Adventures in Mathematics: To Save 50% from Prevailing Wage Repeal, Workers Would Have To Pay To Work!

If you are in the Harrisburg area, tune in to WITF's Smart Talk at 8 p.m. tonight to hear a debate about the prevailing wage, including comments from yours truly in the opening news report.

In answering a reporter's question on prevailing wage, I was told about one claim that repealing the prevailing wage could lower total costs by as much as 50%.

Get out your calculator. If you lowered labor costs on a construction project by 99.99%, at most you would lower total costs by 24% (see the table below).

In other words, if you hear someone claim that eliminating prevailing wage would lower total costs by 50%, they are saying that construction workers would show up to work and not take a paycheck. In fact, they would pay to work on public projects!

Sound fishy to you?

Changes in total cost as a function of the share of labor cost on a $1 million public construction project (assuming labor represents 24%* of total cost)
  With P.W. Without P.W. % Change
Labor Cost $240,000 $24 -99.99%
Non-Labor Cost $760,000 $760,000  
Total Cost $1,000,000 $760,024 -24.00%

*According to the 2007 Economic Census of Construction, labor costs represent no more than 24% of total construction costs in Pennsylvania.

Comments

0 comments posted

Post new comment

Comment Policy:

Thank you for joining the conversation. Comments are limited to 1,500 characters and are subject to approval and moderation. We reserve the right to remove comments that:

  • are injurious, defamatory, profane, off-topic or inappropriate;
  • contain personal attacks or racist, sexist, homophobic, or other slurs;
  • solicit and/or advertise for personal blogs and websites or to sell products or services;
  • may infringe the copyright or intellectual property rights of others or other applicable laws or regulations; or
  • are otherwise inconsistent with the goals of this blog.

Posted comments do not necessarily represent the views of the Keystone Research Center or Pennsylvania Budget and Policy Center and do not constitute official endorsement by either organization. Please note that comments will be approved during the Keystone Research Center's business hours.

If you have questions, please contact [email protected]

The content of this field is kept private and will not be shown publicly.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd> <p> <img>
  • Lines and paragraphs break automatically.