Indiana Politicians Act to Drive Down Constituents’ Wages
While policy makers in Washington are at least paying lip service to the need to lift the stagnant wages of America’s middle class, politicians in state capitals across the country are cutting the wages and benefits of public employees and school teachers, passing so-called “right-to-work” laws to weaken unions, and cutting back on unemployment insurance with the aim of forcing jobless workers to take any job, no matter how poor.
Indiana is a leader in this sorry parade. It passed right-to-work two years ago, and now the legislature has repealed (with the support of a governor with aspirations for national office) the state’s eight-decade old prevailing-wage law, which required contractors on state-funded construction projects to pay their construction workers the average wage in the locality where the work is done. Like the federal Davis-Bacon Act, the rationale for the law was straightforward: The state government should not be in the business of driving down wages. When it pays for construction work, rather than forcing a race to the bottom, it should respect local area standards.
But powerful interests, from the Koch Brothers and the American Legislative Exchange Council to the Associated Builders and Contractors, like the idea of a race to the bottom. From their perspective, the best wage is the lowest wage they can get away with, since companies’ profit margins will be higher with every dollar that isn’t paid to a construction worker. Indiana politicians are dancing to the tune the Kochs are calling.
Part of their motivation is hatred of unions, which set local labor standards where they are strong. Getting the state to accept the lowest bid, with no floor on wages except the minimum wage, means the union wage will be undercut, union contractors will be unable to win project bids, and one of the Kochs’ main political opponents will be crippled. Who other than unions has the power to lobby for a decent workers’ compensation system, unemployment insurance benefits, enforcement of worksite safety and health laws or the minimum wage?
It’s sad to see politicians voting to cut their constituents’ wages, cuts that will increase inequality and reduce the purchasing power of the state’s consumers. President Obama has said that inequality is the key economic political problem of our time, but Indiana politicians disagree. For them, cutting construction workers’ wages is a high priority.
And why exactly, do they want these wages cut? Are they unreasonably high? The average Indiana carpenter makes $41,650 a year, roofers make $40,800, and laborers earn the princely sum of $40,580 a year, doing dangerous work in an industry whose fatality rates are among the highest in the nation. These are middle-class wages, earned by men (and a few women) with skills, physical stamina, and a strong work ethic.
By undercutting the wages of these skilled workers, Indiana politicians will achieve a number of undesirable outcomes. They’ll undermine the best training programs in the country—the joint union-management apprenticeship programs—and lower the skills and productivity of the Indiana workforce.