Bill to Mandate Prevailing Wage on BPU Regulated Projects Passes Committee
Monday, May 11, 2009

MEMORANDUM

TO: Members of the Assembly Labor Committee

FROM: Christina M. Genovese, Manager, Government Relations

RE: A-3372 (Barnes / Diegnan / Love / Egan)

DATE: May 11, 2009

The Chamber of Commerce Southern New Jersey respectfully opposes A-3372 (Barnes / Diegnan / Love / Egan), which requires prevailing wage for construction projects connected with Board of Public Utilities (BPU) financial assistance.

Recently, the BPU approved proposals submitted by five public utilities for infrastructure investments valued at $965 million. This investment will create jobs in support of Governor Corzine’s Recovery and Reinvestment Plan, while also improving utility’s infrastructure. It has been estimated that these projects will create 1,300 new “green jobs” in New Jersey.

However, under A-3372 (Barnes / Diegnan / Love / Egan), all of these projects would be subject to prevailing wage rates and rules, which would greatly increase the costs of these projects. According to the American Legislative Exchange Council’s (ALEC) recently released “Rich States, Poor States” Report, prevailing wage is responsible for adding up to 38 percent to the cost of construction in some states. This bill places an unfunded mandate on utilities, which is one of few business sectors where growth is possible during these dire economic times.

More worrisome is the impact this bill will have on small and medium sized businesses that receive BPU funding, tax exemptions, incentives, grants or rebates for projects. This bill would act as an enormous disincentive for businesses that will be forced to cover the additional costs associated with paying prevailing wage rate. Additional wage costs will equate to less money for new projects and less job creation in New Jersey. In this economy, businesses, especially small businesses, need the public sector to work together with the private sector to help lower costs and make economic development possible.

The Chamber believes we need to find ways to stimulate the economy and generate job growth, not tack new, costly requirements on business. Businesses will have a harder time creating new jobs if prevailing wage is mandated on BPU regulated projects. As you know, New Jersey is currently experiencing record high levels of unemployment. According to the Federal Reserve Bank of Philadelphia’s fourth quarter 2008 survey of our Chamber members, declines in employment in the fourth quarter were widespread with 36 percent of the respondents indicating they have seen decreased employment.

The Chamber believes this bill will undo many of the priorities Governor Corzine has outlined regarding the growth of a “green economy” by increasing the cost of projects and, therefore, decreasing the number of projects undertaken and decreasing the corresponding jobs. For these reasons, we urge you to vote “no” on A-3372 (Barnes / Diegnan / Love / Egan).