BuckeyeBlog

The Ohio State Supreme Court yesterday helped save taxpayers a little money when it limited the scope of the state’s prevailing wage law. The prevailing wage law mandates higher-than-market wages for work on most state construction projects, which leads to the government (i.e., you, the taxpayer) paying 5% to 15% more for these projects. It can also lead to reduced competition for government construction contracts, which hits nonunion contractors especially hard. For a detailed look at the pernicious effects of prevailing wage laws, it’s hard to find a better source than the Mackinac Center’s booklet on Michigan’s law. Most of what author Paul Kersey says about our neighbor to the north also applies to Ohio.

The Buckeye Institute has done some work on Ohio’s prevailing wage law in Ohio’s Prevailing Wage Law a Costly Burden, Prevailing Wage Law Costs Ohio Millions, Prevailing Wage Exemption Provides Schools with Lower Costs, Higher Quality Construction, and Hamilton County Jail Needs to Escape Prevailing Wage.

The Columbus Dispatch reports today on prevailing wage rules released by Governor Strickland yesterday:

Private construction projects that use even a small amount of public money, such as for brownfields cleanup or purchasing machinery and equipment, will be subject to Ohio’s prevailing-wage requirements under rules issued yesterday by the Strickland administration…Strickland spokesman Keith Dailey said the guidelines are not new. They simply “apply the prevailing wage properly.”

Isn’t this a creative system?  Rather than letting you spend your money in the way you see fit and at a level you deem valuable, Ohio tries to pull the Transported Man act with a twist.  Rather than attempting to fool the audience into thinking that the money going in is the same as the money going out, it attempts to construe the opposite.  But in reality, all Ohio does is take the money you would have spent efficiently from you, turns it right back around with strings attached (taking a cut for its bureaucrats in the process), and gives it back (to certain people with the right connections).  The dispatch notes that prevailing wages “are usually closer to union-scale wages and typically higher than the market rate.”  In other words, if you do get your money back (rather than your neighbor getting it), you are now required to spend your money inefficiently.  There’s an innovative way to turn around the economy.

At least some members of government see some of the realities of this system:

“The fact of the matter is the new rules will drive up the cost of doing business in the state of Ohio and drive jobs out of the state,” said Karen Stivers, spokeswoman for House Speaker Jon Husted, R-Kettering.

“President Harris believes this is absolutely the wrong time to follow this course,” spokeswoman Maggie Ostrowski said. “We should be doing everything we can to encourage economic development.”

Gongwer reports on yesterday’s Controlling Board meeting–they’re the guys who write the checks, or cause them to be written, anyway–that “prevailing wage” is coming down the pike from Gov. Strickland.

The Strickland administration confirmed Monday it is considering a major policy change in which private companies that receive millions in state aid would have to pay prevailing wage on their construction projects.

Word of the expansion in the application of prevailing wage – the geographic pay scale usually tied to union contracts – surfaced as the Controlling Board released $2 million in Third Frontier Program grants.

Well of course prevailing wage is coming. There hasn’t been much doubt about that. This is a great reporting catch, though, the good stuff, because it’s the real meat and potatoes. Knowing something is coming is quite different from catching it when it does come.

It’s really a shame how much of government is just about shoveling money from one pocket into another, and of course the only pocket the money is being shoveled out of is yours. Our officials seem interested only in the debate over what pocket it gets shoveled into: the unions, large corporations or entitlement programs. (I wonder if there are any economists out there studying how large the politicians’ commissions are among these groups? My initial guess would be that it’s pretty constant, but that’s just to start the models going.)

As for those few of you who save anything, there is only one message for you: suckers.