How Illinois’ low-paid manufacturing workers subsidize high-paid construction workers

Illinois’ prevailing wage law redistributes income from manufacturing workers to construction workers.

Illinois’ Prevailing Wage Act mandates high wages for construction workers on projects that receive public funding. All Illinoisans have to pay for these wages with property-tax dollars – that includes Illinois’ beleaguered manufacturing companies, as well as Illinois’ nearly 600,000 manufacturing workers, of which there are fewer and fewer every month.

The sad irony of this subsidy for construction workers is that the prevailing-wage law makes Illinois’ construction workers the best paid in the entire nation, while Illinois’ manufacturing workers are the worst paid in the entire region. Illinois is the only state where the average wage for construction workers is over $60,000, compared with the national average of $46,800, according to data from the Bureau of Labor Statistics.

Manufacturing workers in Illinois end up with the short end of the stick. Illinois’ manufacturing workers rank last in the Midwest for average wages. Although the Midwest as a whole pays well for manufacturing work compared with the rest of the country, Illinois workers still make less than the national average wage. Ten states in the Midwest pay above the national average for manufacturing work.

Increasingly, manufacturers have been choosing to leave Illinois. For the companies that stay, the story isn’t pretty. After accounting for the second-highest property taxes in the nation, which hit manufacturers harder than companies in less property-dependent industries, as well as workers’ compensation, unemployment insurance, corporate taxes, forced unionism and a variety of burdensome regulations, there isn’t a lot of money left to pay workers. Illinois’ average manufacturing worker earns only $35,400, the worst of all regional competitors and neighboring states.

The average American construction worker earns $46,800 per year, while the average American manufacturing worker earns $36,500, putting construction workers $10,000 per year ahead of manufacturing workers.

But in Illinois, the average construction worker earns $25,000 more than the average manufacturing worker, revealing the tremendously unfair redistribution from manufacturing to construction caused by Illinois’ prevailing-wage law.

Manufacturing and construction are both critical industries that make up Illinois’ industrial backbone. But state government shouldn’t be in the business of subsidizing one at the expense of the other. At the end of the day, if manufacturing cannot flourish in Illinois, then the construction sector will be hurt for lack of work, even if construction wages are pegged artificially high.

The prevailing wage causes this unfair trade-off. Illinois’ manufacturing sector needs relief from a variety of policy pain points, leading with workers’ compensation but also including worker freedom and property taxes. Gov. Bruce Rauner’s policy to repeal the prevailing-wage law and cap property taxes will provide relief for manufacturers, and end this unfair subsidy of the construction industry at the expense of manufacturing.