The Midwest Economic Policy Institute has released a report on Broadband Construction Projects and Prevailing Wage in Minnesota. They strive to make the case that requiring prevailing wages for all broadband projects (last and middle mile included) would benefit the Minnesota economy. The report is likely a response to the prevailing wage bill that passed into law last earlier this year, a bill that was heavily contested by providers.

They come at it from two angles. First, saying that prevailing wages are good for the economy…

In particular, two labor market institutions have been linked with upward economic mobility for skilled construction workers and increased investments in registered apprenticeship programs: collective bargaining agreements with trades unions and prevailing wage laws.

Without prevailing wages, contracts will go to non-locals…

Both the data and the preponderance of the economic research demonstrate that expanding prevailing wage coverage to more broadband infrastructure projects would deliver positive impacts in Minnesota. It would prevent many broadband infrastructure projects from being awarded to out-of-state contractors and nonlocal workers. This would keep more of Minnesota’s tax dollars in the local economy, increasing labor income and consumer spending in communities across the state. It would also raise wages, boost productivity, increase investments in registered apprenticeship programs, and improve worksite safety outcomes in the broadband construction industry.

And that having broadband is good for the economy…

They conclude…

Over the next six years, Minnesota will be leveraging more than $800 million in taxpayer-funded grants to spur an estimated $1.9 billion investment in broadband infrastructure. Access to reliable high-speed internet service will be expanded to 159,000 homes, businesses, farms, schools, and other community institutions. These investments will raise worker income and expand access to jobs while addressing “digital divides.” However, Minnesota will only maximize the economic development impact of these investments if they are built by local contractors who are able to attract, develop, and retain skilled trades workers during a historic labor shortage. Without action, Minnesota risks either delays in constructing this critical infrastructure or significant leakage of taxpayer dollars to out-of-state businesses and nonlocal workers, who take their earnings and consumer spending back home with them upon project completion—reducing economic activity in the state and limiting its growth potential.

To meet the moment, Minnesota could expand coverage of its prevailing wage law to most or all broadband infrastructure projects that receive taxpayer-funded grants, similar to its existing policy on other types of public works construction projects. The state’s prevailing wage law levels the playing field for contractors, improves job quality for workers, bolsters registered apprenticeship programs that train the next generation of skilled workers, and increases workforce productivity while reducing worksite safety issues. However, at least 8-in-10 broadband infrastructure projects funded with state grants since 2014 have been excluded from prevailing wage coverage.

The state could consider eliminating the exemption for “last-mile” broadband projects and reducing the coverage threshold from a grant of $200,000 to a total project value of $25,000 consistent with prevailing wage coverage on all other state-funded projects. Repealing these exceptions for prevailing wage coverage could have the ancillary benefit of improving transparency and accountability for taxpayers, with certified payroll reports becoming accessible. Additional measures could include inserting prevailing wage and other labor standards into the scoring system for awarding broadband grants to applicants and applying high safety standards on broadband infrastructure investments. These reforms could help ensure that broadband projects are built safely, on-time, and within budget by construction businesses from Minnesota who employ skilled local workers earning market-competitive wages and family-supporting benefits.

Regardless of how you feel about the issue, the report is full of helpful tables and data on the Minnesota Broadband grants.