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As Harrisburg dickers over transportation funding, will cooler heads prevail on prevailing wage?

A minor wage rule ends up threatening a transportation bill — and the state's economic future

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During a late-October press conference designed to pressure lawmakers into passing a much-needed transportation bill, Gov. Tom Corbett held up a piece of concrete that had fallen from an ailing Beaver County bridge.

Corbett's argument, reiterated at his re-election kickoff, has been that Pennsylvania's crumbling infrastructure threatens to take down the state economy. The argument cuts across party lines: No one wants to do business in a state where cargo can't be carried over weight-restricted bridges, or roads are clogged with passengers displaced from barely functioning mass-transit systems.

But the plea to pass a transit package that could create an annual funding stream of about $2.5 billion, and which easily cleared the state Senate in June, has been muddled by a proposal from Corbett's fellow Republicans: Shrink the number of construction projects that are subject to a 1961 "prevailing-wage" law.

Under that law, employees on public construction projects over $25,000 must be paid a prevailing wage — a pay rate that essentially reflects the wages and benefits offered to the majority of workers in a given region. The exact wage is calculated by the state Department of Labor and Industry and meant to ensure that publicly funded construction projects aren't putting downward pressure on wages.

Some House Republicans have demanded that the wage requirement be eased as part of any new transit bill. Proposals have focused on lifting the exemption from prevailing-wage laws for projects from $25,000 to $100,000 — a move that would lower the wages of some workers on smaller-scale projects.

Negotiations in Harrisburg were ongoing as this issue went to press; it's not clear whether transportation funding will pass, or whether the prevailing-wage measure will be part of it. But Steve Miskin, spokesman for the House Republican caucus, says that prevailing-wage laws represent "an artificial wage barrier" that burdens taxpayers and that loosening them should "absolutely" be a requirement for passing a transit bill.

"It's a way to stretch local tax dollars," Miskin says. "It shouldn't be a partisan issue."

Democrats and many unions hate the proposal, calling it an effort to appease hard-line conservatives upset about plans to finance transportation with a gas-tax increase. "[House Republicans] acknowledged that this transportation package is a tax increase — they believe it's necessary to tie it to something else," says Bill Patton, spokesman for House Democrats. "Any effort to tear down the wages of working people is a non-starter."

Corbett has been standing in the middle, hoping to cajole lawmakers to act before next year's election cycle dims the chances of its passage. "The governor has said he wants a transportation bill on his desk," says spokesman Steve Chizmar, "and if prevailing wage is part of that, he'll sign it. We've been under-investing in our roads and bridges for decades; the risk is just too great to not do anything."

The risk isn't just to the state's economy; Corbett's own 2014 re-election bid is also at stake, says Terry Madonna, director of the Center for Politics & Public Affairs at Franklin & Marshall College.

"When you go to the voters in a second term, they want to ask: ‘What have you done for me?'" Madonna says. "Is it enough to say, ‘I got budgets done on time, we spent less, and there weren't higher taxes?' The governor needs a victory."

The prevailing-wage proposal puts unions in a tough spot, too. They're wary of conceding lower wages on any project, but if a transportation-funding bill fails to pass, their members could be out of work entirely.

But putting the heated rhetoric aside, how much difference would changing the prevailing-wage law really make? And how did it become a bargaining chip that has threatened to derail a much larger transit bill?

Experts on both sides of the issue agree that raising the threshold to $100,000 wouldn't affect that many projects. At the state level, the change would have only affected 17 PennDOT projects last year that cost roughly $1.1 million, according to spokeswoman Erin Waters-Trasatt. That's about .06 percent of the agency's construction spending.

"There's no question [the impact] would be relatively minor," Miskin says.

"It's probably not going to impact very much," agrees Frank Gamrat, a researcher for the conservative Allegheny Institute for Public Policy. "But when you get down to the municipal level" — where small-bore projects are more common — "this is where it's going to help."

Raising the exemption to $100,000 is not a "huge concession" for Democrats, Gamrat adds. "This is how dealing is done."

Mark Price, a labor economist at the union-friendly Keystone Research Center, agrees that the projects affected would be a "tiny subset" of projects.

Still, he says, while the measure would not involve "giving away the farm ... you're giving away something you technically shouldn't have to give away."

In any case, he says, municipal governments will see little savings even if the wage requirement is eased. Price says that in states where prevailing-wage laws are eliminated, "average wages do come down. But we're not finding differences in cost" to taxpayers. Rather than swelling government coffers, he says, the money saved in wages is "probably going to profitability for individual contractors."

It's tricky to test claims about the fiscal impact on local governments, because there is little data on the number of projects or workers that would be affected. "There are 2,500 municipalities in the state — [they] aren't thinking, ‘I need to keep track of this data,'" says Amy Sturges, governmental affairs director for the Pennsylvania Municipal League. Still, the organization supports an increase in the prevailing-wage threshold as a separate issue from the transit bill.

But even though the Republican-proposed change may not be a big policy victory, it is precisely because there is so much political pressure to pass a transit bill that Republicans may feel it's the perfect time to chip away at the entire prevailing-wage law, says Madonna, the Franklin & Marshall political science professor.

"The business and labor community want the [transportation-funding] bill — they're united on that," Madonna says. But, he adds, "The unions fear the slippery slope. Rarely do people want to give up what they consider to be hard-earned [wages] for their members."

"It's not a good bill from the perspective of most people in organized labor," says Marty Marks, a communications consultant for labor groups, adding that it's a way for House Republicans to score points against unions in exchange for passing the transit bill.

"Labor is such a small portion" of construction costs, agrees Frank Sirianni, president of the Pennsylvania State Building and Construction Trades Council. "They want to cut workers' wages to subsidize [materials]."

But not all union advocates think the prevailing-wage proposal should be a deal-breaker.

Philip Ameris, president and business manager for the Laborers' District Council of Western Pennsylvania, is a union leader who has reluctantly supported changing the prevailing-wage law if it means his members won't lose their jobs.

"When you're negotiating you have to give and take," Ameris says. "If that's the way we get the bill passed, and that's the way we fix bridges, and they don't go after us again, I'm fine with that." And although he says he understands why many other unions vehemently oppose a change, "The last thing I want to do is to have a bridge fall or someone not be able to get to work ... and for that to be the responsibility of the union."

But while the impact of a prevailing-wage provision would be small, the transportation bill itself is another matter. For once, political rhetoric about the apocalyptic consequences of doing nothing might be justified:

"This is one of those pivotal moments that could be crucial to the future economic development in the state," Madonna says.

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