Prevailing Wage
The Pennsylvania Prevailing Wage Act requires the state and local governments to pay workers on most public projects costing over $25,000 a pre-determined wage rate that is often in excess of market rates. This unfunded mandate makes it more expensive and difficult to complete important projects, like school expansions to meet growing student capacity, mitigating environmental hazards, or new health facilities. Prevailing Wage is an unnecessary cost-driver that contributes to higher property taxes on residents and employers.
The detrimental impact of the Prevailing Wage Act on the business community goes beyond higher state and local taxes:
- Competing for public works projects should be an inclusive process that provides opportunities for smaller contractors who may be inhibited from bidding on public projects due to the inflexible rules and strict requirements.
- Artificially raising wages distorts the market and can ultimately increase costs on all public and private construction projects and maintenance work within the area, potentially forcing important projects to be delayed, scaled back, scuttled altogether or moved to another state;
- Arbitrary and capricious enforcement of the rules creates uncertainty and confusion for companies, which risk a three-year disqualification from public work for any violation;
- Complying with the Prevailing Wage Act precludes flexibility, is an administrative burden, and can be unduly complicated and time-consuming for contractors who must track specific work and tasks performed at any given time by all employees on a job;
The Pennsylvania Chamber supports repealing the Prevailing Wage Act; or, short of full repeal, legislative initiatives or reforms to mitigate the Act’s harmful effects, including:
- Limiting the application of the Prevailing Wage Act to strictly public projects or projects that are at least a majority financed by direct public funding and exempting private projects or aspects of a project funded through or with support from economic development programs;
- Increasing the $25,000 threshold that triggers the prevailing wage mandate, which has not been updated in 60 years, and providing for regular increases, to account for inflation and
ensure the application of the Act is consistent with its original intent, such as not applying to smaller projects and regular repairs and maintenance;
- Allowing political subdivisions and school districts to opt out of prevailing wage requirements;
- Modernizing regulations for more flexibility and directing the Secretary to ensure that wage rates are applicable to the size of the available qualified workforce workers within the locality;
- Ensuring that prevailing wage rates accurately reflect the true market-based prevailing wage rates in a local community; and,
- Ensuring that any regulations or guidelines that dictate employer compliance with the Prevailing Wage Act are unambiguous; including clear employee definitions and classifications.
Additionally, the PA Chamber opposes Project Labor Agreement requirements and supports principles of open contracting in which public project contract award decisions are not influenced by affiliations with organized labor. This helps ensure that contracts are assessed and awarded based on quality of work, experience, and cost.
Revised by the Policy Committee in June 2023 and approved by the Board of Directors on August 3, 2023