Installing Broadband is Expensive – and L&I Isn't Helping

Pennsylvania needs more broadband. Connecting underserved communities to affordable, high-speed internet will help rural communities prosper. Unfortunately, one misguided Pennsylvania policy makes the process needlessly expensive and ostensibly blocks internet access.

Sadly, Pennsylvania’s prevailing wage designations will limit how far those federal dollars can go. As mandated by the Pennsylvania Department of Labor and Industry (L&I), prevailing wage – or the minimum wage paid to workers on publicly funded contracts – adds unnecessary costs to broadband-expansion projects.

The problem boils down to how L&I classifies workers on these contracts. Traditionally, teledata line workers lay the cable. But L&I doesn’t have a classification for them. Instead, the agency classifies them as “electric linemen.”

Though subtle, this misclassification inflates costs. Typically, electric line workers are licensed electricians, working with high-voltage cables. Moreover, their prevailing wage in Pennsylvania exceeds $80 per hour.

This is an L&I problem. And the agency’s reluctance to change comes at a cost.

“Without appropriate broadband worker classifications, the prevailing wage labor rates from L&I may raise project costs for broadband builds by over 50 percent,” said Todd Eachus, president of Broadband Communications Association of Pennsylvania, during a Pennsylvania Senate committee hearing.

With twice the labor costs, Pennsylvania broadband projects are immediately hamstrung before they break ground. The result is fewer households and businesses having access to high-speed internet – all because of this one obscure wage law.

Fortunately, some Pennsylvania policymakers understand broadband’s statewide economic impact and how it can make or break Pennsylvania’s ability to compete.

“Since taking office in 2021, I have made it my personal mission to regularly visit each one of our 67 counties to meet regularly with Pennsylvania manufacturers and other businesses,” said Treasurer Stacy Garrity. “Through these visits, business owners have reiterated how vitally important infrastructure – and particularly digital infrastructure – is as they compete in today’s global marketplace.”

Pennsylvania is already at a disadvantage with state prevailing wage restrictions. Almost half of the United States doesn’t have prevailing wage mandates and defaults to the federal standards outlined by the Davis–Bacon Act of 1931.

But this isn’t a federal issue; again, this is purely a Pennsylvania problem created by L&I.

In fact, the agency is actively fighting against appropriate worker classification. The broadband industry is currently litigating with L&I, seeking accurate categorization of their projects. But relief won’t come in time for the BEAD funding. Companies are already planning and proposing projects based on the current restrictions. The litigation will continue well after NTIA approves these projects and PBDA awards funding.

Regardless, the result will be prevailing wages twice the norm for the foreseeable future.

Ultimately, the agency’s intransigence only makes broadband deployment more expensive. Also, this stubbornness drives out local companies, which are better positioned to connect underserved communities, and limits genuine competition.

“Pennsylvania’s rural communities often feel left behind by Harrisburg, and this issue is no exception,” said Garrity. “We have opportunities to make state and federal dollars go further, helping to advance the health and economic vitality of Pennsylvania and its rural communities while at the same time bringing families and communities across the commonwealth closer than ever before.”

Pennsylvania has a once-in-a-generation opportunity to close the digital divide, but misguided wage rules threaten to squander it. By clinging to outdated classifications, L&I isn’t protecting workers; instead, it has shortchanged underserved communities and federal taxpayers.

Pennsylvanians – especially those on the losing side of the digital divide – pay more and get less in return. Meanwhile, gaps in connectivity and access will only widen.

Elizabeth Stelle is the Vice President of Policy at the Commonwealth Foundation, Pennsylvania’s free-market think tank. Twitter: @ElizabethBryan