Wage Regulation and Training: The Impact of State Prevailing Wage Laws on Apprenticeship
Prevailing wage laws require contractors to pay workers the prevailing wage in state or federal projects in order to prevent wage-based competition in the bidding for contracts. Currently, the prevailing wage in a trade is defined roughly as the wage received by 50 percent of workers in the local market. The prevailing wage laws have been a controversial topic. Critics see it as an intervention that distorts the labor market, rewards union contractors at the expense of open-shop contractors, and inflates government outlays on construction projects. Supporters, on the other hand, argue that prevailing wage laws help create and maintain a more productive and efficient labor force-a benefit that, ultimately, offsets any drawbacks. In this chapter, I contribute to policy debates by addressing a topic that has attracted limited attention in these debates: apprenticeship training. Construction workers learn their craft through a variety of methods ranging from informal 'catch-as-catch-can' training on the job to highly structured formal apprenticeships that combine on-the-job practical training with in-class theoretical instruction. The latter aims to turn out workers that have all-around knowledge of a particular craft, and it has been the traditional port of entry into the trades. It is critical to evaluate whether the regulatory environment facilitates or impedes apprenticeship programs because dividends of training and skill acquisition are expected to accrue both to individual workers in terms of higher life-time earnings, and the society, which would reap the benefits of higher productivity.