The Ohio House Economic Development, Commerce and Labor Committee took testimony May 9 on HB 163 which would allow political subdivisions, special districts, and state institutions of higher education to elect to apply the Prevailing Wage Law to public improvement projects.

Reps. Roegner and Reidel said in sponsor testimony the bill, a companion to Sen. Huffman’s SB72, would allow local governments to decide whether to use prevailing wage on public improvement projects.

Roegner said the state-required prevailing wage is “inflated” by including costs such as base union wage, and union fringe benefits like health care, pensions and training. She also said that the requirement to have the Ohio Department of Commerce determine wages to be paid on a project is a bureaucratic hindrance. The result, she said, is that local projects are more expensive than they should be.

Roegner noted 20 states currently do not have prevailing wage requirements, and cited Ohio’s experience with removing prevailing wage requirements from school construction projects, saying it saved hundreds of millions of dollars in five years.

Reidel said his 27 years of experience in the construction industry showed him there’s no justification for the assertions that prevailing wages provides higher quality work and safer conditions on projects. “I will attest that the quality of workmanship and safety on construction projects today are of the same caliber whether that project pays prevailing wage or doesn’t,” he said.

Rep. Lepore-Hagan asked the motivation for the bill, and whether it would be better to restore Local Government Fund money rather than “attack wages.”

Roegner said the committee will hear from future witnesses about the ability for the bill to save local governments money. She disagreed with the characterization that the bill attacks wages.

Rep. Sheehy asked if the sponsors could quantify estimated savings from the bill, as well as estimated wage reductions.

Roegner again cited Ohio’s experience with school construction, and said a California study had showed substantial increases in costs when public housing projects there were subject to prevailing wage. As to wages, Reidel said in his experience, a steelworker on a prevailing wage project might make $50 or more per hour, versus $25 to $30 on anon-prevailing wage project.

Rep. West asked if the bill would hurt local governments’ funding, as people are paid less on construction projects and thus pay less in income taxes. Roegner said savings to local governments from avoiding prevailing wage requirements could enable them to finance additional projects, thus increasing employment and tax revenue.

West also cited a Midwest Economic Policy Institute study that showed the loss of prevailing wage could cost some workers their health and pension benefits and reduce wages for some to the point they qualify for public assistance. Roegner said she would look at the study he cited, adding that research she’s seen shows compelling benefits related to removing prevailing wage requirements.

Rep. Kelly asked if prevailing wage projects are more or less likely to attract in-state versus out-of-state contractors. Reidel said bidding by Indiana companies in Ohio and vice versa is common in the border counties he represents, but said the paperwork involved in prevailing wage projects is often what compels contractors to forego bidding on a project. Kelly also asked if the paperwork is in fact the problem, or the wage levels. Reidel said there’s no question the paperwork stifles participation, while saying the bill simply seeks to give local governments a choice on the question of wages.

Rep. Arndt asked about how the bill would affect bonding requirements for public projects, citing a situation in his area where an out-of-state contractor couldn’t complete a project, and the community had to go through the bonding agent to try to find another contractor who would complete the work at the same price. He said he wants to make sure taxpayers are not at risk.

Roegner said she would look into it, but posited that the 20 states without prevailing wage laws must have come up with answers to such situations.