Atownship supervisor whose day job is managing projects at a large company comes to a meeting one night where voting on the contract for a new township maintenance shed is on the agenda.
As a part of her full-time job, this supervisor recently managed the construction of a nearly identical maintenance shed project for her company for 30 percent less.
"What is going on," she asks. "Why are our taxpayers getting hit with higher costs for nearly identical projects?"
The difference, her colleagues tell her, is the applicability of Pennsylvania's "prevailing wage" law, which hasn't been adjusted for inflation since 1963, that mandates a community's prevailing wage be paid on publicly funded projects of $25,000 and higher.
In practice, the prevailing wage is the union-inflated rate found in collective bargaining agreements. On average, it is 51 percent higher than what we pay private sector contractors for identical construction of equal quality. With our modern building codes and accredited building inspectors, no structure is approved for use until it meets the very high standards we have set, no matter who builds it.
Recently, a group of construction workers came to my district office to protest a minor reform to the prevailing wage proposed by my colleague, state Rep. Ron Miller, R-Jacobus, which would adjust it for inflation from $25,000 to projects of $185,000 or more.
While one carpenter in this group told a reporter his salary was only "two-thirds of the big-city pay," the fact is that carpenters on prevailing wage projects in York County get paid 19 percent more than those working on private projects. And York's prevailing wage for other workers -- plumbers, electricians, roofers and others -- ends up 50 percent higher than the regular occupational wage.
For example, an independent plumber/pipefitter in York County charges an average of $29.20 per hour, including benefits. But, under the prevailing wage law, the state requires government projects in York County to pay a plumber/pipefitter $47.38 per hour -- more than 62 percent higher -- for the same work.
In 2010, $12.7 billion of Pennsylvania taxpayers' money went toward projects subject to the prevailing wage law. By comparing county wage data, typical labor costs and the experience of other states that have done away with wage mandates, that's about a 10 percent to 20 percent price hike over market-rate labor costs -- a $1.3 billion to $2.5 billion shot in the neck to taxpayers. For an average family of four, it's a needless $400 to $800 more a year in taxes.
The bottom line is that the commonwealth's taxpayers are being overcharged for public projects at a time when property taxes are spiraling out of control and many Pennsylvanians are searching for work.
As a March 19 editorial in the Harrisburg Patriot-News calling for the repeal of prevailing wage pointed out, "We continue to ask our local governments and school districts to cut costs and find ways to deal with decreasing state funding and shrinking tax bases, but yet we don't give them meaningful ways to do that."
But that isn't the only archaic law driving up costs for taxpayers and consumers -- Pennsylvania currently maintains one of the costliest unemployment compensation programs in the country, soaking employers and employees alike. The average annual contribution paid by employers was the ninth highest in the nation in 2010. The national average contribution per employee was about $360; in Pennsylvania it was $529. Willful fraud against the system also increases costs and takes benefits away from those who deserve it.
The result is that the Unemployment Compensation Trust Fund is now operating under a structural deficit. In 2010, revenue raised through unemployment compensation taxes was only $2.48 billion, while benefit payout exceeded $3.7 billion. Fortunately, last year several reforms were passed into law that will save nearly $1 billion between 2012 and 2018, but that clearly is not enough to save it. Nor is it enough to stave off tax hikes on job creators.
Clearly, some reform measures are needed. Legislation approved by the House and now pending in the Senate would rein in the instances of willful fraud, saving $1.06 billion over the next seven years.
There are several proposals pending in the House that, while not providing an ultimate solution to escalating municipal costs and higher taxes on job creators, would go a long way to improve upon the current law.
In addition to Miller's legislation updating the cost threshold of prevailing wage projects from the 1963 level of $25,000 to $185,000, bills have also been introduced to create standard statewide job classification definitions, and to clearly define what "routine maintenance work" would not be subject to the prevailing wage.
These measures, which merely update the law to reflect inflationary effects and the economic realities faced by our local municipalities and school districts, have all been reported from the House Labor and Industry Committee, but have been stalled due to the unfortunate resistance of organized labor.
While we continue to work hard on commonsense reforms and combating the special interests that stand in the way of saving Pennsylvanians' money, those who took a day off to protest outside my office have yet to explain to taxpayers why they should be paid more than needed for no added benefit.
-- State Rep. Stan Saylor is a Republican representing the 94th District in the Penn sylvania House of Representatives, where he also is the Majority Whip. He writes a monthly column for the York Dispatch Opinion page.