Thursday, December 8, 2011

The Chamber on Prevailing Wage

We wanted to let you know about the public policy position that The Chamber is taking - this one on the need to reform state's prevailing wage laws.

A Prevailing Wage is the rate at which public employees must be paid when state funding is involved in a project. The goal of a prevailing wage is to ensure that workers on public projects receive a fair wage for their work. This prevailing wage must be tied closely to the wage paid in a competitive market for labor whether the work is performed for either public or private project owners. A mechanism needs to be exercised to set prevailing wages which more closely represent the actual wage rates for both public and private projects across the different regions of the state as well as the fluctuations in the labor market.

The Chamber signed onto the following letter that was sent to the Pennsylvania House of Representatives:

On behalf of our thousands of statewide member businesses of all sizes and crossing all industry
sectors, the Pennsylvania Chamber of Business and Industry writes to express support for bills to reform the PA Prevailing Wage Act that the House may consider this week.

The PA Prevailing Wage Act (the Act) mandates that workers on public construction projects costing over $25,000 be paid the local “prevailing minimum wage”. The problem is the set wage is typically tied to union wages and therefore often grossly inflated, which burdens the Commonwealth and local governments with higher costs and triggers increases to property taxes while providing no real public benefit. Local governments and school districts are operating under increasingly restrictive budgets and the prevailing wage mandate is one more obstacle impeding efforts to balance budgets and improve communities through vital construction projects and infrastructure improvements.

The PA Chamber supports abolishing the Act. Short of full repeal, we support bills that aim to help mitigate the adverse impact of this archaic and harmful mandate:

HB 1271: Exempts certain road maintenance, which until a recent court decision, had usually fallen under the Act’s exemption for maintenance work. This court decision has forced municipalities to curtail regular roadwork, such as resurfacing, replacing guide rails and painting lines, when they cannot afford the inflated wages that result from the prevailing wage mandate;

HB 1685: Directs the PA Department of Labor and Industry to adopt classifications and definitions for jobs subject to the Act. No such standard guidance currently exists, which creates uncertainty for contractors who face potentially devastating penalties for even accidental violations;

HB 1329: Raises the threshold for a project to be subject to the Act to $185,000; up from the current threshold of $25,000 that was established nearly 50 years ago.

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