Home  >  Pennsylvania  >  Changes to mandated wage laws could mean savings for taxpayers, less pay for workers

Changes to mandated wage laws could mean savings for taxpayers, less pay for workers

By   /   August 10, 2011  /   3 Comments

Republicans seeking to change prevailing wage laws
By Eric Boehm | PA Independent
HARRISBURG — It comes down to a basic question: Is the state getting what it's paying for?
State construction contractors must pay their employees a higher wage than the marketplace otherwise might dictate.
Republicans insist that taxpayers pay more for public projects because of the higher wages , but union officials say lowering these wages would reduce the quality of the workforce and work itself.
“We have to make sure that the Pennsylvania taxpayers are getting the best value on public projects,” said state Rep. Ron Miller, R-York, chairman of the House Labor and Industry Committee on Wednesday. “Why are the taxpayers subsidizing a small subset of workers within the state who are lucky enough to work on a prevailing wage job?”

However, said state Rep. Bill Keller, D-Philadelphia, minority committee chairman, said, “The prevailing wage does protect the taxpayers … by making sure that public works projects are done with the highest skill available.”

At issue are the state’s prevailing wage laws, which set the wages for projects costing more than $25,000. The state Department of Labor and Industry, or DL&I, relies on data from collective bargaining agreements to calculate the wages. The prevailing wage applies to all public projects, regardless of whether union or non-union labor is used.
Miller wants to replace the prevailing wage with the average occupational wage. That latter figure, which takes into account all wages paid in the county and not only union wages, would result in less income for workers and savings for taxpayers. State and local governments could save between 30 and 75 percent on labor costs.
For example, an electrician in Cambria County working on prevailing wage would receive $50.24 hourly in wages and benefits, 78 percent higher than the average occupational wage of $28.11 for electricians in the same county. In Montgomery County, a plumber working on prevailing wage will make $65.94 in wages and benefits per hour, 56 percent higher than the average occupational wage of $42.29.
The gap between these types of wages varies depending on the county and the trade, but the prevailing wage is 50 percent higher on average statewide in the 10 most common construction trades, according to data from Pennsylvania State Association of Boroughs, which represents local governments in the state.
Since union shops take on about 30 percent of state construction projects, advocates of the wage change say a minority of all building projects are setting high wage standards for all public projects.
“The taxpayers pay a higher premium for construction labor than private project owners for the same work,” said John Zimmer, president and CEO of the Keystone chapter of the Associated Builders and Contractors, which represents about 1,000 non-union contractors in Pennsylvania. “Under the current system, collective bargaining agreement rates are almost exclusively the main determinant for establishing the prevailing rate.”
Those agreements are negotiated between businesses, employers and contractor associations and union representatives, said Robert O’Brien, a former head of the DL&I’s Bureau of Labor Law Compliance, which oversees and enforces the prevailing wage laws. 
“These are not fantasy or hypothetical aspirations — they are actual rates currently paid and verifiable by way of the mutually agreed upon enforcement mechanisms,” O’Brien said.
He called the average occupational wage “artificial and unreliable,” because it takes into account workers at all skill levels and all types of work, including untrained workers and maintenance work or off-site fabrication.
Union leaders agreed that prevailing wages are generally higher than the average occupational wage in the same region, but they said this premium ensures taxpayers that they are getting the highest quality work from the most skilled workers available.
“What you pay for is what you get,” said Frank Sirianni, president of the Pennsylvania Building and Construction Trades Council, which represents 115 local construction unions. “If you lower wages, you’re going to have less training, you’re going to have a less experienced workforce, you’re going to have higher injury rates.”
The Pennsylvania Chamber of Business and Industry, which represents businesses in the state, supports changes to the prevailing wage, which would bring “some rationality” to the wages for public projects and assist local governments in dealing with difficult budgets by saving  as much as 30 percent on building projects. 
Sirianni called that figure “ridiculous” because labor accounts for about 22 percent of the average construction project cost.  
“You would have to have people come to work for free,” he said. “So you’re saying, ‘We want to help the taxpayer, but we want to cut your pay.’ It doesn’t make sense.”
Miller said the taxpayers would gain by lowering the prevailing wage rate because more projects could be completed for the same cost. For example, if the prevailing wage was 10 percent lower, the state could rebuild 10 percent more bridges than it would otherwise be able to do, he said.
Prevailing wage rates for specific projects can be challenged in court, but the party challenging the rate has the burden of proof.