State Agency Forces Private Sector to Pay Prevailing Wage

Due to a standing order by the Pennsylvania State System of Higher Education (PASSHE), all public universities are required to pay prevailing wage rates on construction projects funded by private organizations. Pennsylvania’s prevailing wage law only applies to public construction projects, but the PASSHE felt, “the foundations can help ensure that the workers earn a living wage and that the construction jobs go to local residents.� – unless, of course, those residents are black.

The Department of Labor and Industry and the Prevailing Wage Appeals Board both ruled against Indiana University of Pennsylvania (IUP) when they attempted to pay workers the federal prevailing wage rates for residential construction (Pennsylvania has no residential prevailing wage rates). Organized labor filed a complaint that federal rates should not be used since the project did not receive federal funding.

However, the project also did not receive any state funding, being funded instead by the university’s nonprofit foundation, yet IUP must now pay the more expensive commercial state prevailing wage rates to construct residential buildings. In Indiana County, Pennsylvania’s prevailing wage law increases the cost for publicly funded construction projects (and apparently some privately funded projects) by approximately 11 percent.