Indiana's Common Construction Wage Law:

Indiana's Local Contractor/Local Worker Preference Law
Indiana's Common Construction Wage law is a long-standing public policy tool that allows public entities to maximize value when constructing public works projects. The law is effective in lowering overall costs on public works projects by ensuring value, productivity, and quality. The Common Construction Wage law applies to publicly funded construction projects valued at over $350,000 contracted by state and local government, including municipal corporations. Under Indiana law, such contracts must be awarded to the lowest “responsive and responsible” bidder. Indiana’s Common Construction Wage statute allows contractors to compete on the basis of who can best train, equip, and manage a construction workforce, instead of who can hire the cheapest workers. The Common Construction Wage law also works to strengthen our communities by promoting apprenticeship as a career path, which works to create Indiana’s highly skilled construction workforce. The law works in parallel with the private construction sector to create a robust construction workforce that pays good wages and provides healthcare and retirement benefits. It works to encourage strong competition among the best contractors who hire the most competent and qualified construction workers.

This is done by simply requiring all contractors, working on publicly financed projects, to pay their workers what is commonly paid in the county for their respective construction expertise.
Identified below are studies that have found that laws such as Indiana’s Common Construction Wage law actually increase the pool of bidders, work to ensure higher quality of contractors, and promote a stable, highly skilled workforce.

In 1931, the U.S. Government enacted the Davis-Bacon Act, the federal prevailing wage law, to establish local wage rates to be paid to construction workers on federally assisted construction projects. This act requires public-works contractors to pay building tradespeople no less than the wages that prevail on similar projects within the same region. Included in these specifications are worker benefits, such as health insurance and pension contributions. 
Similar prevailing wage rate legislation was ultimately adopted by most states for bidding on state and local government projects. Indiana passed its own prevailing wage law in 1935, which was amended in July of 1995 to be known as the Indiana Common Construction Wage law. 

Key Benefits
When evaluating the effects of Indiana’s Common Construction Wage law, it is important to understand the positive economic effects this law has on the State’s economy, as well as the quality and safety of construction projects. This topic has been studied for over twenty years with similar results – prevailing, or common construction wage laws, are a benefit to the state, the worker and the economy. 
Some of the key findings of the effects of prevailing wage laws, which may be found in the below-cited studies, are:
• The payment of prevailing wages reduces the project cost because of the increase in productivity and the decrease in job site injuries. 
• Prevailing wage laws stabilize and do not reduce the number of bidders on a project.
• Where prevailing wages are paid, training programs are more prevalent, including higher participation by minorities and disadvantaged workers. 
• Repeal of prevailing wage laws leads to a loss in local construction jobs, as a result of an increase in construction work done by out-of-state contractors.
• Failure to pay prevailing wages increases occupational injuries and their associated costs. 
• The failure to pay prevailing wage and benefits creates a direct cost to taxpayers because it shifts the cost of health care and pensions from employers to public health systems. 
• The failure to pay prevailing wage reduces tax revenues, lowers the general economy and forces skilled workers to migrate to other areas, further reducing local tax bases.
• Repeal of prevailing wages laws results in lower productivity of the construction workforce.

Common Construction Wage – Debunking the Myths

MYTH: State and local government can cut 20% of their construction costs by eliminating common construction wage.

FACT: Direct construction labor and fringe benefits account for between 20% and 25% of total construction costs. To save 20% by cutting wages overall would require paying workers well below the federal minimum wage, at an illegal rate, if at all. Research shows that lowering local standards for construction wages tends to attract a lower skilled out-of-state workforce resulting in large productivity losses that eat up any hoped for wage savings on the construction project. Government entities also open themselves up to higher costs in other areas:
• Common Construction Wage standards discourage unscrupulous contractors who typically cheat on payroll taxes, employ low-skilled workers and shirk health and safety requirements on the job site.
• Under-qualified workers and unsafe work environments create a far greater risk in terms of sub-par construction, worker injuries and even fatalities. Some states see injury rates rise as much as 20% or more.
• Workers who earn minimal wages are frequently pushed into relying on government subsidies for healthcare, housing and other social services.
• School construction in neighboring Ohio is more expensive than Indiana despite schools being exempt from Ohio’s prevailing wag law.

MYTH: Common Construction Wage takes away valuable public revenue without providing a significant benefit.

FACT: Paying Common Construction Wage is an investment in a city’s economic development, raising the construction workforce’s skill level and injecting money into the local economy.
Common Construction wages attract skilled, experienced workers who produce superior projects that last longer and incur much lower repair and maintenance costs. States with prevailing wage requirements show up to 13-15% more value-added per worker.

Workers earning Common Construction Wage spend disposable income on local businesses and services, which generate sales tax revenue, which in turn builds general fund levels.
State and local governments thrive when middle-class income earners are able to buy homes, raise families and establish strong, stable neighborhoods.

MYTH: Common Construction Wage excludes a large portion of the workforce including minorities and new craftsmen.

FACT: States that eliminated prevailing wages saw decreases in minority participation in construction trades and training programs. Some states have seen training reduced as much as 40%, with even greater decreases among minority apprenticeships.

Exempting Common Construction Wage reduces apprenticeship and construction training opportunities up to 40% and minority apprenticeship training by 54%.

MYTH: Rural communities have to pay big city Common Construction Wage rates on local public works projects.

FACT: Common Construction Wage rates are determined on a county basis and in most cases the Common Construction Wage is significantly lower in rural areas than Indianapolis or Lake County. 

MYTH: Prevailing wage laws are only supported by labor unions and the far left.

FACT: Prevailing wage is a bipartisan issue supported by people of all political leanings who care about rebuilding the middle class. Many Republicans, including Senator Rick Santorum and Congressman Paul Ryan support prevailing wage. In 2012, when a proposal was floated at the federal level to remove prevailing wage, 54 Republicans in Congress joined Democrats in voting against the proposal and to support prevailing wage.