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August 14, 2013

Public hearings to focus on prevailing wage rules

HARRISBURG — Lawmakers will begin to hold public hearings next week on bills intended to raise the threshold triggering prevailing wage rules that nettle local government leaders who say the inflated pay requirements mean they get less bang for their bucks.

Government entities are mandated by state law to pay prevailing wages on any public works construction contract that’s more than $25,000. Those wages are more comparable to union wages in larger cities than actual prevailing wages in most of Pennsylvania, said Rep. Mario Scavello, R-Monroe County, chair of the House Labor and Industry Committee, which has scheduled four hearings on prevailing wage reform. The first hearing is Aug. 22 in State College. Other hearings include sessions in Stroudsburg and Williamsport and a Sept. 16 hearing in Johnstown.

Max Bossert, a roofing contractor in Union County, said he and his employees like prevailing wage, but he’d rather see the threshold bumped up. Why? Because business has been slow and if fewer projects trigger prevailing wage, local governments might be able to put out more work for contractors like him.

Bossert said he knows that he pays his workers competitively. Veteran roofers on his crew normally make around $25 an hour. That’s more than many local roofers make in the general marketplace, but it’s still far less than prevailing wage for roofers in Northumberland County, which is about $30 an hour.

The difference adds up. Bossert pointed to two recent roofing projects at local fire companies, one involving prevailing wage and one that did not. The prevailing wage job cost $12 to $13 a square foot. The bids on the other job were closer to $8 a square foot.

State Rep. Frank Burns, D-Cambria County, said Bossert’s view is not shared by all contractors.

“At a recent policy hearing, one of the testifiers was a general contractor who represented the Association of Building Contractors (ABC). He actually testified in support of the status quo, arguing that the threshold should stay where it is at, as it creates an even playing field for bidding contracts,” Burns said. “He pointed out that if you want quality work you need to have skilled craftspeople even on smaller jobs. Without the threshold, low bid wins and those who undercut may use less skilled folks who are paid less.”

Burns said that the other argument in favor of prevailing wage is that it helps keep tax dollars in the community by directing it toward the paychecks of workers.

“It’s important we have local, skilled craftspeople employed on local jobs as they have pride in the community and pay taxes locally,” Burns said. “Raising the threshold will result in lower quality labor being shipped in and they do not pay taxes here, nor do they take pride in the local community and the building product which will be an asset in the local community.”

Data compiled by the Pennsylvania Association of Boroughs, comparing prevailing wage rates in 2011 with market-based pay scales shows the disparities. The association estimated that prevailing wage rules almost doubled the pay rate for electricians in Crawford County — increasing the pay from an average of $16.67 an hour to $29.20 an hour.

Prevailing wage has become a popular cause among rank-and-file Republican lawmakers with 15 different bills introduced this year focusing on the issue. Most of them try to make it easier for townships, boroughs, cities and school districts to get small projects done without having to pay 30 percent more due to prevailing wage.

With so many proposals out there, lobbyists for local government have been pushing to get the threshold moved to $190,000, the amount it would be if adjusted for inflation since the time the current $25,000 was set, said Rick Schuettler, executive director of the Pennsylvania Municipal League. The other major priority would be reinstating an exemption for tasks that local government officials describe as maintenance in road projects.

The bills that have emerged as the front-runners present a mixed bag — exempting maintenance work, but only raising the threshold to $100,000.

With so many measures out there, lawmakers are looking for a compromise that will address most of the concerns of small governments while getting enough support in the Legislature to pass, said Rep. Lynda Schlegel-Culver, R-Northumberland County. She is a cosponsor of HB 796, which sets the threshold at $100,000.

An analysis by House staff found that there was about $149 million in government spending that fell under prevailing wage rules in 2012. It would not have done such if the threshold were raised to $100,000. Staff found that since most experts say prevailing wage increases the cost of work between 10 and 30 percent, the prevailing wage reform would save at least $14.9 million a year.

Finnerty reports from Harrisburg for Community Newspaper Holdings Inc.’s Pennsylvania newspapers, including The Meadville Tribune. Follow him on Twitter @cnhipa.

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