The PA Chamber supports legislation pending in the state Senate that would place a moratorium on prevailing wage requirements for municipal and school construction projects while the state recovers from the recession.

Senate Bill 695, which is sponsored by Sen. Mike Brubaker, R-Lancaster, would stimulate construction projects in the Commonwealth by placing a three-year moratorium on prevailing wage requirements.

Prevailing wage rates can add up to 30 percent to the cost of school district and municipal capital projects.

"Almost every community in the state has been affected by the recession in the past several months, and I believe we need to take decisive action to get more Pennsylvanians back to work as soon as possible," said the bill’s sponsor. "My bill would remove one of the barriers for local governments and school districts to begin work on new projects so we can start putting hard-working Pennsylvanians back to work."

The moratorium would enable local municipalities and school districts to address urgent construction needs at the lowest cost to taxpayers.

A temporary prevailing wage moratorium would also allow Pennsylvania companies to be more competitive in the bidding process, as many bids for construction projects in the state are placed by out-of-state companies that do not fall under prevailing wage restrictions. This places Pennsylvania companies at a competitive disadvantage.

PA Chamber members oppose prevailing wage requirements because they arbitrarily raise the cost of construction for projects and increase the cost borne by taxpayers. Ultimately, prevailing wage hinders economic development and job creation efforts in the Commonwealth.

Last year, the Chamber was successful in ensuring that a new state law (Act 79 of 2008) to expand the state’s Keystone Opportunity Zone program was free of prevailing wage requirements.

“Expansion of prevailing wage would have undermined the very purpose of Keystone Opportunity Zones, which is to encourage economic activity in underserved regions of the Commonwealth,” said PA Chamber Vice President Gene Barr.

At the time, the Chamber argued that jobs and job opportunities would be lost in regions of the state most in need of economic growth if development programs were burdened by the costs associated with the prevailing wage. The same argument holds true for projects that would help the state recover from the economic downturn.

To read more about Chamber members’ position on prevailing wage, including reform ideas, click here.