The Wall Street Journal today published the following letter from The Freeman books editor, George C. Leef.
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Terence O’Sullivan attempts to defend so-called prevailing wage laws by saying that they don’t cost taxpayers anything.
First, let’s be clear on what these laws do. They’re governmentally enforced price-fixing conspiracies. On construction projects where there’s even the slightest bit of state or federal money, these laws kick in and forbid construction firms from competing on labor price, which is set at the “prevailing” (that is, union) rate.
The purpose of “prevailing wage” laws when they were passed decades ago was to protect unionized construction firms against competition from more efficient non-union firms. That’s still true today.
Hilariously, Mr. O’Sullivan argues that taxpayers benefit from the “greater productivity” that allegedly comes about from this conspiracy against labor competition. Perhaps the defining characteristic of union construction is its inefficiency, brought about by work rules that require the employment of more workers than the job really needs.
Prevailing wage laws are special-interest legislation pure and simple, squeezing extra money out of a large group (taxpayers) and funneling it to a small but well-organized and politically influential group (construction unions). There are no benefits to the taxpayers, but the interest group has to employ deceptive arguments to confuse the issue.
George C. Leef
Raleigh, N.C.