PMA Bulletin: October 9, 2013

Labor Reform Says: “You Broke It, You Bought It”

Lady Justice is depicted wearing a blindfold and holding balanced scales, representing impartiality. But in Pennsylvania, the scales are tipped in favor of organized labor.

Union protectionism in Pennsylvania goes so far that it actually permits certain activities that would send anyone else to jail. Now, the House is advancing legislation to balance the interdependent working relationship of businesses, unions, and taxpayers.

Pennsylvania Manufacturers’ Association Executive Director David N. Taylor said that many of Pennsylvania’s overzealous labor protections were enacted when union strength was at its pinnacle. “All we’re trying to do is to restore the balance between the laws and regulations covering the right to organize with the right to operate your business,” he said.

One bill, House Bill 1470, sponsored by State Rep. Steve Bloom (R-Cumberland) is based on the principle “you break it, you bought it.” The bill would require the side in a dispute, whether business or labor, that violates a judge’s protection order to shoulder the costs of the violation and enforcing the said order.

Rep. Bloom explained that Pennsylvania's Labor Anti-Injunction Act protects the right to stage protests against businesses, such as forming picket lines, but prohibits picketers from disrupting daily business operations.

“The problem occurs if picketers are blocking a factory gate and they violate a judge’s order to stop. It usually falls upon the business to pay for the cost of enforcing the order. That cost usually includes, among other things, paying the court costs and paying for sheriff’s deputies to be on site,” Bloom said. “My bill (Fair Enforcement of Labor Anti Injunction Act) simply says that if you violate the order, you pay for the cost of enforcing the order so it can’t be violated again.”

Bloom said that he hopes Judiciary Chairman Ron Marsico (R-Dauphin) will move the bill through his committee this fall. Bloom said that once the bills reach the House floor he is confident of quick action there as well.

The damage caused by organized labor favoritism in the state is staggering in terms of business costs, jobs, and costs to the taxpayers.

One look at another unfair labor holdover, the Prevailing Wage Law, is perhaps most telling. The law requires an inflated wage, usually the regional union wage, to be paid on all publicly funded construction jobs over $25,000, a minimum set in 1963 when the law was originally passed. Adjusted for inflation the minimum should be $185,000 today. In April, the House Labor and Industry Committee approved legislation, House Bill 796, sponsored by David Millard (R-Columbia), that would raise the minimum threshold to $100,000.00. The bill awaits action on the House floor.

A year ago, the Commonwealth Foundation released a study of the cost of prevailing wage laws and the pending public projects not being completed because of the law.

The study showed that local governments frequently defer routine repair and construction projects because they exceed the $25,000.00 prevailing wage threshold. The wasteful above-market labor costs render those projects too expensive to undertake.

The County Commissioners Association of Pennsylvania compiled examples of small, routine projects that are subject to prevailing wage requirements:
• $42,000 bridge repair project in Carbon County
• $46,500 roof replacement in Adams County
• $134,000 traffic light upgrade in Lebanon County
• $44,000 to replace exterior lights and posts at the Westmoreland County Courthouse

Eighteen states have no prevailing wage laws, and ten have repealed their mandates in the last 30 years. In terms of taxpayer savings and construction quality, Ohio provides an instructive example:

In 1997, Ohio allowed school districts to opt out of the state's prevailing wage mandate. The state's Legislative Service Commission found schools saved almost $500 million as a result, for an overall savings in construction of 10.7%.

196 school districts responded to a survey about construction quality without prevailing wage. The vast majority, 91%, said construction was of the same quality, 6% reported higher quality, and only 3% reported lower quality.

“Simply put, it’s a competitiveness issue,” Taylor said. “Like all taxpayers, employers expect to pay for public projects. But when project costs are artificially inflated because of obsolete prevailing wage laws, we all pay more as taxpayers leaving less money for payroll and capital investments.”