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Prevailing Wage Boosts Homeownership

EPI finds that prevailing wage laws lead to more Americans achieving the American Dream

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by Guest Post on
Jul 01, 2020

This post was written by the IBEW Media Center

The benefits of a prevailing wage extend beyond just pay and benefits, according to a study from the Illinois Economic Policy Institute. Prevailing wage laws also make it easier to get a piece of the American Dream.

“This just goes to show that paying a fair wage is the right thing to do,” said International President Lonnie R. Stephenson. “IBEW members are community members too, and when we do well, when we can own a home and give back, that prosperity extends in all kinds of ways.”

The ILEPI report finds that state prevailing wage laws, which mandate a fair level of pay on government-funded projects comparable to wages in the area, extend homeownership to more than 61,000 blue-collar construction workers and boost the value of those homes by more than $42 billion. It also found that the laws increase the annual earnings of construction workers by 5%.

“Our study highlights the fact that inequality is not just a function of income — but also of the gaps in homeownership that can inhibit longer-term economic mobility,” said ILEPI Policy Director and study co-author Frank Manzo IV. “Prevailing wage is enabling more workers — and especially people of color — to build a brighter future for their families.”

The study found that, in states like Illinois, Minnesota, Missouri and Ohio, construction workers have a 2% higher rate of homeownership and a corresponding 13% increase in the average value of their homes.  For African Americans in construction, the difference was even more pronounced with an 8% increase in homeownership and an 18% increase in average home values.

These benefits extend to the broader community as well. The research links the 61,000-plus homes to an estimated $508 million increase in property tax collections tied to those home purchases.

“While there is a clear link between prevailing wages for construction workers and increases in their rates of homeownership, it is equally clear that taxpayers are getting a strong return on their investments,” said ILEPI Research Analyst and study co-author Jill Gigstad.  “It’s not just the quality roads, bridges, schools and other vital infrastructure that these workers are building in their communities.  It’s the hundreds of millions of dollars in increased property tax revenues that their home purchases are generating to help fund these critical investments.”

Previous research has also found benefits to the prevailing wage – and serious drawbacks when such wages are absent. A study in West Virginia found that an anti-labor led repeal of the state’s prevailing wage law in 2016 led to lower wages, no cost savings and a 26% increase in on-the-job injuries.

A 2017 study from the Economic Policy Institute found that median construction wages were much lower – 21.9% – in the 20 states that have no prevailing wage law than in the states that do.

“If state officials want to hit construction workers in the pocketbook, while folding to business interests, repealing prevailing wage laws is an effective way to do it,” the EPI report stated.

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