Journal Article on Prevailing Wage Debunked, But Only Outside Academia

A survey of academic journal articles in the fields of labor relations, labor economics, and labor history reveals scholarly consensus: union-backed public policies are good for the economy!

No one ever rebuts these journal articles, so they must be true. And why would anyone assume otherwise? As a union official said about one of these studies at a city council meeting in the San Francisco Bay Area many years ago, “It’s from a college. Written by a doctor!”

Public deference to college professors can be a powerful political weapon. For example, union lobbyists and elected officials across the country frequently cite a recent article published in an academic journal when arguing for policies that impose or expand “prevailing wage” laws on public works construction projects. It was written by a University of Utah economics professor and two other researchers and appeared in October 2012 in Industrial Relations: A Journal of Economy and Society.

This journal is published under the auspices of the Regents of the University of California by the Institute for Research on Labor and Employment, an affiliate of the University of California Miguel Contreras Labor Program. This is one of the numerous taxpayer-funded labor institutes at state universities that produce studies meant to advance the union political agenda.

Slapping the university logo on such studies provides instant credibility that cannot be attained from the logo of an openly union-affiliated organization such as “The California Labor Federation Institute for Policy Research.” After all, the California Labor Federation does not have the scholarly cachet attained from faux-Gothic buildings, cap-and-gown graduations, or sports teams playing in bowl games or “March Madness®.”

Coasting on the reputation of the University of California, this highly-cited journal article “The Effect of Prevailing Wage Regulations on Contractor Bid Participation and Behavior: A Comparison of Palo Alto, California with Four Nearby Prevailing Wage Municipalities” claims to prove that government-mandated wage rates on construction contracts have not negatively impacted bidding for public works projects in the San Francisco Bay Area.

It sounds like the economics is settled on government-mandated prevailing wage rates. Or is it?

You will not find many college professors who specialize in investigating and debunking the claims of university-based labor institutes. And the concept of “peer review” seems tenuous in an intellectual field where every expert necessarily holds the same enlightened ideology.

I don’t have any graduate degrees hanging on the wall or the honor of being called “Professor” by my community, but I pretend expertise on government-mandated prevailing wage laws in California. For example, I have written four editions of an influential but detested report on the issue, entitled “Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions?

With this feeble credential, I decided to take a closer look at what people with doctorates say about prevailing wage policies in California. In my first scan of the article, I saw numerous statements worthy of rebuttal, or at least quibbling. But one item caught my attention.

The study claims that the five cities used for comparison purposes – Palo Alto, San Jose, Sunnyvale, Mountain View, and San Carlos – are in Santa Clara County. But San Carlos is actually in San Mateo County.

Why does this matter? The California Department of Industrial Relations determines prevailing wage rates by obtaining the applicable union Master Labor Agreements for each construction trade or construction professional service occupation. It adds up all of the employer payments indicated in the union agreement, and the total of those payments becomes the prevailing wage.

This means prevailing wage rates are based on the geographical jurisdictions of each local union. While some construction trade unions have large geographical jurisdictions (some as large as the entire State of California), other unions have jurisdictions as small as one county. As a result, prevailing wage rates will differ for some trades even when job sites are only a mile apart, simply because they are in different counties.

Apparently the Utah-based authors of the study actually believed the union rhetoric that claims California determines prevailing wage rates by region based on surveys of employers. Actually, the state has not conducted surveys of employers to ascertain dollar amounts of prevailing wage rates in at least 25 years, if ever. (A few surveys have been conducted to determine which construction trade union has jurisdiction of a disputed job classification, such as installation of metal roofs or off-site hauling to-and-from a job site.)

This geographic error ended up as one of many identified mistakes. In the end, I outlined 17 problems with the journal article. Even the raw data set for the key city of Palo Alto appeared to be inaccurate and incomplete. If someone had the time and money to replicate the entire study, the whole thing would probably be exposed as false.

My report, entitled University of Utah Study on Government-Mandated Construction Wage Rate (“Prevailing Wage”) Policies in Five California Cities: Not a Reliable Tool for Policymakers,” should create appropriate concerns about the study as policy guidance for state and local governments.

Will I seek to have the editors of Industrial Relations: A Journal of Economy and Society retract the faulty article? Of course not!

Even if I possessed academic credibility with a PhD and a professorship at a well-known secular liberal arts college, professors and administrators associated with university labor institutes are in cahoots with the union movement, sometimes explicitly through boards of directors, advisory committees, and funding sources. In academic circles nowadays the definition of truth is malleable, especially when progressive principles of social justice are at stake.

They’ll keep publishing, and maybe once in a while a layman will expose a flawed study or two.


Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

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