The Pennsylvania Prevailing Wage Act requires the state and local governments to pay workers on most public projects costing over $25,000 a pre-determined wage rate that is in excess of prevailing market rates, which arbitrarily makes projects more expensive and increases the cost borne by taxpayers, including employers. The detrimental impact of the Prevailing Wage Act on the business community goes beyond higher state and local taxes:
- Artificially raising wages distorts the market and ultimately increases costs on all construction projects and maintenance work within the area, even private projects;
- Arbitrary and capricious enforcement of the rules creates uncertainty and confusion for companies, which risk a three-year disqualification from public work for any violation;
- Complying with the Prevailing Wage Act is an administrative burden and can be overly complicated and time-consuming for contractors who must track work performed at any given time by all employees and ensure that various wage rates are appropriately applied throughout different stages of a project.
- Prevailing wage requirements can increase project costs to the point that state and local governments postpone, curtail or cancel projects, which hinders economic development and job creation efforts in the Commonwealth.
The Pennsylvania Chamber supports repealing the Prevailing Wage Act. Short of full repeal, the Pennsylvania Chamber supports legislative initiatives or reforms to mitigate the Act's harmful effects, including:
- Limiting application of the Prevailing Wage Act to projects for which the majority of funding is from state sources and exempting projects or aspects of projects funded through or with support from economic development programs;
- Increasing the $25,000 threshold that triggers the prevailing wage mandate, and providing for regular increases, to account for inflation;
- Allowing political subdivisions and school districts to "opt in" to or "opt out" of prevailing wage requirements;
- Providing for open contracting to guarantee that contracts are assessed and awarded based on quality of work, experience, and cost – not a company's affiliation with organized labor;
- Ensuring that prevailing wage rates accurately reflect the true market-based prevailing wage rates in a local community; and,
- Ensuring that any regulations or guidelines that dictate employer compliance with the Prevailing Wage Act are unambiguous; including clear employee definitions and classifications.