Today’s topic is another way that Illinois fleeces its taxpayers: the “prevailing wage.”
Once upon a time people sold their labor for what the market would bear. Not surprisingly, that resulted in many inequities sometimes manifested in what were called “slave” wages. But it also spurred the creation of guilds and trade unions that eventually expanded beyond the conventional trades into the labor unions we know today.
Those unions have been responsible for virtually every benefit working people enjoy today, including the minimum wage, the 40-hour work week, vacation and sick days, etc. In short, unions succeeded in “better[ing] the standards of life for all who work for wages and…seek[ing] decency and justice and dignity for all Americans,” as AFL-CIO president George Meany described it back in the 1950s.
In the free market, profit-driven real world of the private sector, union demands were moderated by market forces that generally tied increases in wages and/or benefits to increases in productivity and profits. Private-sector unions developed a realistic view of the interdependence of labor and capital, which kept their members’ labor profitable and competitive – at least until globalization re-introduced the concept of slave wages.
Not so in the monopolistic, profit-free fantasyland of the public sector. There unions and politicians eagerly colluded – the former trading their political support of the latter in return for the latter’s loosening of the public purse-strings whenever it came to the former’s wages and benefits.
All at the taxpayers’ expense, of course.
Which is why the very same George Meany also said that although “[t]he main function of American trade unions is collective bargaining…[i]t is impossible to bargain collectively with the government” because governmental units have no profits in which labor can share. That means every wage or benefit increase comes not out of the value created by that labor (a/k/a, “profits”) but directly – and by the force of our tax laws – out of the taxpayers’ pockets.
Which brings us to the prevailing wage.
In this state of corruption known as Illinois, local governments hiring outside contractors are required by state law to pay those contractors the prevailing wage for such services in the county where the service is to be performed. Thanks to that union/politician collusion, the prevailing wage has been conveniently calculated (by the Democrat-dominated Illinois Department of Labor) to approximate union scale, even though much/most of such labor is done by non-union workers paid significantly less than union scale.
The result: government (a/k/a the taxpayers) ends up paying the highest labor rates instead of the lowest, or instead of even a blended rate of union and non-union wages. Which means tens and often hundreds of thousands of extra taxpayer dollars are unnecessarily spent on individual public projects – often at the expense of better quality materials or additional features in order to meet project budgets.
In the cock-eyed view of the Democrat-dominated Illinois General Assembly, the prevailing wage law ostensibly endeavors to mandate a “level playing field” that ends up reducing, if not eliminating, competition for the lowest bid. Indeed, under prevailing wage, non-union contractors who normally operate with lower overhead/labor costs are forced to artifically inflate their employees’ wages to the same level as their unionized competitors, thus taking away any potential competitive advantage that a non-union shop might have over a union shop.
As usual, the taxpayers are the losers.
A 2014 study by the Anderson Economic Group, LLC for the Illinois Chapter of the Associated Builders and Contractors concluded that from 2002 through 2011, Illinois public schools spent approximately $29 billion on construction and repair projects; and that the prevailing wage ended up costing taxpayers an estimated $1.6 billion in extraordinary and unnecessary wages and benefits.
But at the June 16 meeting of the Park Ridge Park District Board, three Commissioners – Rick Biagi, Jim O’Brien and Mel Thillens – tried to do something about that. They just said “no,” arguing against the adoption of the Dept. of Labor’s skewed prevailing wage numbers. And they were joined by Commissioner Dick Brandt in out-voting “progressive” Commissioners Joan Bende, Cindy Grau and Jim Phillips.
That victory, however, was short-lived.
Just as soon as the dust settled on that vote, the District’s long-time attorney, Tom Hoffman, began issuing dire warnings about the potential litigation the District might face from either the Illinois Attorney General – whose daddy, Dark Lord of the Sith “Darth” Madigan, presumably has the prevailing wage law engraved on a stone tablet along with his other nine commandments of graft and corruption – or some of the affected unions.
Despite clearly being torqued-off by the prevailing wage costs, O’Brien promptly backed down, explaining that he didn’t want to cause the District to incur legal fees defending itself against such litigation. And Brandt followed suit, with only Biagi and Thillens holding their ground.
Defeat was snatched from the jaws of victory.
We are the last folks to suggest that any unit of government expose its taxpayers to frivolous and expensive litigation. But from what we understand about the prevailing wage law, it seems both arbitrary and anti-competitive – an exercise in political pandering that apparently has survived primarily because of the cowardice and/or stupidity of public officials who have been afraid to challenge it.
Perhaps the Park Board will try again next year to challenge the prevailing wage, only a little more aggressively.
Meanwhile, we pose the following question to Commissioners Bende, Brandt, Grau, O’Brien and Phillips:
How many hundreds of thousands of taxpayer dollars did you waste, WASTE, because of the prevailing wage, on labor costs for the Park District’s $8 million Centennial Water Park and it’s $13 million Prospect Park?
Can you say “penny wise and pound foolish,” Commissioners?
We didn’t think so.
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14 comments so far
By my own estimates, the Park District paid somewhere between $1 million and $2 million in additional labor costs on the Centennial Pool and Prospect Park projects, combined, as a result of the prevailing wage statute.
EDITOR’S NOTE: Which translates into $1-2 million of additional bonded debt AND INTEREST over the life of those bonds.
Outstanding post! I heard about prevailing wage but never really stopped to understand it or consider its practical consequences.
Taxpayers should revolt against this revolting law. Maybe this will spark one.
The prevailing wage ensures a fair wage for people who deserve it. Begrudging them fair compensation because they are not MBAs or lawyers is wrong.
EDITOR’S NOTE: The prevailing wage does nothing but screw over the taxpayers by depriving them of the benefits of honest competition and, instead, forcing them to pay top-end wages for basic services available at far less cost to those very same taxpayers when they are purchasing them for their own private use.
If MBAs or lawyers make more money than carpenters, that’s the product of the free market. So is getting $18 million a year for throwing a basketball through a hoop.
THis kind of crap is what I’ve come to expect from a rich union-busting lawyer who wants to suppress the wages of the workingman. You don’t raise yourself up by pushing others down.
EDITOR’S NOTE: This editor has always been pro-union…for the private sector where free market economics provide checks and balances that are MIA from the public sector and the corrupt collusion of unions and politicians.
Anon 7:29AM:
There are lawyers that charge well in excess of $1000 per hour who are terrible at what they do and there are great lawyers who charge $250 per hour…the rate doesn’t always equate with quality.
How, then, does a law, designed to protect unions (and not the laborers themselves) help insure that we get quality workmanship by requiring that all contractors, regardless of the relative skill of their tradesmen, charge the exact same labor rate? It’s nonsensical.
When we built the Centennial Park Pool, the 900sq ft concession stand cost the taxpayers over $500,000 to build. We were told (on camera, in open session) by our construction management firm that the exact same structure, built on private land (rather than on public land, by a public body subject to prevailing wage), would cost roughly half due to prevailing wage law in Illinois.
We want to build a very small bathroom structure (2 stalls per side) in Hinkley Park (because the current bathrooms are quite a distance from the ball fields) and we have been told by our architects that the structure will likely cost in excess of $650,000 to build…again, because of prevailing wage.
EDITOR’S NOTE: No wonder you folks suggested naming the bathroom after Hillary Clinton if she would donate a big chunk of that cost. Since she supports prevailing wage, it seems only right.
Thank you for this information. It makes me wonder how this kind of legislation gets passed in the first place.
EDITOR’S NOTE: Politicians pandering to special interests.
This must be the new math. There is no way the prevailing way cost the Park Ridge Park District hundreds of thousands of dollars because of the prevailing wage. The prevailing wage didn’t affect everyone’s salary. So you have to exclude those. There are a ton of part timers who even if there hourly wage went up $5 per hour, there are not enough FTEs to have increased salaries and wages by hundreds of thousands of dollars.
I would ask either Commissioner Biagi or Executive Director Mountcastle to communicate during open session how much the increase amounted to for increasing salaries to the prevailing wage.
Salary and wage budget line with have to be over $10 million dollars for a 3% increase to be hundreds of thousands of additional costs. You have to back out all of the FTEs not affected by the prevailing wages to determine the effective increase. I could be wrong, but I don’t think the PRPD Salary and Wages is that large.
EDITOR’S NOTE: The prevailing wage doesn’t affect Park District employees: It only affects wages paid by third-party contractors to THEIR workers. So your talk about FTEs, etc. is irrelevant.
But to simplify it even further, if labor costs represent even 30% of the $21 million spent to build the Centennial Water Park and Prospect Park, that’s $6.3 million of labor costs. So if union labor is merely 10% more expensive than non-union labor, we’re still talking $630,000 of unnecessary labor expense because of the prevailing wage law.
The prevailing wage prevents non/union vendors from undercutting unionized shops for government work. Without this protection a non union shop could easily undercut Union shop bids because they are not paying their workers reasonable wages in the first place. The prevailing wage regulation allows non union shops to compete for bids AND pay their workers a fair wage. Yes, the costs of the project noted would be less if a non union shop got the work and ther was no PW regulation . The employer would make no less profit, yet the workers would be under paid. And yes, the project could be done for even less money if we hired illegals to do the work and circumvented the minimum wage. We don’t buy into such things because A) it’s illegal, and B) it’s immoral. I don’t like Madigan, but if he’s a pain to folks that want to crush public unions I’m just fine with him continuing in his role.
EDITOR’S NOTE: No logic or reason dictates that only union scale represents “reasonable wages” or “a fair wage.” It’s a way for politicians to buy poltical support from the private sector unions using public money extorted from the taxpayers.
And of course you like Madigan…because he continues to pass and preserve laws for the benefit of the freeloaders and the parasites who game the system.
As I quote the 8:45 pm post:
Without this protection a non union shop could easily undercut Union shop bids because they are not paying their workers reasonable wages in the first place.
How is it you know the non union worker is not paid a “reasonable wage”? Nice sound bite for the unknowing gullible readers. If the worker is willing to work freely for that wage, how is that unreasonable. Perhaps if the union wages did not include the payments to their union “leaders” and the union “leaders” pensions and benefits and monies paid to politicians without consent of the worker, then maybe the unions could be more competitive with those who choose not to be obliged to donate to such causes. A worker should have the ability to work for whomever he/she wants at a rate acceptable to the individual. Unions for public sector workers or laws like prevailing wages for work paid by tax payers is a scam and adds to Illinois’ many problems. If you want everyone to be paid the same see USSR and Venezuela. Have fun with that form of life!
Capitalism works until the dimwits we elect start messing with putting laws on books for “our” benefit.
Games By The Politiicians…
You and yours promote the idea that the pay should be based on what the market will allow. Well, the market (and the public) allows for fair wages being paid to union workers. Thus, non union workers are paid less (whatever you can get away with). This means that the worker who is not benefitting from a collectively bargained compensation package is indeed being under paid.
Who is a free loader, Hard working labor trying to fend for their families, or cheap skates like you who are trying to beat workers down and get more for less $$$ ?
EDITOR’S NOTE: You recognize that “the market (and the public) allows for fair wages being paid to union workers,” who represent 16% of Illinois employees. That same market (and the same public) also allows for wages of various amounts to be paid to non-union workers, repreenting 84% of Illinois employees. So by your standard, 84% of Illinois employees are “indeed being underpaid.”
That’s silly and drivel, even if you’re not Silly Drivel.
The Soviet Union had a committee to set wages and prices for every job and commodity that thwarted the free market, and it’s not around any more. This country became great through competition.
Then we started calling everybody a winner and giving out trophies for participation.
EDITOR’S NOTE: It appears that people who can’t (or don’t want to make the effort to) compete successfully have decided to abolish competition, hence the rise of public sector unionization with a concurrent decline in productivity and accountability.
As to your participation trophy comment, we recall that it was in the early 1990s when that great equalizer, sports, started being dumbed down: first they stopped holding tryouts so that everybody made the team irrespective of ability or commitment; then they mandated playing time so individual “self-esteem” superseded team success; then they stopped keeping score so that everybody was a winner; and then they awarded mere participation with a trophy…which were given out pretty much just for signing up and paying the admission fee.
That was followed up by the move to abolish class rank and honor-rolls.
And now those “winners” with their unearned self-esteem are in the work force and expecting trophies just for showing up.
Kumbaya.
To the 3:16PM post:
I quote you again: “You and yours promote the idea that the pay should be based on what the market will allow.” Yes, guilty as charged. I have over 25 people in my business whom I pay competitive market rates or I lose them to competitors. If I want better employees I must compete. It has nothing to do with artificially inflated wages to line the pockets of union leaders and their pensions and political donations to keep the scam going. If I try to “get away” with anything less I lose in the long run. The days of woe is me are over and have been over for some time now.
As I tell people who have an open mind and can understand rational (not emotional) thinking is “as a business evolve or die”. There will be a better solution or product that will drive you out of existence. Think Uber v. cabs. Think Illinois v. Texas (or any state with right to work laws).
EDITOR’S NOTE: Or any state, even without right to work laws, that is not institutionally and inter-generationally corrupt.
You just had to slide in that comment about the park district commissioner wanting to name restrooms after Hillary. As if it was a high point in local government. What an embarrassment you and your cronies are, thanks for yet another reminder.
EDITOR’S NOTE:Is that you, MWR?
Naming the $500K-plus (because of the prevailing wage) Hinkley restrooms after Hillary isn’t anywhere near the “high point in local government.”
At the top of that list would have to be your favorite “retail” mecca, the Uptown Redevelopment, that will end up costing the taxpayers about $20 million, give or take a few million. And back in the 2000s the City blew $650K on an “investment” in the new Peotone airport, which we recall you also favored. And then there was the couple of hundred thousand dollars wasted on “facade improvement” that you also favored. Oh, and your $8 million Centennial Water Park that the taxpayers will be paying off over the next 10-15 years.
Not sure who MWR is but it’s not me. Clearly he/she knows how to get your goat. Nice try, I guess.
EDITOR’S NOTE: Prove it.
No goat. Pepsi.
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