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PA Chamber of Business and Industry

Prevailing Wage Requirement Defeats Purpose of KOZs

by News Release

PA Chamber of Business & Industry

FOR IMMEDIATE RELEASE
Thursday, May 8, 2008

HARRISBURG, PA – The incentives available to businesses that locate within a Keystone Opportunity Zone would be diminished if prevailing wage requirements remain in legislation (H.B. 2297) that would expand the program, the Pennsylvania Chamber of Business and Industry said today.

"Expansion of prevailing wage would undermine the very purpose of Keystone Opportunity Zones, which is to encourage economic activity in underserved regions of the Commonwealth," said Gene Barr, PA Chamber vice president of government and public affairs.

Pennsylvania's Keystone Opportunity Zone program was enacted in 1998, with additional zones created in 2001, 2003 and 2004. The zones offer property owners, residents and businesses greatly reduced or no tax burden for a period of 10 years.

With the first of the zones set to expire this year, the General Assembly is looking to extend the program. On Tuesday, May 6, the House adopted an amendment on second consideration that would require all future public works projects undertaken within a KOZ be subject to the prevailing wage. The House passed the bill, with the prevailing wage amendment, on Wednesday, May 7.

Prevailing wage rates can add up to 30 percent to the cost of school district and municipal capital projects. Barr said similar cost add-ons could be expected for projects undertaken within opportunity zones.

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"It makes no sense to extend the Keystone Opportunity Zone program in order to encourage the development of underutilized land and buildings while at the same time forcing businesses that would be helped to pay inflated labor rates," Barr said. "Doing so would reduce the benefits of locating or expanding within the KOZ."

Barr said jobs and job opportunities will be lost in regions of the Commonwealth most in need of economic growth if development programs are burdened by the costs associated with the prevailing wage.

"Lawmakers who are interested in creating successful Keystone Opportunity Zones and fostering business and job growth in parts of the state that are struggling economically should rethink this counter-productive requirement."

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Founded in 1916, the Pennsylvania Chamber of Business and Industry is the state's largest broad-based business advocacy association. PA Chamber members comprise nearly 50 percent of the private workforce. The PA Chamber is The Statewide Voice of Business.