Workers Lose Benefits When Prevailing Wage Laws are Cut

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CPWR - The Center for Construction Research and Training

Summary Statement

Study showing that health care benefits for construction workers dropped immediately after repeal of state prevailing wage laws.

From 1982 to 1992, 6 states repealed their prevailing wage laws, 32 states kept them, and 9 states never had them.

A study of the effects of the repeals on health-care and pension benefits for construction workers has found that the benefits dropped immediately after repeals. Five years later, benefit levels for construction workers overall were 60% lower than before repeal, the author, Jeffrey Petersen, found.

Petersen conducted the study, Health Care and Pension Benefits for Construction Workers: The Role of Prevailing Wage Laws, with support from CPWR – Center for Construction Research and Training.

Like Davis-Bacon at the federal level, the state laws say construction workers on state-funded projects must be paid no less than wages and benefits "prevailing" in an area.

"Construction workers already have one of the lowest rates of benefit coverage," said Petersen, of the University of California, Berkeley.

"States that repeal prevailing wage laws are putting this group of workers further at risk of not having health insurance or adequate retirement income."

About 68% of construction workers have some kind of health insurance and only 34% have pension coverage. By contrast, average coverage for the total working population is that 82% have health care coverage and 50% have pension coverage.

Prevailing wage laws create a level playing field during bidding, forcing employers who wouldn't otherwise pay benefits to do so.

Usually, a union employer will pay a collectively bargained rate to health and welfare and pension trust funds on behalf of each employee.

Non-union employers often supplement workers' checks or contribute to a benefit program chosen by each worker.

Petersen found the average nonunion contractor pays $434 yearly per worker in pension and health-and-welfare benefits, while the average union contractor pays $12,700.