractors who invest in training to be competitive on public projects. Studies have repeatedly shown that weakening prevailing-wage laws results in reduced apprenticeship, craft and safety training.

Additionally, our construction markets are very strong, and some contractors are having difficulty finding people to enter the industry. Numerous studies have shown removal or weakening of prevailing-wage laws actually discourages qualified workers from entering or staying in the construction industry, thanks to depressed wages, benefits and training. Studies have also shown that taxpayers ultimately pay more when prevailing-wage laws are weakened, but editorial constraints won’t allow me to expound about that at this time.

When looking at prevailing wage, one should consider the overall impact on the state and taxpayers. We welcome a healthy debate based on verifiable facts, not just half-baked opinions and misinformation.