Hearing highlights local financial problems and the costs to taxpayers
Pennsylvania’s prevailing wage laws costs jobs, taxes and economic development according to municipal officials who testified before the House Labor and Industry Committee Thursday in State College. Rep. Stephen Bloom (R-Cumberland), who presided over the meeting, said reform of the Prevailing Wage Law is needed for the benefit of taxpayers.
“Prevailing wage prevents local governments from funding necessary projects,” said Bloom. “Under prevailing wage, Pennsylvania’s municipalities and school districts just can’t afford to complete projects or don’t do them at all.”
Those who testified included township managers, supervisors, a county commissioner and union officials.
“Clearly, the prevailing wage mandate results in less roads paved and at a higher cost,” said Vana Dainty, Bellefonte Borough Council vice president, who indicated that the borough has postponed “true maintenance that was needed for our roads and was forced into doing more patching projects.”
Clinton County Commissioner Pete Smeltz agreed, saying, “It’s a matter of simple mathematics. If we pay as much as 20 percent more to complete a project by most common calculations to meet prevailing wage, we must bid less jobs. Most commissioners today in Pennsylvania will not increase taxes for major building projects but instead will use debt service and a number of small to medium projects are simply left undone.”
Ferguson Township, Centre County Manager Mark Kunkle said prevailing wage caused a project to go from $20,990 to $32,980, an increase of 57 percent “without any additional change to the scope of work. In my opinion the township did not receive any better quality of work by paying more for this portion of a project.”
“The Prevailing Wage Law is a mandate; and an expensive one at that,” Bloom said. “Prevailing wage law is squelching jobs and putting an unnecessarily high burden on taxpayers, and it’s one of the big factors driving up property taxes.”
The hearing was held at the Penn Stater Conference Center in State College, the first in a series on the topic of Prevailing Wage Law reforms. Additional hearings are slated for Stroud Township, Monroe County, on Aug. 29; Williamsport, Lycoming County, on Sept. 10; and Johnstown, Cambria County, on Sept. 16.
Pennsylvania’s Prevailing Wage Law requires municipalities and school districts to pay the “prevailing minimum wage” to those individuals working on public construction projects. The Prevailing Wage Act does not specify how the “prevailing minimum wage” in a locality is to be determined, and the act leaves much discretion to the secretary of labor and industry as to how to set the wage. Currently, the secretary of labor and industry is opting to use the area union wage rates as the prevailing wage rate that is to be paid on public projects. It is argued by Prevailing Wage Act reform proponents that union wage rates are more comparable to wage rates paid in larger cities, and often do not reflect the actual prevailing wages paid in rural areas. Reform advocates believe that basing prevailing wage rates in rural counties on union wage rates inflates the costs of public projects anywhere from 5 percent to 20 percent.