Missouri Enacts Prevailing-Wage Reform

Published September 23, 2018

The cost of some local and state government construction projects in Missouri will decrease now that Gov. Michael Parson has signed a bill reforming the state’s prevailing-wage law.

The new law, formerly known as House Bill 1729 (H.B. 1729), creates a threshold for public-works projects subject to government wage regulation for employees. Construction efforts estimated to cost $75,000 or less will be competitively bid, like privately funded projects. The law went into effect on August 28.

Before the new law, the state mandated artificially high wage rates for all taxpayer-funded construction in Missouri, regardless of the size of the project.

Unwanted Add-Ons

H.B. 1729’s sponsor, state Rep. Jeff Justus (R–Branson), says the mandate on construction wages makes government projects unnecessarily expensive and prevents some from happening.

“During the committee hearing on H.B. 1729, we had several county commissioners talking about specific projects they would get bids on,” Justus said. “The project cost would be estimated at $400,000, then they’d realize they had to factor in prevailing wage, and it would come in 10 percent to 50 percent higher. Every one of my constituents has to pay for these inflated prices.

“Representatives from all counties were talking about this,” Justus said. “They’d have to reduce a project, or they couldn’t afford it at all, because of the prevailing wage.”

‘A Baby Step’

Patrick Ishmael, director of government accountability at the Show-Me Institute, says the new law is only a small improvement over the previous one.

“I don’t think it goes far enough,” Ishmael said. “I think it may help some smaller projects get done, but the prevailing wage law, practically speaking, has been kept intact. It’s a baby step in the right direction.”

Ishmael says Missouri lawmakers should repeal the prevailing-wage law.

“The bill changed how prevailing wages were calculated, but didn’t get at the underlying problem of requiring local governments to pay a wage that the market itself would not bear,” Ishmael said. “The prevailing wage isn’t just about projects that happen, it’s about the projects that never happen because local governments can’t afford the prevailing wage. If wages in a particular area are lower than the prevailing wage, it can be impossible to get a project started, and that hurts workers.”

Job-Killing Effect

Ishmael says stopping government from setting construction wages would be a pro-labor reform.

“Repealing the prevailing wage would help workers,” Ishmael said. “When we talk about helping workers, no one asks, ‘What about the workers never employed for projects that don’t happen because the prevailing wage is too high?'”