Audenreid Mine Drainage Treatment Facility, Schuylkill County

By Andy McAllister, Watershed Coordinator

The Pennsylvania Prevailing wage has been on the minds of the Abandoned Mine Reclamation Community for some time now. As funding levels continue to drop and watershed groups and conservation districts look for creative ways to stretch their shrinking reclamation dollar, the issue of prevailing wage forcing higher project costs has begun to come to the forefront.

The current Pennsylvania Prevailing Wage Act enacted in 1961 requires that all workers on a “public work” project must be paid the prevailing wage determined by the Department of Labor and Industry. ” Public work” means construction, reconstruction, demolition, alteration and/or repair work other than maintenance work, done under contract and paid for in whole or in part out of the funds of a public body (in other words all state and/or taxpayer funds) where the estimated cost of the total project is in excess of twenty-five thousand dollars ($25,000).

To better understand the Commonwealth’s Prevailing Wage, we need to understand the original Federal legislation that spurred the creation of Prevailing Wage Acts within Pennsylvania and other states. The Davis Bacon Act (the Federal prevailing wage act), enacted in 1931, is the brainchild and namesake of two Northeastern politicians; Senator James Davis (R) Pennsylvania and Representative Robert Bacon (R) New York.

According to reports, the impetus for creating such legislation revolved around preventing contractors from the Southern U.S. from bringing their cheaply paid labor up North to successfully compete for Northern jobs against Northern contractors who paid their workers a higher wage. Remember, the country was slowly climbing out of the Great Depression and jobs were at a premium.

In the end, the Act was meant to “level the playing field” between contractors who performed federal government jobs throughout the country with the main rationale being that a Federal Prevailing Wage would stimulate economic growth. The language of this federal statute was sufficiently ambiguous to require clarification in 1935 before it could be effectively enforced. The Act was modified again in 1964 to include fringe benefits.

Because the U.S. Constitution’s Tenth Amendment constrains the federal government’s ability to dictate contract terms for state government projects, state and municipal governments were required to institute their own prevailing wage laws, if they chose to do so.

After Davis-Bacon was enacted, many states began the process of creating their own prevailing wage acts, popularly known as “Little Davis Bacons”. State prevailing wages were initially set up to protect local wage rates and foster a better qualified work force. Not all states have chosen to go this route however. States such as Virginia have no state prevailing wage act, preferring instead to allow public construction work costs and wages to be whatever the market will bear.

By 1969, 41 states and the District of Columbia enacted prevailing wage laws. But, despite the promise of economic advantages touted by proponents of the prevailing wage laws, beginning in 1979 there were widespread efforts to repeal existing prevailing wage laws. Changes in the dominant political philosophy and government budgetary difficulties are often cited as the cause of the repeal movement. Between 1979 and 1988, nine states repealed their prevailing wage laws. Florida was the first to repeal its legislation, followed by Alabama in 1980. Utah was the third state to repeal, but only after vetoes from its governor. Arizona repealed its statute in 1984, followed by Idaho, Colorado and New Hampshire in 1985.

Currently, 29 states have a prevailing wage act and while some states have chosen to repeal their prevailing wage acts over the years, others have decided to retain Prevailing Wage but provide for exemptions, sometimes temporarily. In 1997 a bill was passed in Ohio which exempted school construction from their state prevailing wage but required a study be performed to assess the effects of this exemption upon the construction cost, quality, and wages. After the exemption expired, the Ohio Legislative Service Commission in 2002 concluded that there was no negative effect on the construction industry and reported a cost savings of 10 percent. The State of Florida instituted a similar exemption which saved them 15 percent.

In Pennsylvania, the minimum wage rates listed by the PA Dept. of Labor and Industry have been updated yearly along with the cost of fringe benefits since the enactment of the law in 1961. This wage rate is in large part determined by the union scale rate, which according to reports constitutes less than 23 percent of Pennsylvania’s construction industry. However, the project cost threshold that dictates whether a project must comply with the state Prevailing Wage, has NEVER been updated since 1961 and still remains at $25,000. Apparently, no mechanism had been put into place in 1961 to adjust the threshold to account for inflation.

Upon further examination, a $25,000 threshold in 1961 dollars, if adjusted for inflation, would be a whopping $172,000 in 2007 dollars. This is quite a difference, a difference that has not gone unnoticed by members of the Abandoned Mine Reclamation community.

The potential for cost savings for AMR projects priced below this revised threshold is obvious—some put the cost savings figure at 25 percent. Of course for the AMR community, cost savings ultimately translates to more systems on the ground and more streams cleaned up.

While the particular reason for lack of inflation adjustments in the original threshold amount remains unclear, the end product for AMD construction projects is that recipients of public funding have to comply with the PA Prevailing Wage Act for projects that cost more than $25,000—a figure that is easily exceeded by virtually every single AMD project.

With funding streams shrinking and project costs skyrocketing, watershed groups, conservation districts and other members of the AMR community are becoming even more cost-conscious than ever before.

In a subsequent issue of Abandoned Mine Posts, we will take a look at some proposed legislative changes that are afoot in Harrisburg which would bring equity to this 47 year old problem and we’ll talk about ways for the AMR community to make their voices heard.

This article is just one of the dozens on Abandoned Mine Posts produced by the Western PA Coalition for Abandoned Mine Reclamation. WPCAMR also produces Video Diaries to spotlight issues and projects of interest to Pennsylvania’s mine reclamation community.

5/30/2008