Indiana House panel OKs repeal of common construction wage

The Republican-controlled House Employment, Labor and Pensions Committee voted 8-4 on party lines Tuesday for House Bill 1019, which eliminates the common construction wage used for state and local government building projects worth more than $350,000.

State Rep. Jerry Torr, R-Carmel, the sponsor of the measure, believes it is wrong to have five-person boards — made up of union and nonunion contractors, along with two local taxpayers — decide how much each position on a public construction job should be paid.

"In my view, this sets up an artificial wage and I just think it's better for us to go to the free market," Torr said. "If the committee set a higher wage rate, then the workers on the job benefit but the taxpayers don't."

Torr estimated, based on the savings realized in other states that eliminated their prevailing wage laws, Indiana local governments could spend between 10-20 percent less by ditching the common construction wage.

"When we have local governments concerned about the property tax caps trying to save every dime they can and school districts clamoring for more money for public education, it would seem to make sense for us to go to the free market and let folks bid and have the best at the lowest price," Torr said.

Jason Horwitz, a public policy consultant at the Anderson Economic Group of Michigan, told the committee the total savings statewide likely only would be about $50 million, or 6 percent, and possibly less because Indiana already has such a high threshold for projects to use the common construction wage.

Nevertheless, Republican city councilmen from Fort Wayne and Terre Haute, and representatives from the Indiana Chamber of Commerce and the Associated Builders and Contractors trade association insisted it still is worth eliminating a system the state and local governments have used since 1935.

"Government should not be in the business of fixing prices and mandating wages," said J.R. Gaylor, president of ABC of Indiana and Kentucky. "The market should be the solution to that."

In response, nearly two dozen building contractors, representing billions of dollars in annual projects, each told the committee they want the common construction wage preserved.

They said it prevents unfair bid competition by out-of-state companies using temporary workers, promotes a more stable Indiana construction workforce, ensures workers are trained for the sometimes dangerous jobs they do and enables contractors to pay fair health and retirement benefits.

"It sets a minimum standard for quality, safety and efficiency," said Keith Rose, president of Rieth-Riley Construction, which has offices in Gary, Valparaiso and LaPorte. "It provides a level playing field for union and nonunion contractors."

Gary Mayor Karen Freeman-Wilson, Valparaiso Mayor Jon Costas and Portage Mayor Jim Snyder also told the panel there is plenty of competition for local projects that use the common construction wage, and the practice ensures project salaries generally stay in the community.

"We want people from Portage to build these projects, not transients from Alabama or New Mexico living in cheap hotels and eating bologna sandwiches," said Snyder, a Republican. "A repeal of the prevailing wage is simply an assault on the Indiana family, the Indiana worker and the Indiana church."

In addition, state Reps. Chuck Moseley, D-Portage, and Linda Lawson, D-Hammond, pointed out that when Hoosiers earn less money they have less to spend, reducing state and local income tax revenue and state sales taxes, and likely negating any savings realized by reduced expenses for public construction projects.

In the end, there was little doubt the panel would vote to advance the measure to the full House, where a final vote is expected next week. It is supported by Republican Gov. Mike Pence.

However, the proposal could have a difficult time passing the Senate.

State Sen. Phil Boots, R-Crawfordville, chairman of the Senate labor committee, said he wants an in-depth study of the effects of the legislation before it is enacted.