COUNCIL OF THE CITY OF PHILADELPHIA COMMITTEE ON LABOR AND CIVIL SERVICE - - - Room 400, City Hall Philadelphia, Pennsylvania Monday, June 2, 2008 1:10 p.m. - - - PRESENT: COUNCILMAN BILL GREEN, CHAIR COUNCILMAN FRANK DiCICCO COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN WILLIAM GREENLEE COUNCILMAN JAMES F. KENNEY BILL 080148 - An ordinance amending Section 17-107 of The Philadelphia Code, entitled "Contractors: Labor-Management Relationships," to change the method by which the prevailing wage and prevailing working conditions are calculated for certain occupational classifications... - - - V A R A L L O Incorporated Litigation Support Services Eleven Penn Center 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2
A quorum being present, I'm going to call this hearing to order. Present are Councilman Frank DiCicco, Councilman James Kenney, Vice-Chair Wilson Goode, Councilman Bill 7 Greenlee. Good morning. My name is Bill 9 Green, Chair of the Committee on Labor and Civil Service. We have people's written testimony, so if you would like to paraphrase rather than read directly from it, that would be fine with us. So I guess we should call the first witness. Sorry. Lauren, please read the title and name of the bill.
Bill No. 080148, an ordinance amending Section 17-107 of The Philadelphia Code, entitled "Contractors: Labor-Management Relationships," to change the method by which the prevailing wage and prevailing working conditions are calculated for certain occupational 3 6/2/08 - LABOR & CIVIL SERVICE - BILL 080148 classifications, all under certain terms and conditions.
Thank you. The first witness is Perri DiVirgilio from the Labor Standards Unit. (Witnesses approached witness table.) MR. DiVIRGILIO: Good afternoon, Councilman Green and members of the Committee on Labor and Civil Service. I am Perritti DiVirgilio, the Director of Labor Standards. I'm prepared to give testimony in support of Bill 080148, which, if enacted, will amend provisions of the Chapter 17-107 of The Philadelphia Code by changing the method in which the prevailing wage and prevailing working conditions are calculated for certain occupational classifications. Currently, the City of Philadelphia bids out prevailing wage contracts in which the wages are set ten days prior to the bid opening and are 4 6/2/08 - LABOR & CIVIL SERVICE - BILL 080148 frozen for the duration of the contract. This creates an unfair advantage in the bidding process. Contractors that are signed to a collective bargaining agreement have to increase wages paid to an employee when the prevailing wage changes. Contractors not signatory to any collective bargaining agreement are able to bid lower for a City contract because they can pay the same wages for the life of the contract without the risk of the prevailing wage escalating. It should be noted that the wages for employees working for the non-signatory contractors are less than for the employees who work for signatory contractors. This bill, if amended, will mirror the provisions of the Pennsylvania Prevailing Wage Act, which mandates that prevailing wages shall escalate during the duration of the contract as opposed to staying stagnant. Thus, union and non-union employees will get the same 5 6/2/08 - LABOR & CIVIL SERVICE - BILL 080148 prevailing wage on city work contracts. Here in the City, the majority of the contractors doing prevailing wage work are union workers, are union contractors of union workers. Because the signatory contractors are contractually bound to pay their employees the prevailing wages, the wages are based on their rates. The prevailing wages usually change once a year. This amendment would require that all public work contracts shall contain a provision mandating that the contractor and each subcontractor shall pay each affected worker any new prevailing wage rates on the first day on which the new prevailing wage rate is effective. This amendment levels the playing field for union and non-union employees and would benefit contractors as well. When the prevailing wage changes, the wages in the contract would also change. In preparation for this 6 6/2/08 - LABOR & CIVIL SERVICE - BILL 080148 hearing, I spoke to several contractors who support this bill. This amendment should not cause contractors to bid higher in that the potential for increase of the wage will be built into the contract. Also, I do not foresee that the City will get less bidders due to this bill. Thank you for the opportunity to provide testimony in support of Bill 12 080148. I will be happy to answer any questions that you may have.
Thank you for your testimony. I guess you knew I would have questions for you. MR. DiVIRGILIO: Of course.
Is your 7 6/2/08 - LABOR & CIVIL SERVICE - BILL 080148 office now taking responsibility for implementation of the minimum wage ordinance? MR. DiVIRGILIO: That's correct.
And has the Mayor's Office talked to your office about convening a Living Wage Advisory Committee? MR. DiVIRGILIO: Not the new Administration, no, not at all.
I sent a letter to the Chief of Staff, an e-mail to the Chief of Staff several months ago. This body passed another resolution 17 unanimously asking that the Living Wage Advisory Committee be created pursuant to the minimum wage ordinance. I've been a little bit patient with the Administration because they were new, but you are not new and I made that request to you several times to convene the Living Wage Advisory Committee. It's something that should happen and it's 8 6/2/08 - LABOR & CIVIL SERVICE - BILL 080148 something I've become a lot more aggressive about under this new Administration. And while I've given them some time, you've had enough time to do it already. MR. DiVIRGILIO: Okay. Well, as we talked before, under the prior Administration, I was basically told not to do it. Basically what they told me was I work for the Administration, I don't work for the Council, and they asked me that anybody that called, to refer it to them.
Thank you for putting it on the record. MR. DiVIRGILIO: Right. Right. This is the first I'm hearing this, so it's not a problem.
We will talk about it. MR. DiVIRGILIO: Okay. Not a problem.
Any other questions? 9 6/2/08 - LABOR & CIVIL SERVICE - BILL 080148 (No response.)
Thank you. The next witnesses, Tom Breslin and Guy Pigliacelli from the Carpenters Union. MR. DiVIRGILIO: Thank you. (Witnesses approached witness table.)
Good afternoon. Please state your names for the record and begin with your testimony.
My name is Thomas A. Breslin. I'm a Council Representative with the Philadelphia Metropolitan Regional Council of Carpenters, and we are also in support of this amendment. On behalf of the MRC, I'd like to thank City Council for letting us speak today on this amendment, Title 17-107 of The Philadelphia Code, Contract and Procurement. The premise of Title 17-107 was to ensure that any workman or mechanic that worked on a public works 10 6/2/08 - LABOR & CIVIL SERVICE - BILL 080148 project for the City of Philadelphia would receive no less than a prevailing wage. On March 31, 1931, President Hoover signed the Davis-Bacon Act into the law requiring that all private contractors pay workers the prevailing wage of the area for projects exceeding $2,000 for construction, alteration, repairs of public buildings or public works to ensure that public works projects would be bid at an even and competitive playing field, of which the City of Philadelphia follows what is referred to as Little Davis-Bacon, which can differ in statute as to the scope of the regulation, but still follows prevailing wage determination. Through these wages can be set by area collective bargaining agreements by federal or state rates, depending on which is higher, but is still set a minimum wage rate for public works. For many years, the City of Philadelphia City Code, Title 17-107, Contracts and 11 6/2/08 - LABOR & CIVIL SERVICE - BILL 080148 Procurement, definition for city works is all building or construction under contract with the City for compensation that exceeds $2,000, including repairs, alterations and remodeling done on behalf of the City under a contract awarded by the City. As you can gather, this Code should provide a win-win scenario for all involved. Workers receive wages and benefits, which would allow them to enjoy a decent standard of living, and the City benefits from increased tax revenue, which comes from increased wages. Unfortunately, experience has shown that none of the parties who are to benefit from this ordinance would garner its full benefit. Simply stated, too many contractors that are bidding city works are at a disadvantage due to the use of the Little Davis-Bacon without this amendment to City Code Title 17-107. As of now, the City Code Title 17-107, Contract and Procurement, when a 12 6/2/08 - LABOR & CIVIL SERVICE - BILL 080148 project is bid and a wage determination is given, the wage determination is for the life of the project with no wage escalator. Under these guidelines, City projects can be bid out with an out-of-date prevailing wage rate, and sometimes they can be one to two years behind the current prevailing wage because there is no wage escalator for current prevailing rates -- because of not having current prevailing wage rates. S. Department of Labor. The Pennsylvania Prevailing Wage Act of 1961 has an escalator component in the Act to ensure that the workers are being paid the current prevailing wage rate for the project and the classification. As it stands right now, the public works projects that fall under City Code Title 13 6/2/08 - LABOR & CIVIL SERVICE - BILL 080148 17-107, Contracts and Procurement, that utilizes federal Davis-Bacon rates has no 4 escalator. This amendment would allow the Director of City contracts and procurement to set multiple wage rates per classification to ensure the true meaning of prevailing wage. The Philadelphia School District utilizes the Pennsylvania Prevailing Wage Act, which has an escalator. Amending this City ordinance 13 would bring the City of Philadelphia united under a current wage rate for all public works, and we feel that it is a win-win scenario for City residents, a current living wage, you get a better skilled labor pool, even bidding processes, bigger contractor base, current wage determination for all crafts. In closing, I'd like to thank City Council for the opportunity to testify today, and I'd be happy to answer any questions you may have.
Thank you for your testimony. Any questions? (No response.)
The next witness is James White from PACDC. (Witness approached witness table.)
Good afternoon, Councilman Green and distinguished members of the Committee. My name is James White and I am the Policy Coordinator of the Philadelphia Association of Community Development Corporations. PACDC is a citywide association of more than 80 community development corporations and other organizations that have extensive experience developing affordable homes and undertaking other community 15 6/2/08 - LABOR & CIVIL SERVICE - BILL 080148 development activities. Since the enactment of the federal prevailing wage law, the Davis-Bacon Act in 1931, there has been an ongoing debate regarding prevailing wage laws at every level of government in every state. The stated intent of this proposed ordinance is to protect the local wage rates in the construction industry. We do not disagree with the goal of ensuring livable wages for workers, but we are concerned about the high cost of development in Philadelphia, third highest in the country, and its impact on developing affordable homes for lower income families, seniors and individuals with special needs. Philadelphia's CDCs have faced many challenges trying to balance the City's building regulations and available funding, while providing high-quality and affordable homes to lower income residents in our city. 16 6/2/08 - LABOR & CIVIL SERVICE - BILL 080148 Despite the recently agreed to $3 million annual appropriation in the supplemental funding from the City's General Fund to the Philadelphia Housing Trust Fund for each of the next five years, funding for affordable housing in Philadelphia has been on the decline while the need for new affordable homes, home repair and homeless prevention grows. We encourage Council to amend the proposed ordinance to exempt affordable housing developments, because it would negatively impact the number of high-quality affordable homes that would be produced using City funds. I thank you for your time.
Thank you for your testimony. Any questions for this witness? (No response.)
Seeing none, thank you. Is anyone else here to testify on Bill No. 080148? 17 6/2/08 - LABOR & CIVIL SERVICE - BILL 080148 (No response.)
Seeing no 4 other witnesses, we will adjourn the hearing and go into a public meeting on Bill 080148. Does anyone have a motion?
Mr. Chairman, I move that the amendment to Bill No. 080148 as presented to the members of the Committee and circulated prior be approved. (Duly seconded.)
It has been moved and properly seconded that an amendment to Bill 080148 circulated to members of the Committee be approved. All in favor? (Aye.)
It is unanimously approved. I recognize Councilman Kenney for a motion. 18 6/2/08 - LABOR & CIVIL SERVICE - BILL 080148
Thank you, Mr. Chairman. I move that Bill No. 4 080148, as amended, be reported out of this Committee with a favorable recommendation and a request made for rules suspension to allow for first reading at our next Council session. (Duly seconded.)
It has been moved and properly seconded that Bill No. 12 080148 be reported out of the Committee on Labor and Civil Service with a favorable recommendation and with a suspension of the rules. All in favor? (Aye.)
The ayes have it. It's been reported out unanimously. That adjourns the meeting. (Committee on Labor and Civil Service adjourned at 1:20 p.m.) 19 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on June 2, 2008, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)