Pennsylvania has filed criminal charges against one of the largest construction contractors doing work for the commonwealth for allegedly violating state and federal prevailing wage laws.
As the Post-Gazette reports it, Glenn O. Hawbaker Inc. of State College is accused of “stealing millions of dollars in wages from workers in the largest case of its kind in the U.S.”
But the preponderance of scholarly research more than suggests such laws are the proverbial ass. And that – when the economics and morality of “prevailing wages” are fully considered –renders the prosecution of those for violating such laws as quite Orwellian.
The state alleges a comprehensive “massive” and “unprecedented fraud” in skirting both the Pennsylvania Prevailing Wage Act and the federal Davis-Bacon Act.
The “prevailing wage” in government contracting generally is defined as the hourly wage, benefits and overtime paid to the majority of workers within a particular area.
But it usually is the union wage, an inflated wage agreed to between the government coddler of labor unions and the cartel that organized labor represents.
Simply put, prevailing wages are not natural free market wages. They are antithetical to free market competition. And, in fact, they are discriminatory, oftentimes pricing nonunion minority contractors out of business. (It long has been argued that such wage and benefit floors were, in another era, purposely put in place to do just that.)
Additionally, prevailing wages rob taxpayers of precious dollars that the free and open market would better direct elsewhere.
To wit, the Congressional Budget Office (CBO) noted that, as of 2016, federal prevailing wages increased the total cost of federal construction projects by $1.4 billion. The tally over nine years at the close of 2016 was $13 billion.
Pennsylvania is no stranger to seeing the cost of public works projects inflated because of the state’s prevailing wage laws.
As the Allegheny Institute for Public Policy noted (in Policy Brief Vol. 18, No. 25), the resulting “lack of full-throttled competition for government contracts results in higher costs for taxpayers who ultimately pay for this excessive generosity to unions – and to companies that are union shops and get all the work.”
Here are just two examples the think tank cites of how perverse prevailing wages are in the Keystone State:
In 2017, the average statewide painters wage was $20.30 an hour. It was $18.84 for construction laborers. But in April 2016, on projects at East Stroudsburg University, painters were paid premiums of 64 percent more and 25 percent more, respectively, because of the commonwealth’s prevailing wage law. Fringe benefits also were far above the norm for such occupations.
Then there are state highway projects. Per the Pennsylvania Department of Transportation’s 2017 annual report, $2.57 billion was spent on 703 bridge and road projects.
“Even if the labor compensation savings from doing away with (the) prevailing wage were 10 percent … PennDOT would have an extra $257 million to spend on more projects,” noted Frank Gamrat, the think tank’s executive director, and Jake Haulk, its president-emeritus.
That, by the way, is a low estimate; most research pegs such savings at between 10 and 25 percent.
Yet in his public pronouncements about the filing of criminal charges against the State College contractor, state Attorney General Josh Shapiro talks of Hawbaker “stealing” from workers and “fleecing” them by circumventing prevailing wage laws.
Shapiro went on to allege that Hawbaker used its savings by not complying with the law to “undercut competitors.”
But who’s really “stealing” from whom?
Who’s really “fleecing” workers?
And who’s “undercutting competitors”?
Plain and simple, the law is.
Now, the law is the law. And Shapiro is enforcing the law, as is his charge. But, again, the law is an ass. And Orwell would take great comfort in its perversion.
It’s all the more reason that “prevailing wage” laws should be abolished – for the economic and moral affront they are.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
