Hoffman Estates project offers insight into prevailing wage
An unplanned change to a government project in a suburban Chicago village shined some light on the cost of the prevailing wage law in Illinois.
A contract for work on the Hoffman Estates Park green was originally estimated to cost just under $25,000, but when the district discovered it needed work that required paying prevailing wage, it had to change the contract. Even though the scope was left unchanged, the price jumped to $37,500, according to the deputy director at Hoffman Estates Park.
“The project would have only cost the district $25,000, but because of the law and the way it is written, the project cost us 50 percent more just to meet the legal requirements and not to change the scope of the project,” Craig Talsma told the North Cook News.
Prevailing wage is determined by the hourly wage, overtime and usual benefits provided by a county's largest city, which in Hoffman Estates' case would be Chicago. The wage is used for public contracts and unique to each occupation or trade.
While some might see the wage as imposing a hidden tax, it is state law, Mike Bickham, commissioner and president of the Hoffman Estates Park Board, said in an email.
“It also significantly undermines a true competitive bid process in that wages must be set for such project work,” he said
Talsma said the ultimate cost is borne by the public.
“These are costs that can be directly passed along to taxpayers because we utilize tax dollars for many of our construction projects,” Talsma said.
Bickham said prevailing wage has big financial implications for Illinois.
“The state and all of the nearly 7,000 units of government that exist within Illinois are impacted by this simply due to the fact that the Prevailing Wage Act is state law,” he said. “This also means all projects subject to it and awarded by the state must pay a set wage versus allowing competitive rates to be packaged as part of bids submitted to such governmental entities.”
Bickham and Talsma agreed that the Hoffman Estates project was a good small case example of prevailing wage laws.
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1685 W. Higgins Road
Hoffman Estates, IL 60169