News

Michigan Court of Claims Upholds Repeal of State’s Prevailing Wage Law

February 27, 2019

The Michigan Court of Claims has upheld a 2018 decision by the Michigan Legislature to repeal the state’s prevailing wage law, dismissing claims by Protecting Michigan Workers, the union-led group spearheading opposition to repeal in a decision announced on Monday, Feb. 25. Associated Builders and Contractors of Michigan led the 2018 coalition, Protecting Michigan Taxpayers, in the successful effort to peel back the 50-year old law that had been responsible for inflated construction costs across the state and a bevy of associated regulations and red tape. 

Repeal was achieved through a “public act,” with Protecting Michigan Taxpayers obtaining more than 350,000 signatures to mandate that the legislature vote up or down on the issue in both chambers, without the typical requirement for a signature by then-Gov. Rick Snyder (R)once passed.

Opponents to repeal attempted to make legal arguments based on unconstitutionality, claiming that the enactment of a $75,000 appropriation resulting from the repeal and the law’s immediate effectiveness rendered the repeal effort invalid. In her decision, Judge Cynthia Diane Stephens stated, “Plaintiffs’ position fails to appreciate that a valid appropriation can be made by way of a public act…This proposition is neither novel nor complicated, as the Legislature has made appropriations by way of public acts that were not compiled in the Michigan Compiled Laws for decades.”

The negative effects of prevailing wage on state coffers have been repeatedly proven in studies examining these state policies around the country, with evidence showing that prevailing wage can inflate construction costs up to 25 percent due to their anti-free market design. The state of Ohio showed through an official state-sponsored study that they enjoyed almost $500 million in savings following the state’s repeal of prevailing wage on school construction. In addition to these cost increases, the multitude of regulations around things like employee classification, the burden of unnecessary paperwork, and time-consuming reporting requirements, severely impact the ability for small businesses to bid on taxpayer-funded construction projects.

With this ruling, Michigan further secures its status as the 24th state without prevailing wage policies. The Michigan Court of Claims did the right thing by Michigan taxpayers, ensuring they will receive the best return on their investment and get the best construction product at the best possible price.

Powered by WPeMatico