PA Doesn't Need More Jobs That Don't Pay

PA DOESN’T NEED MORE JOBS THAT DON’T PAY School Associations and Lawmakers Need to Do their Homework on Construction Prevailing Wage Laws
Date of Press Release: 
April 2, 2015

A group of lawmakers led by Rep. Jesse Topper, and joined by representatives of the School Boards Association and the Pennsylvania Association of School Business Officials, held a press conference yesterday calling for school construction projects to be exempted from Pennsylvania’s prevailing wage law. In response, Keystone Research Center Executive Director, Dr. Stephen Herzenberg, an economist, issued the following statement:

“Pennsylvania’s prevailing wage law helps prevent the construction industry from degenerating into destructive wage and price competition, which drives skilled and experienced workers from the industry, reduces productivity and quality, and leads to poverty-level jobs, without saving customers any money. 

A large and rigorous body of economic research and real-world experience documents the negative impact of repealing prevailing wage laws. The school associations and lawmakers advancing this tired perennial of state politics need to do their homework on the actual consequences of prevailing wage repeal and stop parroting outlandish cost-savings claims rooted in imaginary what-if scenarios.

After years of wage stagnation and an economic recovery in which all the gains of growth have gone to the top 1 percent of earners, the last thing in the world Pennsylvania’s working families need is legislation that would create more construction jobs that don’t pay.

It is particularly hard to understand why rural lawmakers whose natural constituencies would be most harmed by this policy – local workers in construction trades – would advance it.

Rigorous research on states with and without prevailing wage laws, shows that repealing prevailing wage laws leads to:

  • less workforce training,
  • a younger, less educated and less experienced workforce,
  • higher injury rates,
  • lower wages; and
  • lower health and pension coverage.

When Pennsylvania lowered its prevailing wage levels briefly in the late 1990s, Dr. Howard Wial found that construction costs tended to go up more where prevailing wages fell the most.

Prevailing wage laws also help ensure that jobs go to local workers whose families shop in local businesses, which strengthens local economies, instead of to low-wage workers brought in from out of state.

In sum, prevailing wage laws promote “constructive competition” in the construction sector based on skills, productivity, and quality, rather than “destructive competition” based on paying low wages to inexperienced workers in unsafe conditions.

There is never a good time to enact a policy that lowers wages and destroys good, middle-class jobs while not saving the state and municipalities any money. But it is hard to think of a worse time.”

For a more detailed summary of research on prevailing wage laws, see The Benefits of State Prevailing Wage Laws: Better Jobs and More Productive Competition in the Construction Industry (press release, report) 

For additional information and links to other sources, go to http://keystoneresearch.org/issues-guides/prevailing-wage