Budget Solution: Stop Paying Extra for Construction Projects

'Prevailing Wage' Costs Pennsylvanians Hundreds of Millions of Dollars Yearly

February 6, 2017, Harrisburg, Pa.—Can you imagine taking your car to the shop for a major repair, learning the cost, and responding, “I’d like to pay 20 percent extra!”

No? Then you probably don’t work in Pennsylvania government.

Pennsylvania’s prevailing wage law, enacted in 1961, needlessly raises the costs of construction projects by requiring state and local governments to pay contractors wages that are artificially inflated by as much as 30 to 75 percent. That’s why eliminating prevailing wage is among Commonwealth Foundation’s policy solutions to help state government work for all Pennsylvanians.

Solution #6: Stop Paying Extra for Construction Projects

The prevailing wage law applies to most taxpayer-financed construction projects—from road paving to school roof repairs. Municipalities rank the prevailing wage as one of the most burdensome mandates in the state, according to a Local Government Commission survey. Local governments even frequently defer routine repair and construction projects due to costs mandated by the prevailing wage law.

Eliminating prevailing wage laws could save Pennsylvanians between $880 million and $2.6 billion on construction costs annually.

“Gov. Wolf and lawmakers have prioritized government efficiency this budget season, but state and local governments are required to pay extra when contracting for construction projects,” commented Bob Dick, senior policy analyst for the Commonwealth Foundation. “What could be more inefficient? Lifting this archaic mandate would save hundreds of millions of dollars per year without affecting construction quality.”

In addition to this and other money-saving reforms—like liquor privatization, cutting corporate welfare, tackling the shadow budget, student-focused education funding, and corrections reform—Gov. Wolf and lawmakers must also enact long-term, structural changes to state government.

These include transitioning new public employees to 401(k)-style retirement plans, restructuring welfare to encourage self-sufficiency, and limiting annual state spending increases to the rate of population growth plus inflation.

See also:

• Solution #1: Corrections Reform
• Solution #2: Liquor Privatization
• Solution #3: Student-Focused Education Funding
• Solution #4: Cut Corporate Welfare
• Solution #5: Tackle the Shadow Budget  

Bob Dick and other Commonwealth Foundation experts are available for comment. Please contact Gina Diorio at 862-703-6670 or gld@commonwealthfoundation.org to schedule an interview.

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The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.