Owners of construction firms, economists, business advocates, and public officials spent more than four hours on Tuesday speaking for and against a bill that would repeal the common construction wage for taxpayer-funded projects before an Indiana House committee.
The Indiana House Committee on Employment, Labor and Pensions passed a bill 8-4, which fell along party lines. The committee’s chair — Rep. Doug Gutwein, R-Francesville — was not present, reportedly because he didn’t feel the time was right to hear the bill, so Rep. Tim Harman, R-Bremen, presided.
Currently, wages and benefits for municipal and school construction projects above $350,000 must be adopted in public hearings of local Common Construction Wage committees. Representatives are required to determine the most commonly paid construction wage in the county where the project will occur.
More than 40 people spoke on the bill, which was heard in the House Chamber due to the large crowd. Portage Mayor Jim Snyder, Hobart Councilman David Vinzant, and Gary Mayor Karen Freeman-Wilson spoke against the bill, arguing that leaving the setting of wages to the free market would cripple middle-class families.
Snyder said repealing the law invites low-skilled, low-paid workers from out of state to seize jobs from local workers.
“We want qualified people from Portage doing these jobs, not transients from companies in Alabama, staying in hotels and eating baloney sandwiches,” Snyder said. “We want an honest day’s wage for an honest day’s work.”
The bill will now go to the full House for consideration. Gov. Mike Pence indicated his support for the measure in a Tuesday afternoon press conference.
Rep. Jerry Torr, R-Carmel, filed the bill in January, but it went under the radar until last week, when House Speaker Brian Bosma, R-Indianapolis, indicated his support and said it would likely come up this week. Torr said his bill would provide cost savings for government units embarking on these costly projects, but he and several proponents of the bill couldn’t say by how much. Academic research varies on the topic, with some studies saying it could reduce costs as much as 20 percent and others saying it makes little difference.
“The free market should take care of these things, that’s my whole point,” Torr said. He pointed out a situation in Allen County in January, where two committees adopted vastly different rates. “You can’t say both of those represent prevailing wage in that community.”
The common construction wage law was established in 1935 to prevent out-of-state workers from coming into the state to undercut the local economy. Due to the volume of testimony and the prospect of changing such long-standing law, Rep. Linda Lawson, D-Hammond, and Rep. David Niezgodski, D-South Bend, tried to delay the committee’s vote until next week. Harman insisted a vote had to happen this week because the deadline for committee action on a bill is Thursday.
“This is a partisan bill,” Lawson said. “It is a travesty. It is laughable.”
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Northwest Indiana Building and Construction Council Business Manager Randy Palmateer was flabbergasted that the bill came up just before the legislative deadline.
“We don’t look at this as a union or a non-union issue,” Palmateer said. “They’re just opening the floodgates for unskilled, low paid, non-local workers to come and undercut skilled workers. This will decimate the local economy, businesses and working families across the state.”
Jason Horowitz, a senior consultant with Anderson Economic Group, said it’s difficult to measure how much of a particular project’s cost is attributable to the common construction wage since no project is the same. Previous studies in Illinois and Michigan have found that differences arose not with wages but benefit packages. Due to Indiana’s $350,000 project threshold, the savings realized could be in the neighborhood of $50 million, Horowitz said.
The contracting industry was split on the issue, with the Association of Builders and Contractors coming out in support of the bill and groups like the Indiana Building Contractors Alliance standing in opposition.
Keith Rose, president of Goshen, Ind.-based Rieth Riley Construction, said many of the figures being tossed about didn’t really add up. Rieth Riley has done work on many Northwest Indiana projects, including the Gary/Chicago International Airport’s runway extension.
“Our industry is a low-bid industry; accepting higher bids maybe happens 0.1 percent of the time,” Rose said. “The numbers of those in support simply don’t add up. They say repeal will reduce costs by 20 percent, but … labor constitutes 17 (percent) to 20 percent of our project cost. If this passes, labor is free then.
“I urge committee not to rush to judgment on assumptions and data from other states.”
The Associated Press contributed to this report.