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After a lot of research and contention, it has been concluded that prevailing wage laws are in fact bad for the economy and are considered to be poor policy. The argument against these laws is presented in more details in the course of this paper, but to summarize, it is concluded that prevailing wages restrict people from operating in a free market to allocate resources and use factors of production in an efficient manner. This retards job creation and contributes to lower economic growth. In context of Michigan, it was found that many of the workers wanted to move out of Michigan (and other prevailing wage states) and go in states where they can earn incomes that are better suited to their skills. This suggests that it would be wise for the Michigan legislature to repeal the Prevailing Wage Act of 1965 (Vedder 1997)

Prevailing Wages and Michigan

A federal district court judge, in December 1994, ruled that Michigan’s prevailing wage law was preempted by ERISA, a federal pension law. In lieu of this judgment, the prevailing wage law was not enforced in the state of Michigan for the 30 months between 1994 and 1997. An appellate court reinstated the law in June of 1997. This allowed the economists to observe and analyze how the law (both its presence and its absence) was able to affect the economy of Michigan during these 30 months. This allowed the economists to determine the following:

“Michigan’s prevailing wage law reduces employment in construction: During the 30 months (December 1994 - June 1997) when the law was ruled invalid, more than 11,000 new jobs were created as a consequence of the law’s invalidation—and the long term impact is much greater;

Michigan’s prevailing wage law adds at least $275 million annually to the cost of governmental capital outlays—approximately the equivalent of five percent of the revenues raised from the state’s individual income tax;

In 1990, African-Americans in Michigan were less than 50 percent as well represented in the construction industry as whites; black employment in Michigan construction was well below the national norm, reflecting both theoretical and empirical evidence that prevailing wage laws promote racial discrimination;

States without prevailing wage laws had net in-migration of over 2.5 million persons from 1990 to 1996, while strong prevailing wage law states like Michigan had outmigration of 2.7 million; nationally, poverty rates are higher in prevailing wage law states; and

Nationally, worker productivity appears to be lower in construction in states with strong prevailing本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。