FOR THE GOOD OF THE COMMUNITY, PREVAILING WAGES MUST PREVAIL!

By Jason Fincke, Executive Director
Builders Guild of Western Pennsylvania, Inc.

Attempts are underway to change or more accurately undermine prevailing wages for the construction industry in Pennsylvania. No less than five bills have been introduced in the House to significantly alter how and when prevailing wages will apply. It is bad policy and, in some cases, the abdication of governing.

Prevailing wages were established in 1931 under the administration of Republican President Herbert Hoover to protect responsible contractors and workers on government funded projects from unscrupulous contractors who could import low-paying workers from other regions to undermine local wages and the local economy. It provided some protection in an industry where work is extremely physically and mentally challenging, and where year-round employment is anything but guaranteed. It allowed men and women to become better trained and productive citizens for the good of the communities in which they worked and lived.

For 80 years, construction workers, both union and non-union, have been able to sleep with at least some comfort in knowing that on publicly funded projects they would be paid a respectable, but hardly extravagant, wage for an honest day's work. That could all change if certain legislators have their way in Harrisburg. It's not right. It's not healthy for our economy and it's not going to significantly lower construction costs, despite popular rhetoric.

Contrary to opinions expressed by prevailing wage opponents, studies have found no statistical cost difference in states with or without prevailing wage laws. Among the primary reasons is the fact that labor accounts for only about 20 to 25 percent of total project costs. Given this percentage, savings of 10 to 30 percent as is often argued by prevailing wage opponents could only be achieved by hiring workers at virtually minimum wage or eliminating wages altogether, neither of which is practical.

Dramatically reducing wages, however, can result in the utilization of lesser skilled and lesser trained workers, which can substantially add to construction costs. A study by the Construction Industry Institute® determined that ". . .on a single capital construction project, each dollar invested in craft training can yield $1.30 to $3.00 in benefits. The benefits accrue to the project in the form of increased productivity and reductions in turnover, absenteeism and rework, as well as in other areas."

Failure to pay prevailing wages can also result in many hidden costs, which can have significant impacts on a state and region's overall economy. For example, a study at the University of Utah concluded that states without prevailing wage rates experienced reductions in local sales and income tax revenues, increases in public health costs and more on-the-job injuries.

A study on the potential impact of repealing prevailing wage laws in Missouri determined that the state could lose income and revenue of between $317.8 million and $384.2 million annually. Such losses in Pennsylvania could be devastating to an already fragile state budget.

When studying wage rates and other labor issues, it must be remembered that construction is not like any other industry. In fact, it is the one industry where employees succeed when they work themselves out of a job. What they hope for and rely on is that their contractor was successful in bidding and receiving another job for them to apply their skills. If not, they will be laid off and become unemployed until their services are needed again. It's a challenging lifestyle, but it is a critical profession that every community needs.

Whether it is to build or maintain new roads and bridges or to construct new schools, office towers, residential units or other facilities, construction and building trades workers will always be in demand. It is a profession that requires special skills and stamina. It is not for everyone. In western Pennsylvania, construction can mean working in 95 degree heat with high humidity and subfreezing temperatures with extreme wind chills. Mistakes can be costly, both financially and to one's health. With the possible exception of some professional athletes, it takes a toll on a person's body unlike virtually any other profession.

Work and one gets paid. There are no sick days, vacation days or personal days. Rain can cancel a day's work, a week's work or more. A construction worker that can't work is a construction worker that doesn't get paid. It's as simple as that. Given these conditions, why would anyone want to do this for a living? Because they like to use their hands and minds to create something tangible and because it can be financially rewarding.

The average union construction worker in western Pennsylvania today earns in salary between $40,000 and $45,000 a year, thanks in part to legislation such as prevailing wage. It is a wage that is befitting a profession that requires special training and education. Fortunately, thanks to many Joint Apprenticeship Training Schools, outstanding training programs are available to local residents at no cost to them or to taxpayers. Recognizing the value in training and the value that comes from investing in local residents, hundreds upon hundreds of contractors have partnered with local building trades unions to build and fund quality apprenticeship schools that provide unlimited training for apprentices and journeypersons alike.

The investment surpasses $20 million annually. It is an investment not just in the workers, but in the local economy. Local union building trades workers live and spend their hard-earned money in western Pennsylvania. They have paid benefits and pensions, and, as such, do not rely on government funded programs for their health care and other income. They pay local and state taxes, all of which help sustain the economy.

If contractors and unions are to continue to work together to train local residents at no cost, contractors must be protected from out-of-state companies who will import non-local residents willing to work at substandard wages. Without prevailing wages, the playing field will be skewed to contractors who care only about profits and not in the quality of their work or the well being of their employees. In order to compete, responsible contractors will not be able to invest in local training and everyone will suffer. Career opportunities will be far less available and far less attractive. Training and safety on the job will suffer, and the cost of construction and the cost to the community will soar.

Among various provisions contained in currently proposed legislation is allowing counties to put referendums on prevailing wage rates for various projects. While it may be popular in some communities, it is an abdication of power from legislators who are elected to lead and act in the best interest of their districts and the Commonwealth. The quality of work on a publicly funded project should not be based on the cheapest commodity, whether they are materials or human resources. The adage "you get what you pay for" can have serious consequences, particularly on schools where children's lives are at stake.

Prevailing wage legislation has a long history in this country and in Pennsylvania. It continues to serve a vital purpose and must be preserved for the good of the industry, for the good of the economy and for the good of all Pennsylvanians.

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