Prevailing wages & more OneJet problems

Prevailing wages & more OneJet problems

In advance of Labor Day, a letter writer to the Tribune-Review contends the benefit that prevailing wages provide to the local economy “is immeasurable.”

“Prevailing wages” are those paid to workers on public projects, supposedly determined by the average wages paid for certain jobs in a certain geographic area. Union wages, that is.

The writer contends “prevailing wage ensures tax money is used solely to benefit the public and the taxpayers by requiring the hiring of local, skilled workers, which stimulates all aspects of the local economy.”

But as George Mason University Law professor David Bernstein reminded in June:

“Since the early 20th century, labor unions have lobbied federal and state governments to enact and enforce laws requiring government contractors to pay ‘prevailing wages’ to employees on public works projects.

“These laws, currently active at the federal level and in approximately 30 states, typically in practice require that contractors pay according to the local union wage scale. The laws also require employers to adhere to union work rules.

“The combination of these rules makes it extremely difficult for nonunion contractors to compete for public works contracts.”

Not to mention, unnecessarily raising the cost of public works projects. Which hardly “benefits” the economy.

Simply put, such perverted economics have no place in public works; the state Legislature should have acted long ago to abolish the practice.

The evidence is mounting that the Allegheny County Airport Authority did not perform its due diligence prior to awarding OneJet $1 million in incentives to operate out of Pittsburgh International Airport.

Had that due diligence been done, it would have discovered that OneJet was a tax scofflaw.

The authority filed suit in Common Pleas Court this month attempting to recover $763,000 of that $1 million incentive. Nonperformance is the issue – OneJet failed to provide and/or maintain the flights to which it agreed.

But days later, the Post-Gazette reports, the Internal Revenue Service filed a federal tax lien against OneJet for failure to pay more than $621,000 in excise taxes.

And at least part of that arrearage dates to 2015, the year before the 2016 bolus of corporate wealthfare was granted.

Such incentives are a bad idea to begin with. But one would think that if a public authority was determined to grant them, it would at least check to see if the recipient isn’t a tax-avoider.

Again, one would think.

Perhaps this is the danger of a pliable authority board granting its chief executive officer unchecked power to grant such subsidies?

So, the very financial wherewithal of OneJet appears to have been in question for the past three years.

And that impression is not helped by news that another airline that OneJet was attempting to acquire has terminated the acquisition process. Ultimate JetCharters says there will be no deal.

The P-G reports that the company won’t say why the acquisition was scuttled but that it had nothing to do with the IRS lien or the Airport Authority’s lawsuit.

Perhaps it was a matter of promises not kept? As the Airport Authority’s lawsuit details, a complaint alleging breach of contract.

And, finally, lest it be forgotten, this headline from the Airliners.net message board (posted Aug. 11):

“OneJet is on its last leg.”

If that’s the case, the public purse will be lighter and, sadly, the public official who cut the deal likely won’t be any wiser.

Colin McNickle is a senior fellow and media specialist at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).