WI AFT Local President Fails Econ 101 on PLAs and Prevailing Wage

An effort to school Governor Scott Walker on free market forces morphed into a self-taught lesson in irony Tuesday for American Federation of Teachers Local 212 President Mike Rosen. Rosen joined  Democratic Assembly Leader Peter Barca and Rep. Katrina Shankland on a media conference call to respond to President Donald Trump’s visit to Wisconsin and appearance with Walker. Rosen attempted to call out Walker for hypocrisy by supporting repeal of prevailing wage laws and requirements for project labor agreements.

Rosen argued that eliminating prevailing wage and requirements for project labor agreements will lower wages for skilled-trade laborers:

“Those are designed to reduce the wages of skilled trades people. Now, if it’s actually the concern of the governor and others, that we have a shortage of skilled tradesmen and women and we want to attract them into the field, the last thing you should be doing when there is a shortage is reducing wages. Any Econ 101 student knows that when there are shortages, the way you address the shortages, if you use market mechanisms, is to raise the price not to lower it.

Rosen, of course, is correct if by “market mechanisms” he means free market forces. If there is a shortage of qualified workers in a free market, private employers in the affected sector respond , of their own choice, by raising wages to make the job openings more attractive. But prevailing wage and project labor agreements are government mandates that artificially inflate prices; thereby circumventing the very “market mechanisms” Rosen appears to be praising.

On Project Labor Agreements: A bill signed into law by Walker in April  prohibits state and local governments from requiring a bidder on a public works project to enter into an agreement with a labor organization; considering, as a factor in awarding a bid for a public works project, whether or not a bidder has entered into an agreement with a labor organization; or requiring a bidder or a bidder’s employees on a public works project to join a labor organization. They also cannot require a bidder to  pay dues to a labor organization, or provide anything of value to a labor organization or its associated benefits plan or program. Walker said at the time that the changewould foster healthy competition between contractors:

“Accountable government means ensuring our taxpayers receive quality service,” Governor Walker said. “By forbidding state and local governments from requiring contractors to enter into agreements with labor organizations, we’re promoting healthy competition between contractors. At the end of the day, this means the contractor ultimately chosen for the project is the one that has demonstrated excellent service and will work at good value for Wisconsin taxpayers.”

Project Labor agreements are still allowed; they are simply no longer government-mandated. In the 2015-16 legislative session, Republicans eliminated  removing minimum salary requirements for workers on local public projects. Lawmakers are working toward repealing the requirement for state projects this session. Advocates say the repeal would save the state hundreds of millions of dollars in construction costs and increase competition by giving non-union firms the chance to bid on public projects.

In other words, supporters of ending Project Labor Agreement and the Prevailing Wage requirement argue that their elimination would unleash the free market forces Rosen praises.