Undercutting prevailing wages is a recipe for economic decline

[eridani]

http://washingtonpolicywatch.org/2012/05/15/you-get-what-you-pay-for-undercutting-prevailing-wages-is-a-recipe-for-economic-decline/

You get what you pay for: Undercutting prevailing wages is a recipe for economic decline

■Pennsylvania school construction data shows no across-the-board decline in costs after prevailing wage laws were weakened there.
■A study of 15 Great Plains states showed the average cost per square foot of building new schools did not differ significantly between states that had prevailing wage laws and states that did not.
■A comparison of school construction costs between prevailing wage and non-prevailing wage states in the Mountain West and Southwest found that average costs per square foot were actually lower in states with prevailing wage laws.
■ A study of school construction costs in Maryland and other mid-Atlantic states found that prevailing wage laws have no measurable impact on costs.

There’s also evidence that weakening prevailing wage laws actually increases costs in the short-term and long-run. Declining worker productivity means more hours are required to get a particular job done; as morale drops, more time has to be spent fixing mistakes; as experienced and skilled workers move on to better-paying projects, fewer workers commit to apprenticeships, leading to long-term labor shortage.

[tclambert]

1. Economic stimulation = increased consumer spending.

It's really that simple. And who does the consumer spending? The middle class. Sure, a rich guy who makes a 1,000 times what an average worker does will spend more. But not 1,000 times more. When a 1,000 middle class people buy one pair of blue jeans each, the rich guy buys 5 designer pair, and a couple of expensive outfits. It adds up to maybe 1/10th what the middle class group spent. With the rest, the rich guy saves it, invests it, plays rich guy games with it that don't contribute to the general economy.

To get an economy booming, you need to get lots of money to the middle class.