Legislative Analysis
REQUIRE PREVAILING WAGE FOR STATE CONSTRUCTION Phone: (517) 373-8080
http://www.house.mi.gov/hfa
Senate Bill 6 as enrolled
Analysis available at
Sponsor: Sen. Veronica Klinefelt http://www.legislature.mi.gov
House Committee: Labor
Senate Committee: Labor
Complete to 3-22-23
SUMMARY:
Senate Bill 6 would create a new act that would require a policy commonly known as
“prevailing wage” for state construction projects receiving public funding. The new act would
be similar to 1965 PA 166, which was repealed in 2018 (see Background, below). Under the
new act, every contract for such a project that requires the employment of construction
mechanics would have to include a term stating that the rates of wages and fringe benefits to
be paid to each class of construction mechanics must equal or exceed the wage and benefit
rates that are standard in the locality where the work is to be performed.
State construction project would mean any new construction, alteration, repair,
installation, painting, decorating, completion, demolition, conditioning,
reconditioning, or improvement of public buildings, schools, works, bridges,
highways, or roads authorized by a contracting agent. It would not include projects that
are subject to the jurisdiction of the Michigan Civil Service Commission.
Construction mechanic would mean a mechanic, laborer, worker, helper, assistant, or
apprentice working on state projects. It would not include executive, administrative,
professional, office, and custodial employees.
Prevailing wage determination
The Department of Labor and Economic Opportunity (LEO) would be required to establish
wages and benefits at the rate that prevails on projects of a similar character in the relevant
locality under collective bargaining agreements (CBAs) or understandings between labor
organizations of construction mechanics and their employers. If no such CBAs or
understandings exist, then LEO would determine the prevailing wage for that locality by using
the rates and benefits that prevail in the same or most similar employment in the nearest and
most similar neighboring locality in which a CBA agreement or understanding exists.
Before a contracting agent could advertise for bids on a state project, LEO would have to
determine the prevailing rates for wages and fringe benefits for all classes of construction
mechanics that would be included in the contract. A rate schedule would have to be included
in the bidding forms. If a contract is not awarded or construction has not begun within 90 days
of making the determination, LEO would have to redetermine the prevailing wage and fringe
benefit rates.
Contracting agent would mean any officer, school board, state board or commission,
or state institution supported by state funds that is authorized to enter into a contract
for a state project or perform a state project by the direct employment of labor.
All determined wages and benefits would have to be filed with LEO and publicly accessible.
House Fiscal Agency Page 1 of 4
 Compliance and recording requirements
Contractors and subcontractors would have to keep a copy of all prevailing wage and fringe
benefit rates included in the contract posted in a conspicuous area at the construction site. They
would also have to keep a record of the name and occupation of, and wages and benefits paid
to, each construction mechanic employed in connection with the contract. This record would
have to be available for inspection by the contracting agent and LEO.
If a lower rate than the prevailing wage or fringe benefit rate has been or will be paid, a
contracting agent could terminate the contractor’s right to proceed under that portion of the
contract after providing a written notice. The agent could then complete the contract through a
separate agreement with another contractor. The original contractor and any sureties would be
liable for any excess costs resulting from the termination.
A violation of the act would be punishable by a civil fine of up to $5,000, and the attorney
general or relevant county prosecutor could bring an action to collect the fine. Contractors and
their subcontractors would each be independently liable for any violations. Contractors and
subcontractors could not discharge, discipline, or otherwise discriminate against a construction
mechanic, or threaten to take any of those actions, for reporting a real or suspected violation of
the act.
Work project appropriation
The bill would appropriate $75,000 to LEO from the general fund as a one-time work project
appropriation under section 451a of the Management and Budget Act. The purpose of the work
project would be to implement and communicate information about the act, accomplished
either by state employees or by contract, with an estimated completion date of December 31,
2024.
(This appropriation would have the effect of making the bill immune from referendum under
section 9 of Article II of the state constitution.)
Exempt contracts
Contracts with provisions requiring prevailing wage payments determined by the federal
government under the federal Davis-Bacon Act or with minimum wage schedules that are the
same as the prevailing wages in the relevant locality would be exempt from the act. 1 The act
would not apply to any contracts entered or bids made before the effective date of the act.
BACKGROUND:
1965 PA 166 required the use of prevailing wages for state-funded construction projects until
2018, when the Michigan legislature adopted an initiative petition repealing the act.2
Supporters of the repeal argued that the 1965 law was outdated, and a repeal of prevailing wage
would save taxpayer money on public works projects and increase competition for the projects.
In 2021, however, Governor Whitmer announced that the Department of Technology,
Management and Budget (DTMB) would resume the prevailing wage requirement for state
1
The Davis-Bacon Act requires contractors and subcontractors working on federally funded construction projects to
pay locally prevailing wages: https://www.dol.gov/agencies/whd/law-and-regulations/laws/dbra.
2
A summary of the petition can be found here.
House Fiscal Agency SB 6 as enrolled Page 2 of 4
 construction contracts for projects greater than $50,000 beginning in 2022. 3 The governor
argued that while the law requiring prevailing wage was no longer in place, DTMB still had
the authority to adopt such a policy in overseeing state contracts.
FISCAL IMPACT:
Impact on Department of Labor and Economic Opportunity
Senate Bill 6 would likely result in increased costs for the Department of Labor and Economic
Opportunity, for the implementation and administration of prevailing wage laws. LEO
estimates that additional staff within the Wage and Hour Division would be required on an
ongoing basis to administer and enforce prevailing wage on public projects, including specific
projects conducted by school districts and local governments. Information technology (IT)
updates would also be necessary to implement and administer the bill. Preliminary estimates
from LEO indicate that costs in the first year could total approximately $500,000, which would
support the necessary staffing and IT modifications.
The bill would appropriate $75,000 to LEO from the general fund as a one-time work project
appropriation. The purpose would be to implement and communicate information about the
act, accomplished either by state employees or by contract, with an estimated completion date
of December 31, 2024.
Impact on State and Local Expenditures
Senate Bill 6 would have an indeterminate fiscal impact on state and local expenditures for
construction projects (i.e., those by state departments, public and charter schools, community
colleges, and universities financially sponsored by the state). As of March 1, 2022, the state
has a prevailing wage requirement for any construction-based contracts issued by DTMB,
which would limit any current fiscal impact on projects subject to that procurement policy. The
provisions of the bill would broaden prevailing wage applicability to other state-funded
projects. However, any fiscal impact would be project-specific and difficult to determine.
The vast academic and policy literature pertaining to the economic effects and fiscal impacts
of prevailing wage laws, or lack thereof, is decidedly contested, lacking consensus on proper
research methods and appropriate sources of data, let alone findings and conclusions drawn
from such data via such methods. The House Fiscal Agency previously compiled a partial
bibliography of studies of the impacts of prevailing wages laws, which can be accessed online
at https://www.house.mi.gov/hfa/PDF/Alpha/Prevailing_Wage_Memo.pdf
Impact on Transportation
Senate Bill 6 would likely have a minimal fiscal impact on Michigan Department of
Transportation (MDOT) construction contracts. Much of MDOT’s transportation program is
carried out by private construction contractors working under contract with MDOT. All of
MDOT’s state trunkline road and bridge capital construction, rehabilitation, and reconstruction
program is performed by private contractors. Most of MDOT’s Capital Preventive
Maintenance (CPM) program is also performed by private contractors. MDOT also administers
many capital construction and reconstruction projects on behalf of local road agencies, airport
improvement projects on behalf of local airports, and capital rail projects.
3
Information on this requirement can be found here, and wage rates for DTMB-funded construction projects for
each county can be found here.
House Fiscal Agency SB 6 as enrolled Page 3 of 4
 Over the five fiscal years ending September 30, 2022, total MDOT construction contracts,
based on awarded bid totals, have averaged $2.15 billion—with a peak in FY 2021-22 at $2.91
billion. All of these construction contracts are awarded through open competitive selection,
and most of them were supported, at least in part, with federal funds.
Projects funded in any part with federal aid are subject to the prevailing wage requirements of
the federal Davis-Bacon Act (40 USC 3141 et seq.), which requires that all contractors and
subcontractors performing work on federal contracts or federally assisted contracts in excess
of $2,000 pay not less than the prevailing wage rates and fringe benefits listed in the contract’s
Davis-Bacon wage determination. MDOT awards relatively few construction contracts that are
not funded, at least in part, with federal aid, and thus almost all of MDOT’s construction
contracts, including projects administered by MDOT on behalf of local units of government,
would be subject to the federal Davis-Bacon prevailing wage requirements. Consequently, the
2018 repeal of 1965 PA 166, and the restoration of prevailing wage requirements in Senate Bill
6, would appear to have a minimal fiscal impact on capital construction contracts administered
by MDOT.
Impact on Corrections and the Judiciary
Senate Bill 6 would have an indeterminate fiscal impact on the state and on local units of
government. The impact would depend on the number of individuals ordered to pay a
fine. Because the bill does not specify where the revenue from a civil fine would be dedicated,
it is assumed the majority of the revenue would increase funding for public and county law
libraries, and a small portion of the revenue would be deposited into the state Justice System
Fund, which supports various justice-related endeavors in the judicial and legislative branches
of government and the Departments of State Police, Corrections, Health and Human Services,
and Treasury.
Legislative Analyst: Holly Kuhn
Fiscal Analysts: Marcus Coffin
Ben Gielczyk
William E. Hamilton
Robin Risko
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency SB 6 as enrolled Page 4 of 4