Prevailing Wage Law Back in the News

In 2018, Michigan’s legislature voted to repeal legislation that required state contractors to pay workers a “prevailing wage” equivalent to union wages. The “Prevailing Wage” law applied to union and non-union workers alike. Supporters argue the law ensured the state would receive top quality work since contractors couldn’t cut corners on a non-unionized workforce. Critics complained the law needlessly drove up costs by eliminating market competition and ultimately cost taxpayers. Despite opposition from then-governor Rick Snyder, the Republican-controlled legislature ended the law three years ago.

Governor Gretchen Whitmer recently announced plans to revive the prevailing wage if not the legislation itself. Relying on the Management and Budget Act, which gives the executive branch the authority to “set contract terms that benefit the state,” Whitmer confirmed that the state will pay union wages on future constructions projects.

The move certainly faces legal challenges. Specifically, critics argue the Management and Budget Act does not confer such broad authority. One Republican legislator asked, “If the Act granted this authority, why did we need the former Prevailing Wage law in the first place?” Expect the governor’s office to distinguish between the former law’s requirement to pay a prevailing wage and the Act’s discretion to do so. Who is right? As with so many things these days, it looks likely that it will be up to the judicial system to decide.