Since 2008, the Allegheny Institute has commented many times on the slow arriving recession and its relatively moderate negative impact on the region’s economy. With no housing or general real estate boom there was no bust in the region-a major factor in the severity of the downturn in many fast growing cities such as Las Vegas, Phoenix and states such as Florida.
Newspaper reports on the Labor Day parade Downtown noted that something was missing from the march: spectators. In fact, people walking in the parade outnumbered people watching. What gives?
Was it the economy? One union official flippantly noted the bad economy and remarked that people who would normally be there were probably out looking for jobs. Was it the weather? We can rule that one out as Monday stood in stark contrast to the 2009 affair when it was noted "the cool, drizzly weather appeared to thin the parade crowd considerably".
Or could it be a sign of taxpayer disenchantment with unions and theirnever ending quest to make government bigger, more inefficient andcostlier?
Except for union members and their immediate families andthe hardest of the hard left, labor’s all out support of Obamacare,stimulus spending to save government jobs, card check, and higher taxes on the national level and the presence of their influence in state and local policy including the lack of Right to Work or prevailing wage reform, continuing threats of teacher and transit strikes, and opposition to outsourcing and privatization is finally getting through the public’s consciousness as being a majorcause of the ongoing funk in the economy.
How deliciously ironic. The Laborers Union International announces it will run ads warning motorists about Pennsylvania’s structurally deficient bridges. And why are the bridges deficient?-according to the union not enough money is being spent on the bridges.
Perhaps if the bridges did not cost 30 percent more to repair than bridges in a right to work state with no prevailing wage requirement, they would be in much better shape. The union should be asked this question: In order to have safe bridges in an environment with very limited funds available to do the work, would you be willing to abandon the prevailing wage requirement and allow less expensive non-union labor do the work?
The answer would be no. So, here is what the union is really is saying. We prefer unsafe bridges to giving up any of our stranglehold over the policies of Pennsylvania. Indeed, they are really about soaking taxpayers regardless of the consequences. Looks like France from here.
While the local economy struggles to recover from a long running recession, the City and County governments seem intent on further undermining what’s left of the free market for labor in Pittsburgh and Allegheny County. The recent assault comes in the form of prevailing wage laws that will require artificial above market wages for employees working at firms who have received or are benefiting from "economic development" help from the City and County.
Proponents of the new wage laws argue there will be little impact on jobs and therefore using the strong arm of government to mandate higher wages is acceptable and justified. This argument fails to understand the cumulative impact of the government’s meddling in the economy and the role that meddling has played in holding down private sector job growth in the region for decades. Absent the health care and post secondary education jobs gains, the City, County and region have seen no net private employment gains for the last ten years and have averaged far slower than national growth for several decades.
Labor laws that are grossly unfavorable to businesses and taxpayers have already taken a terrible toll on the state and region. Prevailing wages in construction, public safety unions with labor favoring binding arbitration regulations, and teacher and transit unions with the right to strike have created an overly expensive and unfriendly climate for companies and high taxes for residents.
The City and County prevailing wage laws will add to the market disrupting forces already instituted and will require further interference later on as the unintended consequences multiply and insidiously stifle economic growth. More and larger taxpayer subsidies will be necessary to induce businesses to risk investing here to offset the higher wages that must be paid. These projects will have an even lower return for taxpayers than the ones currently receiving government aid-taxpayer assistance that was necessitated by the poor investment climate created by earlier misguided policies.
There is no way to recoup the enormous and rapidly accumulating deficit of jobs and income the City and County have already engendered by the anti-free market environment already in place. Unfortunately, those who live and vote for government officials in the City and County will pay the price for voting for candidates who choose to make things worse. Their children and grandchildren will poorer for those votes.
Allegheny County Council seems intent on passing its version of a prevailing wage law, thereby placing yet one more mandate on businesses in the County. With an overwhelming majority on Council (eleven of fifteen members) the Democrats can expect no effective opposition. In fact, with six Democratic members sponsoring or co-sponsoring this type of legislation, it seems certain to pass eventually.
Mandated wages, such as prevailing wages, are a favorite issue for labor unions and liberal elected officials. They accomplish what labor unions sometimes can’t through bargaining—increase the wages of their members. And they help boost other wage rates by setting a minimum on the wage ladder. The County’s proposed prevailing wage law targets specific job classifications: janitorial, grocery, and hotel and food service workers on projects receiving County assistance. Are private sector unions losing so much ground in the leisure and hospitality industry that they need help from their friends on Council to accomplish their goals?
If they are having trouble organizing workers, isn’t that a signal they have worn out their welcome in the private workplace? It’s unlikely they will take the hint. After all they still have friends in government who are more than willing to help.
The Mayor didn’t veto Council’s prevailing wage legislation because he knew the veto would be overridden. Because of concerns about its effects on future development and enforceability, he didn’t sign it either. Thus the legislation became law. Just one more burden the City taxpayers must bear.
While the Mayor is understandably concerned about its impact on future development, he also needs to worry about its impact on the City’s finances. The law requires the City Controller to study and determine the median wages for all affected job classifications. For a department that is already stretched thin, this is a cost-increasing mandate. How is the controller going to allocate resources to carry out what could be a fairly expensive undertaking without affecting his ability to do the work already required? Will he ask for more money from council or allow needed work to slip or get done in an unsatisfactory manner? And they don’t have much time to get it done, as the law takes effect in 60 days.
The increase to the Controller’s budget is not the only concern. The law also requires the City and firms operating under City contracts to pay the prevailing wage to janitorial and food service workers. City employees already making less than the prevailing wage will not be the only ones getting a boost, but to maintain workplace hierarchy, those above them will be increased proportionally as well. And of course firms or agencies with City contracts will pass this cost onto the City in the form of higher prices in any future contracts and could ask for or sue for immediate additional funding assistance on the grounds the terms of their contract have been affected.
Does the Council have a plan to pay for these increased costs? It’s doubtful they will look to raise taxes on their constituents, but continue to pursue suburbanites and others that don’t vote in the City. This mandate will do very little to lift people out of poverty, but it will do very much to sink an already financially strapped City.
Moreover, since the law will almost certainly reduce the amount of new development in the City, significant tax base and income generation that might have occurred to help City finances won’t happen.
All told, the prevailing wage law is a surefire loser for city taxpayers both near and long term. But Council in its best Alfred E. Neuman portrayal is saying, "What, me worry?"
Municipal authorities were purportedly created in part to do things regular governments cannot do and to assume certain financial and operational functions. In Pittsburgh, we have the water and sewer authority, the parking authority, the housing authority, the redevelopment authority, etc. These authorities are governed by a board that is appointed by the Mayor and approved by the City Council. Within the state’s statutes governing the authority and the authority’s own charter and by-laws, the board presumably has the responsibility and freedom to make the big decisions for the authority.
Generally speaking the board is supposedly independent of political pressures. Of course, board members who continually run afoul of the Mayor’s wishes could be asked to resign or not be re-appointed. Certainly, the City Council should not be stepping into manage the affairs of any authority. That is a prescription for turmoil.
Now comes Councilman Shields saying, "The [Urban Redevelopment Authority] can’t even breathe a breath without the consent and authorization of this body"-referring to Council. He went on to say that he would do unimaginable things to the URA if it did not comply with the prevailing wage bill Council is getting ready to pass.
So, in Pittsburgh, what is it? Are authorities independent or are they lackeys of City Council? Apparently, a new era of Council hegemony just dawned in Pittsburgh.
On Monday, Pittsburgh City Council unanimously voted to adopt a prevailing wage law. One more vote from Council and the bill goes to the Mayor for a second time. The first time the united Council passed the bill it was vetoed by the Mayor on December 31st and Council was unable to gather enough votes to override it. Undeterred, they vowed to reintroduce the legislation and once again pass it unanimously-which they have just done.
Now it will be interesting to see the how the Mayor reacts.
He tried to play both sides of the fence by denouncing the prevailing wage bill as a killer of (subsidized) development, yet introduced his own competing prevailing wage bill, which Council summarily ignored. Now he needs to contemplate his next decision. He either vetoes the bill again, signs it or allows it to become law without his signature. If he vetoes, chances are high the veto will be overridden. Thus, barring a sudden and unexpected outbreak of sanity on Council, prevailing wage legislation is on the verge of becoming law.
It appears City is all but certain to be saddled with another market interfering mandate. A mandate that will prolong the City’s exit from distressed status.
Hard on the heels of the efforts of Pittsburgh to put together a “prevailing wage” law for workers on development projects that receive government financial assistance, now appears Allegheny County with its own plans to mandate wage levels for projects receiving County aid. Very convenient for the City in view of the Mayor’s argument that the City should not impose a prevailing wage requirement unless the County enacts a similar law.
Prevailing wage legislation continues to be a hot topic in Pittsburgh. Since the Mayor vetoed Council’s passed bill on December 31st, both he and Council have introduced competing versions of the prevailing wage ordinance. The Mayor, buckling under pressure from union leaders, will introduce a bill that appears to be more business friendly and makes its effective date contingent on Allegheny County passing similar legislation. The Mayor must have figured County’s passage was a long shot-but he appears to be wrong.
County Council is working on introducing their own version which would cover any food and building service workers employed at any County building or County-subsidized project. Their wages will be determined not by the market, but by local averages for similar positions or set by the Pennsylvania Department of Labor. This would also include any benefits and leave time.
At a time when the nation and region are struggling to emerge from the recession, neither the City nor County needs to be interfering in the market place. Obviously they haven’t learned from their past meddling. The high taxes imposed on businesses in the City and County begat subsidies to retain current or attract new ones. This strategy failed miserably as area job growth was sluggish at best while most of the rest of the nation prospered.
Now officials are upset that businesses who took the subsidies are not paying what they, and their union collaborators, deem to be sufficient wages. So naturally they propose to mandate wages, which is nothing more than another tax on businesses. Elected leaders from the City and County refuse to learn that imposing taxes and mandates on people and businesses only serves to drive them away.