INDIANAPOLIS | With the stroke of a pen Wednesday, Gov. Mike Pence ended a system the state and local governments have used for eight decades to set wages on most publicly funded construction projects.
House Enrolled Act 1019, which takes effect July 1, repeals Indiana's common construction wage, also known as prevailing wage, by eliminating the wage-setting duties of local boards of taxpayers and contractors in favor of free market pay scales.
"Wages on public projects should be set by the marketplace and not by government bureaucracy," Pence said. "By repealing the common construction wage, our state is putting hardworking taxpayers first, lessening the burden on cash-strapped local governments and schools, and opening doors of opportunity for small businesses across our state."
The new law also is a personal political victory for the Republican governor who spent thousands of dollars from his campaign fund on television ads trying to win over reluctant members of the Republican-controlled General Assembly.
It ultimately passed by narrow margins, 27-22 in the Senate and 54-40 in the House.
No Northwest Indiana lawmaker in either chamber, Republican or Democrat, supported the legislation.
State Rep. David Niezgodski, D-South Bend, said Pence's claim that common construction wage repeal will save money only is true if Hoosiers working on public construction projects are paid less than they earn now, or lose their jobs altogether once low-wage, out-of-state contractors come to Indiana and underbid local construction companies.
"The middle class in Indiana is dying. By getting rid of the common construction wage, our governor and his Republican supermajorities have sped up the process," Niezgodski said. "It is a slap in the face to not only our hardworking men and women, but Hoosier business owners and taxpayers as well."
Supporters of the new law claim it contains safeguards that ensure all companies will be held to the same standards, and job training programs run by building trades unions will remain viable.