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Wage bills could change Pittsburgh region's job climate

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By Thomas Olson
Wednesday, April 21, 2010
 

Two bills being voted on by Allegheny County and City of Pittsburgh lawmakers would lift many workers' wages but could discourage some companies from doing business in this region, experts said Tuesday.

Allegheny County Council passed a bill by a 10-4 vote late yesterday that requires any company receiving more than $100,000 in county aid for a project to pay workers the region's prevailing wage for their respective jobs. The bill covers maintenance workers, hotel workers and food service workers.

Next Wednesday, Pittsburgh City Council is expected to vote on a similar "living wage" bill. It would require city government, and any contractor providing at least $10,000 a year in products or services to the city, to pay workers at least 150 percent of the state minimum wage. That means a raise to $10.88 an hour from the minimum wage of $7.25.

"This could ripple up through an entire enterprise," said Ralph Reiland, associate professor of economics at Robert Morris University, Moon. "If somebody making $7.25 an hour gets a 50 percent increase, then others making $12 an hour will want $18 an hour."

The economist, who operates a restaurant in the South Hills, said employers will likely cut hours, or even jobs, if labor costs suddenly increase.

"If wages jump up, you can keep a dishwasher on until 10 o'clock, instead of midnight," he said.

The difference between the bills is that a "living" wage creates its own pay floor, such as a multiple of the mandatory minimum wage. A "prevailing" wage is based on existing wages in a given market, as shown by Department of Labor data.

In the past 15 years, more than 100 cities and counties have adopted living wage laws, and dozens more were considering it, according to a study by the New York University School of Law.

The study showed the higher labor costs from similar bills haven't disrupted development in those markets or significantly inflated government budgets. A living wage bill in Warren, Mich., for instance, raised average contract costs by $60,000, or 0.04 percent of the city's budget, the study found.

"It's hard to find a negative impact because of the limited scope of these laws," said Mark Price, labor economist for the Keystone Research Center, Harrisburg.

The larger of the two local proposals' scope is the one from Pittsburgh City Councilman Ricky Burgess, whose living-wage bill covers all city workers. But it should only raise the city's labor costs by a "couple hundred thousand" a year, Burgess said, because most city workers already make at least $10.88 an hour.

"There's going to be a negative impact to the (private) employer, but not enough to determine whether a company is going to bid on a project," said Price.

Prevailing wage laws are nothing new. Federal law since 1931 has required contractors on a federal public works project to pay wages prevalent for that market.

The City of Pittsburgh has a prevailing wage law, which took effect in February. It requires for workers at city-subsidized developments to be paid wages comparable with those paid to their counterparts citywide. Like the new Allegheny County law, it generally covers maintenance, hotel and food service workers.

What's less common about the Pittsburgh and Allegheny County laws are that their scope extends to service workers, as opposed to jobs in the building trades, Price said.

 

 
 


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