WILL Analysis | School Districts Could Save $245 Million With Prevailing Wage Reform

Published on: May 20, 2015

WILL Analysis

Data shows $245 million could be saved by Wisconsin schools

School districts have decried Governor Walker’s proposed reductions in anticipated state aid. While it now appears that these deferred increases will be reinstated, the controversy is instructive on another pending reform. There exists an antiquated, very costly mandate that forces school districts to pay above market wages for their construction projects.  This is known as the prevailing wage laws.  Reform would make much more money available for education. In this paper, we give examples for how much it might save particular school districts.

Much has been written about how this law – a super minimum wage for a select few – costs taxpayers.  The Wisconsin Taxpayers Alliance issued a report concluding that if market wages were used instead of prevailing wages for state and municipal projects, in 2014, taxpayers could have saved between $200 million and $300 million. Americans for Prosperity used data to estimate the impact of prevailing wage laws on referendum projects in 2015 ($37.8 million) and between 1995 and 2011 ($890 million).

WILL adds to the debate by estimating the potential savings to taxpayers over the last 5 years if all Wisconsin school districts paid market wages, instead of the prevailing wage, for projects approved by voter referendum.  Using our methodology, we conclude that districts would have saved at least $163.2 million and $244.8 million over the last five years.

The full report is available here, including a breakdown of savings for all Wisconsin school districts.

A .pdf version of the report can be downloaded here.