The Cost of Pennsylvania’s Prevailing Wage Law

Apparently my recent commentary on Philadelphia’s prevailing wages has stirred the city’s union waters, so I am posting the data analysis to support the article’s statement:

The labor costs for public sector construction jobs in Pennsylvania average 37 percent higher than what the private sector pays for the same work and 44 percent higher in Philadelphia. Given the average cost of labor, this adds a little over 20 percent to the cost of every taxpayer-funded construction project.

I analyzed prevailing wage data for 268 projects in calendar year 2007. One project from each quarter was chosen from each of Pennsylvania’s 67 counties to account for any difference in wages by region over the course of the year. Four worker classifications were selected due to their presence in each project’s prevailing wage report and their lack of class types: bricklayer, carpenter, electrician, and plumber. The prevailing wages (obtained from the PA Department of Labor and Industry) were then compared to the 2007 average hourly wage for each profession in the respective county.

Focusing on Philadelphia, I compared the average wages from four prevailing wage projects in 2007 to the average market wages for the same year, as depicted in the table below.

The 20% additional project cost was calculated using the average cost of labor as derived from a survey of union contractors (45% of total project cost).