Montgomery County Council Passes Prevailing Wage Law

By a 7-2 vote, the Montgomery County Council passed a prevailing wage law covering county-funded construction work. In doing so, they protected thousands of construction workers on public jobsites.


Prevailing wage laws have been in existence in the U.S. for more than a century. They ensure that construction contractors on public jobsites do not pay less to their workers than the wages and benefits that prevail on other jobs in the same community. The federal government, thirty-one states and countless local entities employ prevailing wage laws to protect local labor standards.

Without prevailing wage laws, out-of-state contractors can undercut local bidders by lowballing labor costs, thereby eroding local labor standards. In a landmark study, University of Utah economist Peter Philips found dire consequences in nine states that repealed their prevailing wage laws, including declining income and sales tax revenues, increased cost overruns on road projects, lower earnings for construction workers, reduced construction worker training, falling enrollment of minorities in training programs and a 15% increase in occupational injuries.

In Maryland, the state government, Baltimore City, Prince George’s County and Allegany County all have prevailing wage laws, as does the federal government (which covers the District of Columbia). Montgomery County was the largest jurisdiction on the eastern side of the Potomac River without one. Six County Council Members – lead sponsor Valerie Ervin and Marc Elrich, George Leventhal, Duchy Trachtenberg, Nancy Floreen and Roger Berliner – co-sponsored a prevailing wage bill that ensured that workers on county jobs are paid the same rate that they would be paid on state jobs. County Council President Mike Knapp joined them in voting for the bill. County Executive Ike Leggett contributed invaluable support. Council Members Phil Andrews and Don Praisner voted against it.


Prior to the vote, Council Member Andrews expressed concern that the bill would inflate construction costs. But the overwhelming preponderance of the evidence is that prevailing wage laws encourage higher productivity that offsets any wage increases and prevents cost hikes. In a 1999 study done for the Prince George’s County government, Cortland State University economist Mark Prus found that prevailing wage laws had no statistically significant impact on public construction costs of schools built in Maryland and the Mid-Atlantic region. Economic Policy Institute analyst Nooshin Mahalia conducted the most comprehensive academic literature review ever undertaken on the subject of prevailing laws and costs and concluded:

Critics of prevailing wage laws argue that they inflate government contract costs. But a growing body of economic studies finds that prevailing wage regulations do not increase government contracting costs. Some of these studies use a cross-sectional approach, which compares costs of contracts subject to a prevailing wage with costs of contracts that are not during a common time period, and others use a time-series approach, which examine whether contract costs have changed with the adoption or repeal of a prevailing wage requirement. These studies also show that prevailing wage laws provide social benefits from higher wages and better workplace safety, increase government revenues, and elevate worker skills in the construction industry...

At this point in the evolution of the literature on the effect of prevailing wage regulations on government contract costs, the weight of the evidence is strongly on the side that there is no adverse impact. Almost all of the studies that have found otherwise use hypothetical models that fail to empirically address the question at hand. Moreover, the studies that have incorporated the full benefits of higher wages in public construction suggest that there are, in fact, substantial, calculable, positive benefits of prevailing wage laws.

The County Council’s action brings Montgomery County into line with the federal and state governments and many of its neighbors. And by acting to preserve labor standards in the construction industry, they are protecting thousands of workers on county jobs in difficult economic times. Passage of the bill is a victory for construction workers, their families, and Montgomery County taxpayers (like me) who benefit when public funding supports a high-wage, high-productivity path for our local economy.

Update: Maryland Secretary of Labor Tom Perez, who testified in support of the bill, wrote in support of prevailing wage legislation in this Gazette column.

Disclosure: The author is the Assistant to the General President of the United Brotherhood of Carpenters.