House panel OKs repeal of common construction wage

INDIANAPOLIS | A philosophical dispute at the Statehouse over the role of the free market in setting pay rates for public construction projects could soon translate into smaller paychecks for thousands of Indiana building trades workers.

The Republican-controlled House Employment, Labor and Pensions Committee voted 8-4 on party lines Tuesday for House Bill 1019, which eliminates the common construction wage used for state and local government building projects worth more than $350,000.

State Rep. Jerry Torr, R-Carmel, the sponsor of the measure, believes it is wrong to have five-person boards made up of union and nonunion contractors, along with two local taxpayers decide how much each position on a public construction job should be paid.

"In my view, this sets up an artificial wage and I just think it's better for us to go to the free market," Torr said. "If the committee set a higher wage rate, then the workers on the job benefit but the taxpayers don't."

Torr estimated, based on the savings realized in other states that eliminated their prevailing wage laws, Indiana local governments could spend between 10-20 percent less by ditching the common construction wage.

"When we have local governments concerned about the property tax caps trying to save every dime they can and school districts clamoring for more money for public education, it would seem to make sense for us to go to the free market and let folks bid and have the best at the lowest price," Torr said.

Jason Horwitz, a public policy consultant at the Anderson Economic Group of Michigan, told the committee the total savings statewide likely only would be about $50 million, or 6 percent, and possibly less because Indiana already has such a high threshold for projects to use the common construction wage.

Nevertheless, Republican city councilmen from Fort Wayne and Terre Haute, and representatives from the Indiana Chamber of Commerce and the Associated Builders and Contractors trade association insisted it still is worth eliminating a system the state and local governments have used since 1935.

"Government should not be in the business of fixing prices and mandating wages," said J.R. Gaylor, president of ABC of Indiana and Kentucky. "The market should be the solution to that."

In response, nearly two dozen building contractors, representing billions of dollars in annual projects, each told the committee they want the common construction wage preserved.

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House panel OKs repeal of common construction wage