Colin McNickle At Large

A lawsuit to watch; a lesson to learn

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Here’s an important public policy lawsuit to keep tabs on:

A building contractor is alleging in a lawsuit that a succession of Pennsylvania and New Jersey governors worked in concert to add tens of millions of dollars to the cost of the I-295 Scudder Falls Bridge to favor organized labor.

At issue is yet another one of those cost-inflating, union kow-towing “project labor agreements.”

From a Tuesday story in The Philadelphia Inquirer:

“According to a lawsuit by a building contractor, Pennsylvania and New Jersey governors — from Ed Rendell and Jon S. Corzine to Tom Wolf and Chris Christie — added tens of millions of dollars to the cost of that new interstate bridge linking Pennsylvania and New Jersey, through a bidding process that favored employers of members of the influential Philadelphia Building and Construction Trades Council unions at the expense of rival union and nonunion contractors.”

The lawsuit, which does not name the politicians as defendants, cites messages between Wolf aides and bridge commissioners (who oversee the now-tolled span) obtained through public records requests.

Continues the story:

“The suit says the cost went up more than $70 million, because the commission’s insistence on a labor agreement favoring council members effectively prevented contractors with other union or nonunion workers from doing the job.”

All, of course, it is alleged, in a quid pro quo arrangement that gives pols union support in return for such project labor agreements.

Gee, once upon a time there was another name for such behavior.

Sound public policy be damned, it appears, and, in this case, at a $70 million-plus taxpayer premium.

Thanks to a circuitous state Supreme Court ruling, private companies doing business in Pittsburgh must offer paid sick leave to their employees.

But as George Mason University economics scholar Don Boudreaux reminds, writing on the topic in general, “You might not see the damage that mandated paid leave would inflict on workers, but you can be sure that such damage will result.

“First consider a worker who isn’t underpaid – that is, a worker whose pay reflects the value that she contributes to her employer’s output. If government requires that her employer increase her paid leave, the employer’s cost of employing this worker is pushed above the value that she contributes to her employer’s output.

“The only way this worker will keep her job is if there is an offsetting decrease in the value of some other component of her pay package, such as her hourly money wage.

“In effect, this mandate obliges this worker, as a condition of keeping her job, to purchase a particular product sold by her employer – namely, paid leave.”

Continues the economics professor in a spot-on tutorial that should be mandatory reading for every “progressive” government official:

“Before you conclude that this worker is thereby made better off, recognize that this mandate is no different than one that, instead of mandating paid leave, mandates that workers annually buy from their employers, say, a minimum of three pairs of shoes or weekly house-cleaning services.

“Shoes and house-cleaning services are valuable, but workers’ welfare would almost certainly be decreased, rather than increased, if government were to oblige them to purchase minimum quantities of these goods and services from their employers.”

Continuing his lesson, Boudreaux notes that the case for paid leave is no stronger if we assume, contrary to fact, that workers are generally underpaid.

“First, there’s no reason to believe that workers would prefer to receive higher incomes in the form of paid leave rather than in the form of more take-home pay.

“Second, if workers are indeed generally underpaid, this fact would imply that employers have monopoly power over workers. (Economists call it ‘monopsony power.’)

“Because mandating paid leave does nothing to rid labor markets of such monopoly power, mandated paid leave would, as when workers are not underpaid, cause the value of workers’ take-home pay or of other fringe benefits to fall in order to offset employers’ costs of supplying more paid leave.”

Concludes the professor:

“In short, there’s simply no good case to be made for government efforts to increase paid leave.”

No matter how well said, government “social justice” warriors will continue to insist that the immutable laws of economics somehow don’t apply in Pittsburgh’s case.

So much for critical thinking skills.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

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Colin McNickle
Colin McNickle

Colin received his B.G.S. from Ohio University. The 40-year journalism veteran joined the Institute in October 2016. That followed a 22-year career with the Pittsburgh Tribune-Review, 18 as director of editorial pages for Trib Total Media. Prior that, Colin had a long and varied career in media — from radio, newspapers and magazines, to United Press International and The Associated Press.

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