The cost of construction and the state's prevailing wage

Construction in New York City
Construction in New York City
Nick Starichenko/Shutterstock

The cost of construction and the state's prevailing wage

An effort to expand a fair wage in the thriving construction industry.
June 4, 2018

Anybody who has seen Gov. Andrew Cuomo give a speech in the past few years knows that New York is in the midst of a building boom.

There are marquee projects like the Gov. Mario M. Cuomo Bridge over the Hudson River or the renovation of LaGuardia Airport in Queens, and there are smaller projects like street enhancements in downtown Watkins Glen or a proposed Metro-North station at Woodbury Common Premium Outlets.

These projects are mostly publicly financed and built by private contractors – and in the midst of this building boom, some state legislators are hoping to clarify what those contractors should be paid.

The state constitution says that construction workers on state-financed projects should be paid the prevailing wage – a set rate of pay and benefits. Prevailing wage rates are maintained by the state Labor Department and vary by location and job. For example, a structural ironworker in Albany County would make $30.50 an hour plus some $27 an hour in supplemental benefits on a public project, while one in New York City would make nearly $52 an hour, plus more than $70 an hour in supplemental benefits. It’s meant to prevent contractors from undercutting wages, and to ensure workers on public projects are getting paid fairly.

A bill is being considered that would expand the number of construction projects subject to the state’s prevailing wage rates. In practice, the bill is meant to clarify the definition of “public work,” legislating that even largely private projects that receive tax breaks or other government subsidies are still required to pay a prevailing wage to workers. The bill’s sponsors say that judicial rulings have caused loopholes that allow contractors to not pay full wages.

“Too often in construction, we see a race to the bottom with little to no standards in place for workers.” — Patrick Purcell, executive director of the Greater New York Laborers-Employers Cooperation and Education Trust

Advocates for workers say the state is paying for poor working conditions. “Too often in construction, we see a race to the bottom where unscrupulous contractors are receiving taxpayer dollars to subsidize development with little to no standards in place for the workers on these projects,” said Patrick Purcell, executive director of the Greater New York Laborers-Employers Cooperation and Education Trust, in a press release supporting the legislation.

The bill, sponsored by Democratic Assemblyman Harry Bronson, passed the Assembly in May. A companion bill in the state Senate, sponsored by Republican state Sen. Terrence Murphy, is now in the Finance Committee.

Despite the bill’s bipartisan support, it faces serious opposition from upstate business groups. More than a dozen groups, including Unshackle Upstate and The Business Council of New York State Inc., sent a letter to Cuomo in March opposing the bill, saying that the prevailing wage law is flawed and miscalculated. The groups cited a report from the right-leaning Empire Center for Public Policy that said prevailing wage rates increase the cost of construction projects by as much as 25 percent, hurting taxpayers and doing no favors for the lagging upstate economy.

“In light of the state’s budget multibillion-dollar deficit, extending this wildly expensive mandate to private sector economic development projects will further strain state finances, result in less economic development across New York state and needlessly waste taxpayer dollars,” the groups wrote.

“In light of the state’s budget multibillion-dollar deficit, extending this wildly expensive mandate to private sector economic development projects will further strain state finances.” — business groups in a letter to Gov. Andrew Cuomo

When similar legislation was considered last year, the Empire Center railed against it as a handout to labor unions, which have a lot of power in setting prevailing wages and the accompanying benefits. The Building and Construction Trades Council of Greater New York, an umbrella group for construction unions, rallied at the state Capitol in February to support the bill.

Cuomo has strengthened his ties to labor unions in recent years and has touted good wages for construction workers in the past, but he has not apparently made any comments on the specifics of this bill. With bipartisan support, the bill may actually have a chance of passing, even as Capitol watchers are predicting a quiet June.


Building for the future


Cuomo’s $125B plan

After a couple years touting a $100 billion infrastructure plan (quantified by the total spending for current and planned projects, from the Gateway rail tunnel to the JFK Airport renovation), Cuomo upped the estimate in May to $125 billion over the next five years. The announcement was more of a goal than a concrete plan, and construction insiders don’t expect more details before the end of the session. But $25 billion a year is a lot of work within next year’s budget.
 

Congestion pricing

The ambitious congestion pricing plan for New York City, known as the Move New York Fair Plan, didn’t get the necessary support in the state budget. Opponents to the plan argued against charging outer borough motorists to drive into Manhattan, which would push more commuters onto the increasingly unreliable and overcrowded subways. The state budget included more than $800 million for a short-term Subway Action Plan, and added a surcharge to cab and ride-hailing trips in the Manhattan core to help pay for public transit improvements. With those moves, congestion pricing won’t be on the table again until at least next year.
 

Design-build

For years, some state lawmakers and New York City officials have wanted to expand the state’s design-build law, which only allows the project delivery method at a limited number of state agencies and authorities. Cuomo has touted its use on the Gov. Mario M. Cuomo Bridge, arguing that it has expedited the project to replace the Tappan Zee Bridge and kept costs in check. This year, the state budget expanded design-build authority to the construction of new jails to replace Rikers Island, the Brooklyn-Queens Expressway and New York City Housing Authority projects.
 

Verrazano-Narrows naming

One infrastructure bill that’s actually likely to pass? Correcting a decades-old spelling error on the Verrazano-Narrows Bridge – named in honor of Italian explorer Giovanni da Verrazzano (with two Z’s). The senators on both sides of the bridge, Brooklyn’s Martin Golden and Staten Island’s Andrew Lanza, have co-sponsored a bill to fix the bridge’s official spelling. It’s on the state Senate calendar for a floor vote.

Jeff Coltin
is a staff reporter at City & State. He covers New York City Hall.
20191021