In a study evaluating the state of Wisconsin’s approach to calculating prevailing wages and its financial impact on taxpayers, the nonpartisan, nonprofit, and independent Wisconsin Taxpayers Alliance (WISTAX) found
at least two methodological “flaws” that tend to raise prevailing wages above market rates.
The first flaw the report highlighted is that the response rate on the survey used to calculate hourly prevailing wage and benefit rates for public construction projects was dramatically lower when compared to the federal survey. The result is a sample that does not accurately reflect the overall construction industry.
Secondly, while most states that employ survey averages to calculate prevailing wages use all survey responses to measure to market, Wisconsin selects and averages only the top half of the wage distribution. As a result, prevailing wages are inflated by 20 to 40 percent above the rate that would result from calculating a true average from all respondents.
In addition, Wisconsin prevailing wages tend to be 23% higher than averages found in a federal survey of the same Wisconsin employers; and when prevailing wages and benefits are combined, they average 45% more than typical compensation packages estimated in the same federal survey.
The study outlines the fiscal implications this has on state and local governments stating that in 2014, if prevailing wages had reflected average wages and benefits, the state and local governments—as well as taxpayers—could have saved as much as $299 million on building and heavy construction projects.
Read the full analysis on ABC Wisconsin’s website