APRIL 25, 2012

Prevailing Wage Pummels Another School District

We've reported before about how Pennsylvania's outdated prevailing wage law imposes needless extra construction costs on local governments and school districts across the commonwealth, hurting taxpayers. The law requires that a community's "prevailing wage" be paid on public construction projects above $25,000—which is in practice the union-inflated wage. The $25,000 threshold figure has not been adjusted since its early 1960s level, when the average home cost half that amount.

One outrageous example of the impact of prevailing wage comes from South Western School District in York County: The cost for a roof repair project skyrocketed 50 percent when officials factored in prevailing wage, going from $84,504 to $126,825—for no added benefit or better construction quality.

Turns out prohibitive prevailing wage costs are preventing more than one school district from undertaking roof repairs. Central York School District needs to repair a 30,000 square-foot section of its middle school roof. Without prevailing wage, the project cost would be $115,000 for materials, and $75,000 for labor at the market wage, for a total project cost of $195,000.

Additional labor costs under prevailing wage, however, add an extra $85,000 to the bill, for a total project cost of $275,000. That's a 45 percent increase for the exact same job. School district officials have decided to defer the project in the hopes that Pennsylvania's legislature will finally pass a common-sense reform raising the minimum prevailing wage threshold from $25,000 to $185,000. In that case, officials hope to re-bid the project so the roof repair falls under the threshold, and save a good $100,000.

One school board member told the York Dispatch: "While I understand that we are required to pay these additional costs, it still really chaps me up." Complying with the prevailing wage mandate forces officials to delay even basic repairs in a time of strained budgets. Lawmakers should pass prevailing wage reform now, and let schools put a decent roof over their students' heads.

posted by PRIYA ABRAHAM | 03:55 PM | 0 comment

APRIL 16, 2012

Union Party Speaks: Defend Union Agenda

We've mentioned many times that the real party controlling the Pennsylvania legislature is not the Republican Party, but rather the Union Party.

Today, in a story by the Pittsburgh Post-Gazette's Tom Barnes, the Union Party "Republicans" lay their cards on the table for all to see.

Republican Rep. Gene DiGirolamo, a Bucks County Union Party member, has formed his own political action committee (PAC) called Good Jobs PA—primarily funded by union PACs—to funnel money to Republicans who will vote against high priority items like prevailing wage reform or liquor store privatization.  As Barnes notes:

He has created a political action committee, called GoodJobsPa, which gets donations, mostly from labor unions, and gives the money to liberal-leaning House Republicans, such as Mr. Marshall ($5,000) and Reps. Tom Murt of Montgomery ($2,500), Rep. Bob Godshall of Montgomery ($500) and Rep. Joe Hackett of Delaware County ($2,500).

DiGirolamo reads straight from the union's talking points when trying to explain why he is working to thwart reforms that will save taxpayer dollars. On prevailing wage—a mandate that local governments pay state-established wages on construction projects, regardless of the going market wage—he claims that identified savings won't benefit taxpayers, but will only increase "profits" for contractors.  This, of course, is untrue as the lower costs of public projects on the front end would reduce taxpayer outlays to these very same contractors at the back end.

Furthermore, DiGirolamo conveniently overlooks the fact that contractors make a profit off of government projects now, and he intentionally ignores real-world examples of savings identified by local governments. Indeed, a broad coalition, including local government officials from townships to boroughs to counties to school boards across Pennsylvania, has called for prevailing wage reform.

DiGirolamo also criticizes plans to let the private sector run liquor stores, claiming that privatization will lead to more alcohol abuse, and repeats myths about liquor store "profits". Of course, these talking points have long been debunked, but union money trumps facts and evidence.

Republican Rep. Jim Marshall, one of the key recipients of Good Jobs PA PAC money, backs up DiGirolamo, taking the union side against taxpayers. Marshall claims that paying construction workers market wages—freeing up money for additional projects, or for tax reductions—represents an "attack" on jobs. Marshall adds that he doesn't see a "glaring problem" with government-run liquor stores—a claim that has 70 percent of voters scratching their heads.

posted by NATHAN BENEFIELD | 10:17 AM | 0 comment

APRIL 10, 2012

Think Government Union Dues aren't Used for Politics? Think Again

Government unions often defend their dues—and the fact that taxpayers subsidize the collection of dues—by claiming dues cannot be used for politics. That is not the case. Union dues cannot be given directly to a candidate or a PAC, but they can be used for politicking in other ways: lobbying, independent advertising in support of a candidate, get out the vote efforts, mailings to members, etc.

For example, a reader recently sent us a scanned mailer they received from the PSEA, paid for with union dues. The mailer endorses a Republican incumbent in the primary, based on his opposition to school vouchers (a major focus of the PSEA's $4.2 million in lobbying spending), opposing reforms to a broken pension system, and supporting a "living wage" for school employees, whatever that means.

It is time we end collection of political money with taxpayer resources. For more on how government unions use dues for politics, and for the benefit of union bosses, check out our report, The Squeeze.

PSEA Campaign Mailer 2012 Primary

posted by NATHAN BENEFIELD | 10:30 AM | 0 comment

APRIL 2, 2012

Six Ways Prevailing Wage Increases Taxpayers' Costs

This week, the Pennsylvania House is set (yet again) to consider basic reforms to Pennsylvania's outdated prevailing wage law, which mandates that union-scale wages be paid on taxpayer-funded construction projects above $25,000.

We've noted before how the prevailing wage is on average 51 percent higher than the market wage—and for construction that is no better in quality. In 2010, Pennsylvania spent $12.7 billion on government construction projects subject to prevailing wage, such as roads, bridges and school buildings. Without prevailing wage, taxpayers could have saved between $1.3 billion and $2.5 billion. That's an extra $400 to $900 in needless taxes for the average family of four.

Trade and construction unions often argue that prevailing wage barely raises construction costs, and  doesn't hit taxpayers hard. But across the commonwealth, township and borough supervisors and county and municipal officials beg to differ. From Butler to Bucks, officials with strained local budgets are pleading with lawmakers to reform the prevailing wage mandate. From experience, they offer proof of how prevailing wage raise taxpayers' building costs:

• Carroll Valley Borough in Adams County reported that they had road/storm water damage in April 2011. Their engineer's estimate to repair the damage was $45,000, with prevailing wage. Instead of using outside contractors, the borough decided to use in-house workers, thus avoiding prevailing wage requirements. The cost then? $6,958. (From the Pennsylvania State Association of Township Supervisors, PSATS).

• Franklin Township in Adams County reports that their 2008-09 Cashtown/McKnightstown sewer project was $8 million...the township contributed $1.2 million towards the project. This project serves 261 households, 26 businesses, and an elementary school. According to the township, if it did not have to comply with prevailing wage, the total cost would have been $2 million less (from PSATS).

• A proposal for a roof repair project in South Western School District in York County initially came in at $84,504, without factoring in prevailing wage rates. The contractor resubmitted his proposal for the exact same scope of work and included the payment of prevailing wages and the total cost of the project increased from $84,504 to $126,825—an increase of $42,321 or 50 percent, which was footed by local taxpayers (from the Pennsylvania School Boards Association).

When it comes to road repairs, the prevailing wage law could well be Pennsylvania's "Pothole Mandate." Many local governments can no longer afford to pave their roads because prevailing wage hikes costs too high. More examples from PSATS:

• Morgan Township in Greene County has not bid out a paving job since the Youngwood decision (a 2008 PA Supreme Court ruling that subjected more maintenance work to the prevailing wage law). Instead, the township has resorted to using tar and chip, sealcoating, and other pavement maintenance methods from 30 to 40 years ago to extend the life of their roads because the preferred maintenance method, paving, is no longer affordable.
  
  
• Frenchcreek Township in Venango County may return its roads to a gravel surface as they deteriorate, because the township simply cannot afford to maintain hard-surfaced roads.
  
  
• In 2009, Rose Township in Jefferson County oiled and chipped a road that is a high-traffic major route to a neighboring township and another road used as a short cut between two state highways. The township was able to oil and chip these two roads for $36,000. The township would have liked to have paved them both, but the total estimated cost, including prevailing wage, was more than the township could afford.

Our local governments are fighting to provide essential services, and giving them prevailing wage relief would allow them to do more with less. House members will vote on a bill this week that simply adjusts the prevailing wage thresholdfor inflation, from its early 1960s level of $25,000 to $185,000.

Click here to contact your lawmaker about passing the reform.

posted by PRIYA ABRAHAM | 05:20 PM | 0 comment

MARCH 8, 2012

Big Bucks for Government Union Bosses

Union bosses frequently criticize corporate CEOs and government leaders for supposedly taking home hefty pay at workers' expense. Just this week, protesters picketed House Majority Whip Stan Saylor's office in York, and singled out his $82,000-a-year salary as lavish. But as our latest research shows, government union bosses do pretty well for themselves too—all funded through dues from ordinary union members. Take a look at the table below from "The Squeeze: Government Unions' Grip on Pennsylvanians."

All four union bosses earn six-figure compensation or close to it. The biggest earner—Wendell Young IV—earns pay equal to nine workers in UFCW 1776. And a whopping 148 employees at the Pennsylvania State Education Association earn more than $100,000. Perhaps government union bosses like Wendell Young attack the top 1 percent of income earners because his hefty pay only puts him in the top 2 percent.

posted by PRIYA ABRAHAM | 03:15 PM | 3 comments

MARCH 6, 2012

Construction Workers Picket Rep. Saylor

No sooner did we release research documenting the iron grip of Pennsylvania's labor unions on the commonwealth's taxpayers than they obliged us with a case-in-point on union bullying tactics. Some 40 "concerned taxpayers"—disgruntled construction workers—turned up outside House Majority Whip Stan Saylor's office in York protesting very basic reforms to state law that would allow local governments to use taxpayer funds more efficiently.

One of the reforms?  Raising the threshold for "prevailing wage" projects from $25,000 (the unchanged 1960s level) to $185,000 (adjusted for inflation). Pennsylvania's 1961 prevailing wage law mandates that 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 in the private sector for identical construction of equal quality.

You wouldn't know it to hear the picketers outside Rep. Saylor's office. "Cutting the wages of hard working taxpayers is not fair" their flyer proclaimed, singling out Rep. Saylor's $80,000 salary as further evidence of unfairness. But Rep. Saylor is right: It isn't fair for taxpayers to pay extra in prevailing wage for no added benefit. While one carpenter claimed his salary was still only "two-thirds of the big-city pay," carpenters on prevailing wage projects in York County still 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.

Prevailing wage reform—and the other efforts Rep. Saylor supports—will ensure taxpayer dollars are not wasted. We're already facing a four-alarm fire with our budget. Unions won't tolerate even the slightest spending reforms: Evidence, yet again, that Pennsylvania's taxpayers are in their grip.

posted by PRIYA ABRAHAM | 05:00 PM | 0 comment

MARCH 5, 2012

How Unions Put the Squeeze on Pennsylvanians

We've talked before about how passing meaningful reform on anything from school choice to prevailing wage has been stymied not by a Democrat vs. Republican fight in Pennsylvania's legislature, but by the real battle between the Union Party and the Taxpayer Party.

Now a comprehensive new policy report from the Commonwealth Foundation explains just how the Union Party got so powerful. Government unions, who represent half of Pennsylvania's government workers, derive their strength from two legal privileges: They're allowed to deduct union dues, at taxpayer expense, directly from payroll systems at schools and other government offices. Second, they can force even non-members to pay into the union just to keep their jobs.  That's called paying a "fair share fee."

Armed with automatic union dues and fair share fees from nearly 300,000 workers, Pennsylvania's four main government unions spent $6.5 million on political activities and lobbying in 2010-11. That money goes toward enacting policies that create unsustainable salary, pension and benefit increases that will either bankrupt the state or lead to severe tax increases.

The Pennsylvania State Education Association, or PSEA, further hurts families and students by heartlessly thwarting school choice. And member dues also fund six-figure salaries for union bosses, frequent luxury outings and junkets. Whether you're a taxpayer, parent or worker, unchecked union power is squeezing Pennsylvania dry. But lawmakers can change the rules in a fixed game by making unions collect their own dues, stopping the requirement that non-members pay "fair share fees," and requiring unions to get their members' permission before using dues for political activity.

Write your legislator now and tell them to release taxpayers from the grip of government unions.

posted by PRIYA ABRAHAM | 02:00 PM | 0 comment

MARCH 2, 2012

Pop Quiz: Would You Pay $126 or $84 for the Same Product?

Yesterday, we noted how Pennsylvania's prevailing wage law is a "rent" for labor unions.  Here's an example of how it plays out in real life—when our schools are hit with higher construction costs because of the mandate. So, pop quiz: Would you pay $84 or $126 for the exact same product? 

When it comes to Pennsylvania's "prevailing wage" law, we force the taxpayers to pay $126. That's precisely what happened to taxpayers in the South Western School District in York County. But instead of it being $126 and $84, it was $126,825 instead of $84,504.

You see, when the South Western School District needed some roof repairs, the initial proposal from the contractor came in at $84,504. However, prior to obtaining Board approval, business officials inquired as to whether the proposal had used prevailing wage rates since the total cost of the project exceeded $25,000. The contractor indicated that the initial proposal did not include the artificially increased wage rates. He had used the wages being paid on a similar project in the private sector, like the roof of a large office building.

The contractor resubmitted the proposal for the exact same scope of work and included the payment of prevailing wages. Guess what: The total cost of the project increased from $84,504 to $126,825! That's an increase of $42,321, or 50 percent, for exactly the same product with the same skilled workers. The only difference is that the taxpayers in South Western School District got a 50 percent higher tax bill for the same work.

Thank goodness we taxpayers don't have to pay so-called "prevailing wages" on all the labor that government purchases from contractors. For example, when the state contracts with technology companies, law firms, food service companies or office supply vendors, we don’t mandate certain wage levels for computer techs, lawyers, food servers or Staples employees. So why do we do it only for public construction jobs?

The short answer is this is what happens when the Union Party controls Pennsylvania state government rather than the Taxpayer Party. Of course, we should end such unnecessary mandates such as prevailing wage entirely, but until the Taxpayers have a majority in the Pennsylvania General Assembly, we should at least increase the prevailing wage threshold from $25,000 to $185,000.

posted by MATTHEW BROUILLETTE | 08:00 AM | 0 comment

MARCH 1, 2012

Rent Seeking: Pennsylvania's Prevailing Wage Musical

"Rent" isn't just a depressing musical about New Yorkers facing AIDS. It's also a term economists use to describe the benefits special interests win for themselves in the political arena, such as regulation that limits competition.

Pennsylvania's 1961 prevailing wage law is a rent. The outdated law mandates that the "prevailing wage" in a community be paid to construction workers on publicly funded projects costing greater than $25,000 (when the law was passed, the average home cost about half that figure).

There's a huge problem with the prevailing wage law: The "prevailing wage" is not the market rate for a carpenter, plumber or electrician—it's the artificially inflated wage that labor unions get in their collective bargaining agreements. On average, the prevailing wage is 51 percent higher than regular wages Pennsylvania construction workers receive for building quality homes, hospitals and offices. That's the rent— the extra taxpayers are forced to pay labor unions for no extra benefit.

In 2010, Pennsylvania taxpayers spent $12.7 billion on construction that was subject to the prevailing wage law. Using county wage data, typical labor costs on construction projects, and the experience of other states that suspended or eliminated their wage mandates, that translates to about 10 to 20 percent in extra costs. Overall, that's an additional $1.3 billion to $2.5 billion that taxpayers pay. That's a needless $400 to $800 more in taxes for the average family of four— money they could use for childcare, groceries, increasingly expensive gas and other essentials.

Two weeks ago, Pennsylvania's lawmakers had a chance to enact a first-step, basic reform to the prevailing wage law: By increasing the "threshold" for prevailing wage projects from the 1960s-era $25,000 to $185,000, which is what the figure would be after adjusting for inflation. But the reform didn't even make it to a vote, and the earliest it will be considered is March 12, when the House returns to session. Labor unions lobby hard to keep their rent. For Pennsylvania's stretched taxpayers, however, prevailing wage is a tired, tuneless score.

posted by PRIYA ABRAHAM | 08:00 AM | 0 comment