Charlie Neibergall/AP Photo
Chief custodian Ryan Nail cleans a classroom at the Jesse Franklin Taylor Education Center, July 29, 2020, in Des Moines, Iowa.
The COVID-19 pandemic has transformed the way Americans think about work—and about workers.
Millions have learned they can do their jobs remotely, without commuting. We’ve endured historic disruptions to the travel, retail, and hospitality industries, even as we’ve stressed our health care workforce to the breaking point. Unions and efforts to improve labor standards are enjoying their highest levels of public approval in more than 50 years, although that hasn’t yet shown up in increased union density. And we’ve gained a new appreciation for the important role that custodians, food service, and other face-to-face service workers play in keeping our economy running.
We don’t discuss this latter group of workers nearly enough. They’ve faced some of the highest workplace risks during this pandemic. They are disproportionately people of color (including 53 percent of custodians in America today), and have long been among the lowest-paid in our economy. The jobs often offer few benefits, and workers face higher risk of abusive practices like wage theft.
Among the biggest consumers of the services that employ these workers are governments and public bodies—including schools, universities, hospitals, and state facilities. Governments award contracts for service work to private firms with the lowest bid, which can incentivize employers to shave costs wherever possible. This puts even more downward pressure on wages and benefits for the most economically vulnerable workers. Now, three years into a historic labor market disruption, many employers are struggling to fill vacancies for essential frontline service jobs.
The data shows that prevailing-wage laws can deliver both job quality and strong contractor competition, and not just for the construction industry.
Prevailing-wage laws were adopted in the 1930s to prevent a similar problem in the construction industry, ensuring that construction contractors on federally funded projects meet local market standards for compensation and high-quality craft-based skills where the work is being performed. Twenty-eight states have since passed laws applying prevailing-wage standards to state and locally funded construction work.
Decades of academic research has dissected their impact, concluding that prevailing wages not only produce higher wages and better benefits for workers, but they dramatically increase participation in apprenticeship programs that function as labor supply pipelines. Equally important and contrary to long-standing conservative rhetoric, research has concluded that these laws do not increase total project costs, because they attract higher levels of skill and productivity to the job site, result in fewer safety and performance problems, and improve workforce retention.
While Congress enacted a prevailing-wage standard for federally funded service work in the 1960s, only eight states have acted to apply those standards to service contracts paid for by state or local agencies.
According to a recent study by the Project for Middle Class Renewal (PMCR) at the University of Illinois at Urbana-Champaign and the Illinois Economic Policy Institute (ILEPI), there is reason to believe that more state policymakers should follow suit. While custodians nationally earn less than $30,000 in annual income on average, we found that those in the eight states with service contract prevailing-wage laws earned 6 to 10 percent higher incomes and were 2 to 4 percent more likely to have health insurance. Service contract prevailing-wage laws also made custodians more likely to have full-time jobs and less likely to live in poverty. The greatest positive impacts were realized by Black and Hispanic workers, indicating that the policies help combat racial inequities.
With cumulative annual federal, state, and local government spending pushing $10 trillion, it’s no secret that the employment and procurement standards established by public bodies can either uplift or depress conditions for workers in industries that regularly compete for lowest-bidder contracts. The PMCR-ILEPI study, a first-of-its-kind examination of the impact of prevailing wages on service workers, shows that these laws promote a rising tide that lifts all boats for custodians. In an era of tight labor markets, low unemployment, higher safety risks, and inflationary pressures that are reducing the value of paychecks, that rising tide can be a decisive factor in helping employers fill job vacancies and deliver value for taxpayers.
The data shows that prevailing-wage laws can deliver both job quality and strong contractor competition, and not just for the construction industry. To combat labor shortages, the service sector would benefit from wider utilization of state and local prevailing-wage standards. These policy instruments lift wages, expand benefits, and improve job stability for workers, while ensuring that employers remain competitive in any labor market contingency. It’s a proven idea that should be expanded.
