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Reform state wage law
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School districts and state and local governments are struggling to keep their operating budgets in the black while providing essential services; taxpayers are at their breaking point. It flies in the face of reason, then, to keep unchanged a decades-old law that forces these entities to pay a premium for taxpayer-supported public works projects. But that is exactly what is happening because of Pennsylvania's antiquated Prevailing Wage Law.
The 1961 law, which hasn't been updated in more than 50 years, mandates that workers on taxpayer-supported construction and infrastructure projects costing more than $25,000 be paid a state-determined and often grossly inflated "prevailing wage." These rates are often well above typical private-sector wages in a particular region -- exceeding market wages anywhere from 30 percent to 75 percent, according to a Pennsylvania Association of Boroughs study.
The prevailing wage mandate can raise the cost of taxpayer-funded construction projects by 5 percent to 30 percent -- creating more than $2 billion in extra costs for Pennsylvania taxpayers each year. According to data from the U.S. Department of Labor, the state Department of Labor and Industry, the Pennsylvania Association of Boroughs and Pennsylvania-based construction companies, the prevailing wage mandate costs a typical Pennsylvanian up to $230 per year and the average family of four up to $900 per year.
This extra cost does not guarantee bigger, better or safer structures. It merely takes money from the wallets of hard-working Pennsylvanians and threatens them with higher property taxes.
Local government organizations, taxpayer advocate groups and the business community support a number of reasonable bills introduced in the General Assembly to reform this costly mandate, including one that would raise the $25,000 project threshold, which is unrealistic in today's economy.
Failure to increase this threshold has resulted in a law intended for large, expansive projects to now encompass nearly every public project. Local governments are forced to think twice about moving forward with routine yet important initiatives because they fall under the Prevailing Wage Law.
For example, in 2004, Allegheny Township in nearby Westmoreland County spent $1.2 million on a new police facility -- a facility that would have cost taxpayers about $300,000 less if it weren't for the Prevailing Wage Law.
In Cranberry, when the prevailing wage was applied to street resurfacing, the township saw a 20 percent increase in costs, which resulted in a 20 percent reduction in its resurfacing program for the year.
In Penn Township, the cost of materials and added labor costs prevented the municipality from replacing a worker who had quit so that more money could be put toward road maintenance. The amount of money that paved four to five miles of roadways less than 10 years ago now covers less than two miles.
House Bill 1329, which is ready for final passage, would account for inflation and raise the law's project cost threshold to $185,000. Clearly, $25,000 does not buy in 2012 what it did in the early 1960s. Raising the threshold is simply common sense. Even prevailing wage supporters must admit that the legislators who enacted the original law thought it should apply to a certain scale of project; why else include a threshold at all?
Local governments and school districts are operating under increasingly restrictive budgets, and the prevailing wage mandate is one more obstacle to balancing budgets and improving communities with vital construction and infrastructure projects. How are local officials supposed to be responsible with tax dollars when state regulations don't allow them to be?
While it's only a first step, lawmakers can nonetheless demonstrate they are on the side of Pennsylvania taxpayers by voting "yes" on H.B. 1329.
First Published April 2, 2012 12:01 am
