The Wisconsin Taxpayers Alliance
found the survey method used to calculate prevailing wage led to wages that: "do not reflect varying county construction wages or regional labor markets; are more "costly" in low-wage, low-income counties, particularly those in northern Wisconsin; can fluctuate widely and unpredictably from year to year, rather than change slowly and consistently as market wages typically do; can require contractors to pay un-skilled workers more than skilled workers in some situations; and may cost state and local government hundreds of millions of dollars in excess costs."
Method: In order to calculate prevailing wage and benefit rates, by county, Wisconsin surveys construction contractors annually to get information on what private construction projects paid in wages and benefits to workers.
The study found that only 10% of surveys are completed correctly and returned, a much lower response rate than the federal government's survey of the same employers. Due to this low return rate, the union/non-union split in hours does not reflect the overall construction industry. 87% of the hours reported are covered under union contracts, but only approximately 25% of the industry is unionized in Wisconsin. This tends to raise prevailing wage rates above the market rates.
A second flaw that results in inflated prevailing wages occurs because Wisconsin selects and averages only the top portion of the wage distribution instead of using survey averages to calculate prevailing wage using all of the survey responses. This leads to prevailing wages that are 20% to 40% above the rate that results from calculating a true average from all the survey responses.
This study does not address whether Wisconsin should or should not have a prevailing wage law, but rather only how the prevailing wage is calculated.
View the Report: Evaluating Wisconsin's Approach to Determining Prevailing Wages: State Methodology, Regional Market Comparisons, Local Fiscal Impact