ALBANY, NY – Unshackle Upstate was joined by representatives from business and construction organizations in the Capitol today to voice their collective opposition to the expansion of New York State’s prevailing wage mandate.
Specifically, these organizations are opposed to a measure (S.1947/A.1261) that would impose prevailing wage standards on projects receiving any level of state financial support. The bill would also classify Industrial Development Authorities (IDAs) and local development corporations as “public entities” and the projects in which they engage as “public works,” subjecting any project they support to prevailing wage laws.
“It’s already incredibly expensive to build projects in New York State. This proposal is a death sentence for many private construction projects across the State,” said Michael Kracker. “Given the New York’s multi-billion dollar budget shortfall, it’s fiscally irresponsible to enact that would drive up construction costs up by double digits. Our leaders should be focused on efforts to reduce those costs and attract more private sector investment – not chase those opportunities away.”
A 2017 report published by The Empire Center found that the current form of the prevailing wage law inflates the costs of public works projects by double-digits throughout New York:
- 13% in the Albany-Schenectady-Troy area;
- 14% in the Rochester and Syracuse metro areas;
- 15% in the Dutchess-Putnam County area;
- 20% more Long Island and in the Buffalo metro areas; and
- 25% more in the New York City region.
An additional analysis published last week by The Empire Center found that the level of union coverage in New York’s private construction industry was approximately 21 percent in 2018. Given that New York State uses a 30 percent union coverage standard for its prevailing wage mandate, this new analysis calls into question whether the State should be able to enforce the law in its current form or expand it to include private projects that receive public financing.
Leaders from several business and construction organizations voiced their concerns and urged elected officials to reject the harmful proposal.
Dottie Gallagher, President and CEO of the Buffalo Niagara Partnership:
“Expanding New York’s prevailing wage mandate to private projects will stall Buffalo Niagara’s momentum and stymie progress and job creation throughout Upstate. Given Upstate’s anemic business climate, most private development – including non-profit, affordable housing, historic rehabilitation and brownfield projects – do not materialize without some form of public support. Attaching prevailing wages to these projects will raise construction costs by as much as 20 percent in the Buffalo Niagara region. Most of these projects can already be described as break-even and a drastic increase in total project costs will dramatically overtake the value of any incentive, turning the whole project financially upside down. As a result, the expansion of the prevailing wage mandate to private projects will be a death blow to private investment in Buffalo Niagara and a significant step backwards for the revitalization of the region. New York State should be committed to building the economy in Upstate, not imposing unaffordable mandates that will drive development and private investment out of New York State.”
Brian Sampson, President of Associated Builders and Contractors, Empire State Chapter:
“It’s no secret that the cost of construction in New York State is higher than almost anywhere else in the country. With the proposed legislation, it will make construction nearly 25 percent more expensive and will force our developer base to pull back and reevaluate if our state is a cost effective, viable market for their project. As contractors that employ hundreds of thousands of workers, our concern is that the proposed legislation will dramatically constrict development opportunities. With less opportunity to bid and win work due to the increase in construction costs added by this new bill, contractors will be forced to cut employment dramatically. That shouldn’t be a piece of legislation anyone should support.”
Garry Douglas, President of the North Country Chamber of Commerce:
“The reality is that this isn’t about higher wages but about whether important projects can happen at all. New York remains a high cost state, and all the more so in areas like the Adirondacks where basic construction costs are even higher than elsewhere. It take public partnership of various kinds to leverage private investment in the case of many economically important projects, but that leverage is lost with high cost mandates. The result becomes not higher wages but less construction and less work all around. There must be a huge caution light on any expansion of union wage mandates.”
Bob Duffy, President and CEO of the Greater Rochester Chamber of Commerce:
“We commend Governor Cuomo for his efforts to support economic growth and expansion in Upstate New York. We encourage lawmakers to recognize that the purpose of incentive programs is to help move forward projects that wouldn’t happen otherwise. Instituting this legislation as is runs counter to that goal and effectively negates the value of the incentive bringing us back to square one.”
Jennifer Conway, President and CEO of the Greater Binghamton Chamber of Commerce:
“New York State is facing very serious challenges in 2019. Our state budget is experiencing a 2.3 billion dollar shortfall. Higher taxes would crush a lagging southern tier economy. By reforming state regulations involving prevailing wage, this could save state budget billions and ensure our infrastructure needs are met. We must stop any attempt to expand prevailing wage to include private projects granted tax incentives and credits by economic development agencies to spur development. This expansion of existing law would simply crush any development in the Southern Tier.”