Prevailing Wage Saves Costs

Study Proves Prevailing Wage Saves Costs; Increases Employment and Economic Growth

May 26, 2011 - A new study from Working Partnerships USA, and funded by the construction industry, has found that the payment of prevailing wage on public works projects in San Jose has provided an array of economic benefits to the region while actually lowering overall construction costs. This study should be of great value in battling the misleading ABC arguments about labor cost savings from lower hourly wages.

The study, conducted by Colorado State University, Pueblo Senior Economist Kevin Duncan concluded that over the past five years, San Jose's prevailing wage policy added $164 million in economic activity, produced $1.9 million in local tax revenue, and generated more than 1,500 local construction jobs.

Further, an "apples-to-apples" comparison of two public library projects in Santa Clara County - the Mitchell Park Library in Palo Alto built without prevailing wage, and the Gilroy Public Library built with prevailing wage - found a significant overall cost savings, due to greater productivity, when prevailing wage was paid: Gilroy's $326 per square foot to Palo Alto's $430. Further, the benefits to the local economy were far greater in Gilroy, where 71 percent of the project value went to local contractors, compared to only 12 percent in Palo Alto.

The study found a significant "ripple effect" economic benefit to the local economy when prevailing wage was paid, beneficial social impacts due to lower public assistance costs, and traffic and environmental benefits resulting from the decrease in commuting miles from the greater use of local workers.

The entire study can be found at www.wpusa.org.
 

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