Background Information

Moody’s Analytics Forecast for Illinois (2015)

  • “Since laws that hurt unions shift the balance of power from employees to owners, they tend to erode wages and lead to a more uneven distribution of the gains of economic growth,” Moody’s report said. “Consequently, even if the impact of right to work laws is positive in the short run, it can diminish over time because of the downward pressure on incomes.”

University of Illinois study on “Right to Work” (2013)

If Illinois adopted a “Right to Work” Law:

  • Earnings would fall by 5.7 to 7.3 percent over time.
  • Manufacturing earnings would fall by 8.6 percent over time.
  • Construction earnings would fall by 22.2 percent over time.
  • Wage growth would be between 0 and 0.4 percent; but closer to 0.
  • The union wage premium would fall by about 2 percentage points over time.
  • Employment would increase by a very small 0.4 to 0.55 percent but this increase may cease over the course of a few years.
  • The unionization rate for Illinois would decline from 14.6 percent to betwen 4.7 and 13.1 percent.
  • The hourly wages of African-American workers would drop by 2 to 9 percent over time.
  • The hourly wages of Latino(a) workers could drop by as much as 8 percent over time.
  • The hourly wages of women would fall by 2 to 7 percent over time.
  • The annual benefits packages offered to construction workers would fall by as much as $4,126 over tiume.
  • Approximately 107 additional Illinois workers would lose their lives due to work related injuries in the construction sector over 10 years.
  • Annual total labor income in the state would drop by between $1.9 billion and $8.9 billion by the third year after adoption.
  • Annual state income tax revenue would decline by $76.9 million and $355 million by the third year after adoption.
  • After the third year of the adoption, Illinois would suffer a loss in labor income between $36 billion and $40 billion over the following 5 years.
  • After the third year of the adoption, the 5 year reduction in state income tax revenues would be between $1.4 billion and $1.6 billion.

University of Illinois Study on Prevailing Wage (2013)

  • Findings from this study indicate that the Illinois Prevailing Wage Law (PWL) is associated with positive labor market outcomes for construction workers at costs that are either negligible or fully offset. Additional labor costs associated with the statewide PWL are outweighed by other substantial positive impacts for the state economy and Illinois taxpayers. In all likelihood, total construction costs would not be greatly affected by the repeal of PWL due to potential changed in the workforce, productivity, and management practices associated with the policy change. Indeed, repeal of Illinois’ PWL would likely cost the state money, result in job losses, and reduce the construction sector’s efficiency.
  • This study forecasts that employment in the construction industry would like increase should the statewide PWL be repealed. However, any new jobs linked to repeal would be significantly offset by job losses experienced throughout the rest of the economy. These indirect effects of repeal would result in about 3,300 net jobs lost, in a total GDP contraction of more than $1 billion annually for Illinois, more than $44 million in lost state and local taxes, and roughly $116 million in lost federal tax revenue. Within the state, the negative results are comparable for each of the 8 regions that were studied.
  • If the Prevailing Wage Law were to be repealed in Illinois, it is estimated that an additional 7 Illinois construction workers would lose their lives on an annual basis. ¬†Extrapolated over the span of a decade, approximately 70 additional Illinois workers would suffer fatal work related injuries in the construction industry due to the repeal of the state’s PWL. It can also be anticipated that employer contributions to both legally required and fringe benefits for construction workers would dramatically decline.
  • Additionally, the data examined in this study strongly affirms the claim that state PWLs are supportive of construction apprenticeship programs. Study findings suggest that state PWLs ¬†support of the construction training system is a critical component for an industry that is continually concerned about the availability of sufficiently skilled workers.
  • Finally, this study finds no substantial evidence that state PWLs are harmful to African-American participation in the construction industry. Claims that states with PWLs have reduced African-American participation in construction are based on simplistic analyses which are, at best, descriptive and unconvincing. More advanced work finds no evidence suggest that PWLs act to the detriment of African-American workers.
  • In summary, Prevailing Wages for public construction projects in Illinois provide numerous positive economic and social impacts for both construction workers and the state on the whole. This study predicts that repeal of Illinois’ PWL would not result in savings for taxpayers or the state or lead to increased employment of African-American construction workers. Rather, repeal of Illinois’ PWL would result in job losses throughout the state’s economy, increased construction worker fatalities, and declines in valuable social impacts such as construction worker benefits and training opportunities.

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