The Costs of Prevailing Wage: Evidence From State Road Construction Spending

By Dr. Michael J. Hicks.

"In this report, Ball State University economist Michael Hicks examines the impact of prevailing wage laws across the country on the cost per quality-adjusted mile of road construction from 2004 to 2019. He also reviews the impact of these laws on the labor share of road construction costs. Hicks relies on data from the Federal Highway Administration, the Bureau of Economic Analysis and the Bureau of Transportation Statistics.

His research demonstrates that prevailing wage laws increase the cost of road construction by 8.5% to 14.3%, in line with previous Mackinac Center estimates and other scholarship. These results are both economically and statistically significant.

Contents

• Executive Summary
• Introduction
• Modeling Prevailing Wage Legislation Effects
• Literature Review
• Model and Data
• Estimation Results
• Summary and Conclusions
• Endnotes"