Last week, Governor Matt Bevin gave the keynote address at The Maine Heritage Policy Center’s 2019 Freedom and Opportunity Luncheon. In his speech, Governor Bevin talked about his background, accomplishments and the new reforms he’s helped advance in the Commonwealth of Kentucky. Governor Bevin and his administration have been successful in passing common-sense policies such as right-to-work while also reducing red tape, repealing the prevailing wage and the launching an apprenticeship initiative that expands opportunity in his state.
Most notably, Governor Bevin started the Red Tape Reduction Initiative, a movement to review, update or eliminate costly, ineffective or outdated regulations. When Governor Bevin launched the Red Tape Reduction Initiative, there were over 4,700 regulations in Kentucky’s Administrative Regulations. Those regulations contained more than 130,000 rules and restrictions that burdened Kentucky businesses and residents alike. According to Governor Bevin’s administration, 617 regulations had been repealed and 661 were amended as of April 2019 — accounting for approximately 27 percent of total regulations since the initiative began.
The Cato Institute ranked Kentucky 18th for regulatory policy in their 2016 “Freedom in the 50 States” report, primarily due to Governor Bevin’s Red Tape Reduction initiative. For reference, Kentucky ranked 26th in regulatory policy in 2015. Removing burdensome regulations make states like Kentucky more desirable to individuals and businesses. The premise is simple; when government makes it easier and less expensive to operate a business or maintain a home, individuals and businesses will prosper.
Governor Janet Mills should follow Kentucky’s lead in an effort to attract more individuals, families and businesses to our state. According to the Mercatus Center, there were approximately 113,862 restrictions contained in the 2018 Code of Maine Rules (CMR). To put that in perspective, it would take 449 hours, or 11 weeks, to read the 2018 CMR in its entirety.
While some of those regulations may be necessary to protect the health and safety of the public, there are undoubtedly thousands of restrictions that serve no legitimate purpose and could be nixed from the CMR to help Mainers thrive. For example, requirements for obtaining an occupational license could be reduced or eliminated in some professions to allow individuals to pursue their career goals without encountering excessive barriers to entry.
In addition to reducing red tape, Governor Bevin signed a right-to-work bill into law in 2017, making Kentucky the 27th state to pass such legislation. Right-to-work laws prevent employers from requiring employees to join or pay dues to a union as a condition of employment. Currently, 27 states have right-to-work provisions in statute or in their state constitutions. Right-to-work states give workers more individual freedom to choose how they spend their hard-earned money.
Right-to-work laws do not prevent or make it more difficult for individuals to join a union. Instead, they encourage organized labor to more effectively represent their members in order to retain and grow membership. For example, unions require an average of 10 percent more in dues or fees (and pay their officers approximately $20,000 more) in non right-to-work states than in right-to-work states. Because unions are largely shielded from competition and loss of revenue in non right-to-work states, they can force their members to pay more in dues (and pay union officials more as a result) without consequence.
In addition, right-to-work laws have a positive effect on economic performance. Private sector employment, gross domestic product and personal income grew more in right-to-work states between 2001 and 2016 than in non right-to-work states.
The Maine Legislature had a chance to pass right-to-work legislation this session. LD 1232 would have allowed employees to decide whether or not to join a labor union or if the organization deserves their financial support. Instead, the Committee on Labor and Housing voted “Ought Not to Pass” on LD 1232 and it eventually died after a vote in the Maine Senate.
Right-to-work isn’t the only initiative Governor Bevin has championed to attract new industries to Kentucky. In 2017, Governor Bevin also signed legislation that repealed the prevailing wage on public works projects that are estimated to cost more than $250,000. The prevailing wage is a rate of pay established by state and local governments for public projects that are sent to bid for contractors.
The idea behind the prevailing wage is to prevent the government from always entering into agreements with contractors that submit the lowest bid or pay the lowest wages. While this idea may be great in theory, there are unintended consequences to enacting a prevailing wage.
The prevailing wage increases the cost of public works projects, which are primarily paid for by state and local taxpayers. In other words, taxpayers are almost solely responsible for the cost of artificially inflated services that others could and would perform for fair market value. The Associated Builders and Contractors supported the repeal of the prevailing wage for public works projects in Kentucky, calling the policy “wasteful.”
According to the Damon Thayer, a Kentucky State Legislator, repealing the prevailing wage was estimated to save the Commonwealth 18 to 23 percent on construction costs. Once public works projects exceed $250,000, it becomes exponentially more expensive when the prevailing wage is included in the equation. Tyson Hermes, the vice president of Hermes Construction, said the cost inflates to more than $400,000 on public works projects with an estimated cost of $250,000 or more.
The state of Maine missed an opportunity to repeal the prevailing wage this session. The legislature and the governor decided to change how the wage is configured through LD 1386. Instead of collecting a single dataset from wages on private construction projects, it identifies a second compilation assembled from state construction projects that are already subject to the prevailing wage.
Thereafter, the Maine Department of Labor would choose whichever wage is higher from the two datasets. Thus, the prevailing wage will never be subject to a decrease and can only increase or remain stagnant. In other words, it would always be measured against itself or a higher rate from the private sector. Governor Mills should strongly consider repealing the prevailing wage or change it to be more consistent with the value of work in the private sector, especially since Maine’s labor shortage and the cost of materials are already driving up construction costs.
Another major reform made by Governor Bevin is the “Kentucky Trained. Kentucky Built.” initiative. The Governor’s vision is to increase the volume of manufacturing jobs in the commonwealth by identifying and expanding the role of apprenticeships in the workforce. When the initiative began, Kentucky had nearly 3,000 apprentices throughout the commonwealth. According to Governor Bevin’s office, Kentucky currently has more than 3,600 registered apprentices and more than 250 programs in place.
By promoting and educating individuals on the apprenticeship programs available in Kentucky, the state is increasing the number of trained workers in its workforce. Maine could benefit from a program similar to Governor Bevin’s.
With about 22 percent of Mainers projected to leave the workforce by 2026, the demand for skilled labor is going to increase. The Maine Department of Labor created a dataset illustrating the high-wage, in-demand occupations that will require new workers annually in the state. In order to fulfill this demand, the state ought to consider expanding and promoting apprenticeship programs.
Maine stands to benefit from imitating Kentucky’s recent policy successes. Instituting right-to-work legislation, substantially cutting red tape, repealing the prevailing wage and expanding apprenticeship programs would make Maine more competitive and attractive to individuals and businesses, particularly when compared to other states in the region.
As our state’s population ages and more individuals retire from the workforce, the demand for labor and new industry will grow even greater. If we don’t act soon, too many Mainers will be left behind.