PA divided over prevailing wage reforms
House comes up short on raising threshold to $185,000
By Eric Boehm | PA Independent
HARRISBURG — When a local government has to fill in a pothole or rebuild a culvert, taxpayers foot the bill.
And local government leaders, who are facing lean budgets and less state assistance, are stretching those tax dollars as far as possible.
In Polk Township in Monroe County, township Supervisor Nancy May said municipal governments could save money if the state would repeal, or at least adjust, the so-called prevailing wage law that determines wages for all public projects above a threshold of $25,000.
“We try to do more with less, but it really ties the hands of local municipalities,” May said of the prevailing wage laws. “It’s really an unfunded mandate from the state.”
May has been the supervisor in Polk Township for 23 years, and her experience shows.
She rattles off the township’s exact population figures from the most recent U.S. census — 7,874 — as casually as if she were discussing her phone number. She laments how the region has changed during her tenure on the township’s Board of Supervisors, and is reluctant to raise taxes on her neighbors to pay for services and maintenance that has become more costly in the past few years.
When a culvert in the township — long in need of repair — was further damaged by flooding last summer, she said the prevailing wage law made the reconstruction more expensive than it otherwise would have been.
The wages generally are higher than the average occupational wages paid for the same work in the private sector. Although the prevailing wage varies by county and occupation, it is 50 percent higher, on average, across the 10 most common construction occupations, according to the Pennsylvania State Association of Boroughs, which represents local governments.
For example, a cement worker in Monroe County would make a prevailing wage of $27.83 per hour, which exceeds the local average occupational wage by 43 percent.
Across the 10 most common construction occupations, the prevailing wage ranges from 30 percent higher than the average wage — in Fayette County — to 75 percent higher than the occupational wage in Huntingdon County, according to the State Association of Boroughs.
May said she wants to see the state raise the threshold for the prevailing wage, so local governments can afford to complete more small projects with the same amount of tax revenue.
She soon may get her wish, as the state House moved closer this week to approving a bill to increase the threshold for prevailing wage from $25,000 to $185,000 — matching inflation over the 50 years since the limit was set.
The bill also would allow the threshold to increase with inflation.
Republican leadership in the state House spent Tuesday afternoon in closed-door meetings cobbling together the votes to pass the measure, but they came up short and pulled the bill from the calendar Wednesday.
The bill is on hold until March 12 when the state House returns to the state Capitol.
The proposal has the backing of Gov. Tom Corbett.
“We think that a responsible increase in the threshold would be prudent to account for inflation,” said Eric Shirk, Corbett spokesman.
Labor unions oppose the attempt to raise the threshold, because it chips away at the prevailing wage law that guarantees higher wages for workers on public projects.
Frank Sirianni, president of the Pennsylvania Building and Construction Trades Council, which represents 115 local construction unions in the state, said the threshold should not increase with inflation, because wages are not tied to cost of living and have not kept pace.
“It really does not create one job and it in no way guarantees any savings of any amount on any public project,” Sirianni said.
Because labor costs account for about 20 percent of most construction projects, the savings from raising the threshold have been overstated, he said.
Even with the $185,000 threshold, construction of new schools or large renovations would require the payment of prevailing wage. Likewise, any project that gets at least $2,000 in federal funding would qualify for the prevailing wages guaranteed by the federal Davis-Bacon law.
Bob Thomas, a Franklin County commissioner for 17 years, said the proposal to raise the threshold for prevailing wage was “a good first step,” but he encouraged lawmakers to consider repealing the law entirely, so more expensive construction projects also could be included.
“The bottom line is that it results in higher costs for these public projects, and with the pressure that is being put on all tax dollars, it is just lunacy that we’re required to pay more,” Thomas said.
The prevailing wage varies for each construction occupation in each of Pennsylvania’s 67 counties and is determined by the state Department of Labor and Industry, which relies on data from collective-bargaining agreements to set the wages.
The prevailing wage is then used for all public projects, regardless of whether union or non-union workers do the work. The result is higher costs for school districts, local governments and state government on taxpayer-funded projects.
For example, an electrician working on prevailing wage in Cambria County would make 78 percent more per hour than the average occupational wage for an electrician in that county. In Montgomery County, a plumber would make 56 percent more on prevailing wage than the average occupational wage.
According to U.S. Census Bureau data, Pennsylvania state and local governments spent more than $10 billion on construction in 2009, the most recent year for which data is available.
Proponents of changing the prevailing wage argue that it could result in savings of up to 20 percent on public building projects, representing a possible annual savings of $2 billion to taxpayers.
Local government groups say the savings, even if only on small projects, would be welcomed.
May said her township is trying to find a way to pay for a similar project that will be tackled this summer.
But the Pennsylvania AFL-CIO, a coalition of labor unions, argued in an email to supporters Wednesday that raising the threshold would "effectively slash the wages of thousands of workers."
Pennsylvania is one of 32 states with prevailing wage requirements.