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Pennsylvania House Fails to Reform the Prevailing Wage. Workers Rejoice.

An effort by Pennsylvania House Republicans to weaken the state’s prevailing wage law failed when, despite having the majority, they could not get enough votes. House Republicans claimed that raising the project cost threshold that triggers the prevailing wage from the current, 1961-established level of $25,000 would save local governments money. There is little evidence that this is true, however. In fact, many experts argue that raising the threshold would truly only guarantee that work would be done by under-trained, frequently non-union contractors, resulting in higher long-term costs.

The House GOP was stopped in its tracks by (gasp!) pro-labor Republicans, including roughly a dozen from the Philadelphia suburbs who refused to go along with party leadership because they believe the desired threshold of $185,000 is too high. Democrats, who opposed the bill, claimed it was an attack on PA workers.

From Capitol Ideas:

Democrats warned that the change in threshold would cost jobs during a time of recession.

“Changing the prevailing wage laws is nothing more than a burden for the workers of Pennsylvania who are trying to make ends meet,” Rep. Joe Markosek, the ranking Democrat on the House Appropriations Committee, said in an interview before the vote. “It’s wrong-headed.”

Economic studies have determined that Pennsylvania’s prevailing wage has lived up to the goals of its original premise: to deliver quality work and ensure fair pay for the state’s workers. The Keystone Research Center reviewed the prevailing wage and came to these conclusions:

Construction industry prevailing wage laws have long operated nationally and in states as a check against the tendency of the construction industry to degenerate into destructive wage and price competition.

Consistent with the original rationale for establishing prevailing laws, a rigorous body of economic research shows that efforts to repeal these laws lead to:

-less workforce training;
-a younger, less educated and less experienced workforce;
-higher injury rates;
-lower wages; and
-lower health and pension coverage.

Research also reveals that prevailing wage laws do not raise costs, suggesting that the positive effect of higher wages on productivity compensates for higher labor costs:

–Comparing school construction costs before and after Michigan’s suspension of its prevailing wage law revealed no difference in costs.

–National analysis of data on school construction costs reveals that prevailing wage laws do not have a statistically significant impact on cost. By far, the biggest impact on school construction costs is whether that construction takes place at times of low unemployment, when construction demand and prices are high, or at times of higher unemployment. Schools built at times of higher unemployment, when construction bids are much lower, can cost more than 20% less per square foot than schools built during times of high demand. Consistent with this estimate, in and immediately after the recent “Great Recession,” Pennsylvania was able to finance 28% more projects with American Recovery and Reinvestment Act dollars than initially estimated.

There is little evidence that reforming the prevailing wage will save local governments money. Even if austerity had the desired effect, is this really the correct time to take money out of the wallets of the working class? To focus on anti-labor goals when Pennsylvania is already coming apart at the seams thanks to bottom-line, business-first policies is misguided. There are serious problems in the Keystone State and House Republicans seem to be unaware of the effect they have on voters, the same voters they will have to explain themselves to in November.


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