A proposal to repeal the state law that sets wages for public construction projects was approved Tuesday by an Indiana House committee amid disagreement over what impact the change would cause.
More than 100 people filled the House chamber as the Republican-controlled House Labor Committee heard more than four hours of testimony before voting 8-4 along party lines in favor of eliminating the boards that set construction wages for each state or local project.
Supporters of the repeal say it would save an estimated 10 percent to 20 percent on public construction projects by allowing more contractors to pay wages below union scale. Numerous construction company officials testified against the proposal, saying the law contributes to the state having a stable, well-trained labor force by preventing low-wage contractors from underbidding on projects.
The bill would eliminate the boards that set construction wages for each state or local government project costing more than $350,000.
Those five-member boards, which include people appointed by labor unions and an association of non-union contractors, set what is known as the common construction wage that any contractor on the building project must pay workers.
Indiana Chamber of Commerce President Kevin Brinegar said he believed the law forced cash-strapped cities, counties and school districts to pay inflated prices and that it was an "unnecessary and wasteful interference by government into the free enterprise system."
"It is a relic of the 1930s and it is long past time that this costly and unfair statute be repealed," Brinegar said.
The new push comes three years after Republicans pushed through the state's right-to-work law that drew thousands of union protesters to the Statehouse.
Most of those speaking against repealing the wage law were officials from construction companies that hire union workers and do hundreds of millions of dollars in public projects around the state each year.
Keith Rose, president of Goshen-based Rieth-Riley Construction Co. Inc., disputed estimates that the change could lead to 20-percent savings on projects, since he said labor costs were typically around 20 percent of a contractor's cost.
"In my simple math, that means labor's free — I'm going to pay the worker zero," Rose said. "So that math doesn't quite add up."
The repeal proposal will likely go before the full House for a vote next week.
The step has been sought for many years by organizations such as the Associated Builders and Contractors of Indiana and Kentucky, which represents non-union companies.
J.R. Gaylor, the group's president, said the free market — and not government — should be the deciding factor on wages.
"Free enterprise will work for everyone," he said. "Taxpayers will win, contractors will win, workers will win and our general economy will win."
Several local officials joined repeal opponents with arguments that the current system encourages high-quality work even by low bidders on project contracts.
Portage Mayor James Snyder, a Republican, said his northwestern Indiana community benefited from having fairly paid, local workers build its city hall, fire stations, roads and bridges.
"We want people from Portage doing these projects, not transients from Alabama or New Mexico living in cheap hotels, eating bologna sandwiches," he said.
Gov. Mike Pence said he’d sign the bill into law if it hits his desk.
“Throughout my career I have long believed that wages on public projects should be set by the marketplace and not by government bureaucracy,” Pence said. “This measure would save taxpayers millions of dollars and it would lessen the burden on cash-strapped local government sand local schools.”