Local Government Makes Operating Stadiums in Philadelphia Much More Expensive

As more cities reach the harsh realization that public financing for sports venues is a losing proposition for taxpayers, Philadelphia has now enacted a law aimed at recouping some of its money and boosting local workers’ earnings via mandated higher wages at public facilities.

On October 21, Mayor Jim Kenney signed the prevailing wage bill into law after it passed a unanimous vote by City Council. The law expands prevailing wages to employees or contractors working in “city-subsidized” buildings such as the convention center, hospitals, certain university buildings, and stadiums. At its core, the law will raise the average wage for service workers, such as security guards or janitors, by several dollars an hour.

According to the 32 BJ SEIU, the largest union of property service workers in America, the law will benefit the city to the tune of more than $22 million per year while it “transforms thousands of low-wage jobs into family-sustaining jobs paying workers almost $15 an hour with benefits.”

Per the language of the law, the following workers will soon see pay raises: “watchman, guard, doorperson, building cleaner, janitor, custodian, porter, maintenance person, handyperson, elevator operator or starter, window cleaner, desk clerk, housekeeper, gardener, [and] groundskeeper and cleaner of public property or the public right-of-way.”

Broadly, a prevailing wage is the salary, benefits, and overtime paid to workers in a particular geographical area. The new law mandates that service workers at the designated facilities receive a wage equal to “the wage paid to the majority (more than 50 percent) of workers in the classification at similar locations in the City.”

What makes this new law particularly interesting is that Philadelphia was already one of the few municipalities in the country with a prevailing wage law for building services workers. Now, however, more properties and facilities will fall under the purview of a mandatory wage including all commercial office buildings greater than 50,000 square feet, hospitals, universities, ports, and stadiums that receive “financial assistance” from the government. Curiously, though, “financial assistance” is not further defined in the law.

This means that any facility that received a tax break or direct financial assistance from public funds must now pay higher, and potentially above-market wages, to its service employees. In Philadelphia, the law could certainly harm the bottom lines of the publicly-financed Citizens Bank Park and Lincoln Financial Field. The same goes for many of Temple’s buildings, including the Liacouras Center.

As PlanPhilly reported, the current prevailing hourly wage for unarmed security guards is $13.28 plus $4.27 for benefits.  The prevailing wage for janitors is $16.89 plus benefits. Undoubtedly, many workers at Penn, Temple, and the pro stadiums are about to see significant wage increases.

Yet, higher operating costs almost always translates to higher prices for fans, whether at the concession stand or box office. It could also lead to a reduction in positions and hours as this new wage law will apply to both union and non-union positions.

Of course, the theory is that higher wages means more money in employees’ pockets, less reliance on government benefits, and more tax revenue for the City. Remember, Philadelphia has a 3.9 percent wage tax for city residents. If a security guard at an Eagles game receives a $2 per hour raise, that is almost eight cents per hour coming back to the City. Multiply that out over the course of the year for thousands of employees and it is a nice haul for the City’s coffers.

Essentially, City Council passed a new tax on businesses in the name of supporting workers — a tried and true strategy of a one-party town. At this point, though, it is too early to know how this increased tax revenue will actually benefit the taxpayers who originally provided these stadiums with public assistance since the law really will not gain any teeth until each individual service contract comes up for renewal.

If City Council keeps with tradition, though, it will look for a new way to tax its businesses, property owners, and residents. Higher wages just means more to tax. Consider it the government’s Brotherly Love.

Steve Silver is an Associate at McBreen & Kopko and Founder of TheLegalBlitz.com. You can follow him on Twitter at @thelegalblitz

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