Prevailing Wage Foolishness

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.

Prevailing Gamesmanship

In a bold New Year’s Eve gambit, Mayor Ravenstahl’s veto was able to stymie City Council efforts to institute a “prevailing wage” law in Pittsburgh through a bill it passed unanimously on December 21.  Unable to override the veto because of the last minute Mayoral maneuver, irritated Council members have promised to reintroduce the legislation in 2010.


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Pittsburgh’s Worsening Policy Spiral

govt city

Pittsburgh’s City Council is holding debates over proposed prevailing wage legislation.  The legislation requires that any tenant of a subsidized development “would have to pay hotel, cafeteria, grocery, and building service workers prevailing wages, based on the averages paid to their peers in the city”.  This language is accompanied by feel good rhetoric and, not surprisingly, is heavily supported by the local labor unions. The proposed ordinance is sponsored by seven of the nine council members.  This latest market interfering bill is opposed by the mayor and developers who argue strenuously that development in the City will come to a virtual standstill if the mandate is enacted. 



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Pittsburgh Prevailing Wage: Union Power Play

Pittsburgh’s Councilman Shields will propose a prevailing wage bill that is expected to mandate that employees at businesses with a City contract or receiving any City subsidy be compensated the same as City employees doing the same job.

Since City employees other than managers are likely to be union members, the compensation requirement would effectively unionize all newly covered workers in terms of pay and benefits. But unless they are union members they will not have a contract covering work rules and they will not have to pay dues. Thus, the non-union workers covered by prevailing wage would receive the benefits without the union dues cost.

If the employees covered by the prevailing wage are union members but are earning less than City workers, the new law will in effect supersede collective bargaining agreements. And we have been told for years those agreements are sacrosanct. That appears not to be the case if the government decides to force the company to pay more than the negotiated contract calls for.

In the case of the non-union workers getting union pay and benefits, the question must be asked: Why would unions support the proposed bill? Why not simply ask that Council require the workers on City contracts or on projects getting a subsidy join the union? Legally, that might be hard to enforce if the workers vigorously oppose being compelled to join a union and fail to vote to be represented.

All told, one must wonder why the prevailing bill is so important to unions. It must be viewed as just another way of showing their strength in the City and reminding politicians who is in charge.

Federal Stimulus Spending on Transit Running on Empty

Federal stimulus money for transportation seemed like manna from heaven for cash-strapped states needing to repair roads and bridges as well as fund public transit. Now these same states that have enjoyed the gift are starting to wonder what will happen when the funds dry up. They worry that there will not be enough to satisfy all of their projects or, in the case of public transit, where replacement funds for the stimulus programs will come from. Many of them are pushing for a higher Federal gasoline tax. However, the Obama administration is correct in noting that raising the gasoline tax is the wrong thing to do in a recession.

There is plenty of irony in the plea to raise the gasoline tax, not just at the federal level, but the state level as well. The push to get people into cars that get higher miles per gallon driven, as evidenced in the cash for clunkers program, has reduced the demand for gasoline and thus reduced the tax revenue collected. Now they want to raise the tax rates which will further force people into more fuel efficient cars.

Thus the cry for a more reliable funding source for transportation.

But these advocates are missing one important point-the cost of these projects have been inflated by as much as 30 percent due to prevailing wage laws. If they want the money to go farther, this onerous law should be repealed. It’s nothing but a sop to the politically powerful unions. Thus repeal is unlikely to happen. Instead the tax and spenders at the state and federal level will find ways to bleed taxpayers for the benefit of these unions.