ABC: Free Enterprise Momentum Continues with Passage of Prevailing Wage Repeal and Right to Work Laws in Kentucky

Associated Builders and Contractors (ABC) recently commended the Kentucky Senate’s passage of bills that would end forced unionization and repeal the state’s wasteful prevailing wage law.

The Kentucky Senate today passed HB 3, which would repeal the state’s costly and inefficient prevailing law by a vote of 25-12 after the Kentucky House of Representatives passed the bill by a vote of 60-35 on Jan. 5. The Senate also passed Right to Work legislation, HB 1, by a vote of 25-12, which would prevent workers from being required to join a labor union in order to accept or maintain a job. The Kentucky House of Representatives passed HB 1 by a vote of 61-34 on Jan. 5. Both bills now await Governor Bevin’s (R-Ky.) signature.

“Associated Builders and Contractors applauds the Kentucky Legislature’s decisive actions to promote free enterprise and fair and open competition and looks forward to other states following suit in embracing these merit shop principles,” said ABC Vice President of Regulatory, Labor and State Affairs Ben Brubeck. “By creating new opportunities for all Kentucky contractors shut out by the archaic and costly prevailing wage law, and allowing workers to freely decide whether to join a labor union, the Kentucky legislature has enacted needed improvements to the state’s business climate, ranked 32nd in the country by ABC’s latest Merit Shop Scorecard.”

“Associated Builders and Contractors of Indiana/Kentucky commends the leadership of Governor Bevin, Speaker Hoover, Chairman DeCesare, Representative Koenig, Chairman McDaniel, Senate President Stivers and Leader Thayer for their support of fair and efficient government policies that will benefit all Kentuckians,” said ABC of Indiana/Kentucky President J.R. Gaylor. “These leaders articulated the need for a better business environment in Kentucky leading up to last November’s election, were given free enterprise-supporting majorities in both chambers of the legislature by the voters of the commonwealth and have delivered these crucial policies that will help grow Kentucky’s economy.”

Should these bills be signed into law, Kentucky will become the 21st state not subject to prevailing wage requirements on public construction projects and the 27th Right to Work state (the fifth to reject forced unionization since 2012).

ABC released its latest Merit Shop Scorecard rankings in November 2016. The meritshopscorecard.org website reviews and grades state-specific policies and information significant to the success of the commercial and industrial construction industry. The scorecard grades states on their policies on prevailing wage and project labor agreement (PLA) mandates and Right to Work status, as well as their construction job growth rate, commitment to developing a well-trained workforce, career and technical education (CTE) opportunities and results, and use of public-private partnerships (P3s). Plagued in part by its prevailing wage and failure to adopt a Right to Work law to date, Kentucky’s business environment ranks 32nd in the country.

ABC opposes wasteful prevailing wage laws because they contain outdated job restrictions that do not match the needs of today’s competitive construction business environment. Prevailing wage requirements discourage many qualified small and minority-owned contractors from bidding on public projects. State governments’ complex and inefficient wage rate determinations and work restrictions make it difficult for them to compete with better capitalized corporations. Studies have shown that state prevailing wage laws can needlessly inflate construction costs by as much as 38 percent.

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ABC supports Right to Work laws because they guarantee workers can seek employment without fearing they will be required to join (or pay) a union if they are hired. These laws simply allow workers who do not want to participate in collective bargaining to opt out of joining the union or paying dues or fees. If all or most of the members of a bargaining unit believe union representation will advance their interests, then nothing in a Right to Work law prohibits them from exercising their federally protected right to organize a union and collectively bargain with their employer. U.S. Bureau of Labor Statistics reports that private sector employment grew 5.2 percent faster in Right to Work states than non-Right to Work states from 2003-2013.

Additionally, U.S. Department of Commerce data show that per capita disposable income, adjusted for cost of living, was higher in Right to Work states than the national average in 2013.

Neighboring West Virginia also repealed its prevailing wage law and adopted Right to Work legislation in 2016. Despite rhetoric that both actions would have dire economic consequences, the state’s monthly construction unemployment rate has consistently improved compared to its 2015 rate, and the state now ranks second in the country in year-over-year construction unemployment rate progress according to the latest report.

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