INDIANAPOLIS | The Indiana Senate narrowly approved a plan Wednesday eliminating the process used by the state and local governments for eight decades to set wages on most publicly funded building projects.
House Bill 1019, which passed 27-22, repeals the common construction wage and replaces it with a series of new requirements for contractors and their employees aimed at maintaining job site safety and building quality in its absence.
State Sen. Carlin Yoder, R-Middlebury, the sponsor, said repeal will save government money by reducing the cost of public works projects, since wage boards — made up of union and nonunion contractors and local taxpayers — no longer will set the pay rates for building trades workers.
"I know there's a lot of controversy with this and there's been a lot of debate, but the bottom line is this bill is a bill that allows for free markets to work," Yoder said.
In response, state Sen. Frank Mrvan, D-Hammond, pointed out the only way the repeal saves money is if contractors pay their workers less, and Hoosiers already earn some of the lowest wages in the nation.
Mrvan said labor makes up only about 20 percent of a project's cost, and if the state and local governments are going to save 20 percent on public works projects following repeal, as some supporters claim, worker salaries will be gutted — correspondingly reducing their spending and state tax revenues.
"You're going to hurt business, you're going to hurt the workers and you're going to hurt Indiana," Mrvan said.
Twelve Republicans joined the 10 Senate Democrats in voting against the measure, including state Sens. Ed Charbonneau, R-Valparaiso, and Rick Niemeyer, R-Lowell.
No Northwest Indiana lawmaker, Republican or Democrat, has supported the proposal in either the House or Senate.
Niemeyer pushed back on allegations by repeal supporters that local wage boards are not functioning correctly and need to be eliminated because they sometimes set disparate wages for similar projects in adjacent communities.
"These local boards are made up of local people that are appointed locally by local elected officials. So if there's a problem in certain areas, the taxpayers need to address that by going through the local people that represent them," Niemeyer said.
"It comes back to local control, local government. Is this bill going to fix that issue? I don't think it will."
State Sen. Karen Tallian, D-Ogden Dunes, said she believes the push for repeal ignores the will of Hoosiers and instead is part of a national agenda to drive down worker wages and make it easier for low-pay, out-of-state contractors to win bids for Indiana construction projects.
"We've heard from some of Indiana's largest businesses, some of our major contractors, all over the state saying do not repeal common construction wage," Tallian said.
"We've heard from mayors, even Republican mayors, counties, cities, local public officials ... and they're telling us do not repeal the common construction wage."
Tallian said repeal is likely to cost the state significantly more money in worker training, since building trades unions no longer will be able to maintain their $42 million a year apprenticeship programs without the training funds typically included in common wage bids.
But state Sen. Brandt Hershman, R-Buck Creek, would have none of it. He said if wages drop following repeal it proves they were being set too high by the wage boards, and the free market dictates a lower salary be paid for the work.
"To overpay the market, that's not doing anyone any favors," Hershman said. "It's an income transfer from the poor to others for no good reason."
Republican Gov. Mike Pence, who has appeared in television ads calling for repeal, cheered its passage by the Republican-controlled Senate.
"When the Indiana Senate voted today to repeal the common construction wage, they put taxpayers first, providing much-needed relief to cash-strapped local governments and schools," Pence said. "April 15th ought to always be this good for taxpayers!"
Repeal approval also was lauded by the Indiana chapter of Americans for Prosperity, a conservative advocacy organization founded by billionaire industrialist brothers David and Charles Koch.
"Indiana is the Midwest's leader in policies that expand economic freedom and opportunity," said Chase Downham, AFP Indiana director. "Today's vote keeps the state moving in the right direction and sets an example for our neighbors."
The House-approved repeal legislation was significantly revised by the Senate and is likely to go to a House-Senate conference committee for lawmakers to devise a compromise proposal that must be re-approved by both chambers before Pence can sign it into law.